By Harry Handley
As host of the 2016 G20 summit, Zhejiang province has been thrust into the global spotlight in recent months. The province of 55 million people is advantageously located on China’s east coast, south of Shanghai which is easily accessible via one of the world’s transoceanic bridges spanning the Hangzhou Bay. Zhejiang boasts advanced infrastructure, with 2,600 kilometers of railway, almost 120,000 kilometers of highway, and one of the top five busiest ports in the world. These factors, along with a rapidly developing business environment, have led Zhejiang to become one of the strongest and most diverse provincial economies in China.
A growing number of foreign firms are choosing Zhejiang as the location for their Chinese investments. The province offers great opportunities to potential China entrants, including a range of economic development zones. In order to take advantage of these opportunities, the economy of Zhejiang and recent foreign direct investment (FDI) trends must be understood.
By Dezan Shira & Associates
Editor: Elizabeth Leclaire
With a GDP of US$122.31 billion in 2014, Ningbo is a major economic hub along China’s eastern coastline. Much of Ningbo’s economic success can be attributed to the city’s ports which connect the Yangtze River Delta to the East China Sea. Over 10.5 million twenty-foot equivalent units (teu) passed through Ningbo’s ports from January to June of this year, surpassing Hong Kong’s throughput volume of 10.1 million teu over the same period. Ningbo’s profitable overseas trading sector, in addition to its bustling manufacturing industry, has placed the city among China’s largest commercial centers. Continue reading…
By Elizabeth Leclaire and Rainy Yao
Closely mirroring the structural and legislative policies of the Shanghai Free Trade Zone (FTZ), the Guangdong Free Trade Zone was launched in April of this year, along with two other FTZs in Tianjin and Fujian. With Shanghai as the nation’s de facto financial center and Guangdong as one of the world’s major manufacturing and trading centers, both the Shanghai FTZ and Guangdong FTZ have caught the attention of foreign investors seeking to enter a more liberalized Chinese market. While the Shanghai FTZ and Guangdong FTZ are regulated by similar policies, important distinctions exist between the two zones, and foreign investors must be careful to select the location best suited for business needs. Continue reading…
By Kimberly Wright
On June 29, 2015 the Chinese government formally released its proposal for the implementation of its integrated cross-border e-commerce experimental zones. The proposal situates Hangzhou as the focal point of e-commerce business in China and seeks to spread Hangzhou’s model for e-commerce to six other areas in Zhejiang: Ningbo, Wenzhou, Jiaxing, Huzhou, Jinhua, and Yiwu. By introducing subsidies and preferential policies for enterprises involved in e-commerce, the government hopes to facilitate cross-border e-commerce business and boost import and export business in China. Continue reading…
With a population of over 25 million, Shanghai, often referred to as the “Paris of the east,” is the economic nexus of China. Situated in the Yangtze River Delta (YRD) in east China, the city aims to be the world’s global financial and economic center and international transport hub by 2020.
In this article, Rainy Yao from Dezan Shira & Associates takes a closer look at this modern metropolis with its well-developed infrastructure and sound investment environment.
Shanghai accounts for one-eighth of China’s total financial income while taking up only 0.06 percent of the nation’s land. In 2013, the city’s gross domestic product (GDP) exceeded RMB 2.16 trillion, the highest in all of China. Of this total, the city’s primary industry contributed RMB 12.9 billion and its secondary industry RMB 802.7 billion (up 6.1 percent from 2012). The most notable contribution was from the service sector – a monumental RMB 1.34 trillion, or 62.2 percent of total GDP. In the first half of 2014, the city’s GDP stood at RMB 1.09 trillion with a stable annual growth rate of 7.1 percent.
The finance sector has also played a key role in Shanghai’s economic development, with an added-value in 2013 of RMB 282.3 billion (up 13.7 percent from 2012). By the end of 2013, 215 foreign-invested financial institutions and 198 representative offices had been established in the city.
From January to September 2014, Shanghai has witnessed a sharp increase in foreign direct investment. Over 400 foreign-invested projects were introduced in September alone – a y-o-y growth rate of 34.1 percent. Continue reading…
By Maria Kotova and Kate Wang
A client in the tourism industry recently contacted Dezan Shira & Associates to advise them on how to best expand their scope of operations in the tourism industry. With the rise in income levels in China, outbound tourism has become one of the most profitable operations for travel agencies in China. The client, who had already engaged in domestic and inbound tourism in China for several years, requested that we investigate the options for foreign investment in the outbound tourism industry.
Pursuant to Article 21 of the Regulation on Travel Agencies (the “Regulation”) issued by the State Council on May 1, 2009, foreign investment in travel agencies is permitted for Sino-foreign equity joint venture (EJV) travel agencies, Sino-foreign cooperative travel agencies and wholly foreign-owned travel agencies, restricted to domestic tourism and inbound tourism only.
Further, according to Article 23 of the Regulation, “foreign-invested travel agencies shall not engage in overseas travel for Chinese mainland residents or business travel for Chinese mainland residents to the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan.” Therefore, our client’s goal of expanding operations by adding outbound tourism to their business scope was determined to be impossible under the normal regulatory environment in China. Continue reading…
By Matthew Zito
One often overlooked feature of the Shanghai FTZ is the unique advantages it affords foreign investors for transferring funds between their China domestic and overseas entities via two-way cash pooling. This refers to a transaction in which banks facilitate multi-national companies in moving capital between their onshore subsidiaries to an offshore headquarters (or vice versa) via inter-company loans. Companies use cash pooling for a variety of purposes, such as to deploy greater liquidity, more efficiently manage finances, or obtain a better deposit rate than in the revenue’s country of origin.
Cross-border forex cash pooling only recently became possible in China with the lifting of the ban on such activity in the Shanghai FTZ in February of this year. While the People’s Bank of China has announced that cross-border RMB cash pooling will soon be available nationwide, the FTZ retains the unique ability to offer forex cash pooling. Continue reading…
Hong Kong, Macau Professionals Permitted to be Partners in Accounting Firms in the Shanghai FTZ
On September 17, the Shanghai Municipal Government released the “Measures for Accounting Professionals in Hong Kong and Macau to be Partners in Accounting Firms in the Shanghai Free Trade Zone (Trial, Hu Fu Ban Fa  No.43),” which will be effective October 1, 2014 to September 30, 2016. The Measures stipulates that accounting firms with partners from Hong Kong and Macau should meet the following conditions:
- The number of partners from mainland China should be over 51 percent of the total partners;
- The chief account (partner) must be a mainland partner; and
- The Hong Kong/Macau professionals must work in the firm for at least 180 days each year.