On June 29, Hong Kong and Beijing agreed on further liberalize services and economic co-operation under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) by signing Supplement IV to CEPA.
The mainland will introduce a total of 40 liberalization measures covering 28 services areas, including 17 existing CEPA services areas and 11 new services areas. As a result, the total number of services areas covered by CEPA will expand from 27 to 38. Both sides have also agreed to enhance cooperation in financial services, convention and exhibition, and in mutual recognition of professional qualifications.
The measures, set to take effect January 1, 2008, include liberalization in the following existing service areas:
Securities – Mainland fund management companies approved by the China Securities Regulatory Commission will be allowed to establish subsidiaries in Hong Kong to operate relevant business; and the timeline for mainland securities companies to complete their registration procedures in setting up subsidiaries in Hong Kong will be extended from 6 months to 1 year. Read the rest of this entry »
The BVI Financial Services Commission announced on Tuesday that the BVI Executive Council has issued an order amending the schedules to the BVI Business Companies Act.
This order is important as it paves the way for a number of new initiatives including new simplified provisions for the transitioning of bearer share companies to non-bearer share companies. This order essentially means that it is no longer a requirement for companies to amend their M&AA to prohibit bearer shares to avoid the higher fees. Instead, the new order will do the following:
- Deem that the memorandum of every former IBC will be amended with effect from the transition date to prohibit the issue of bearer shares, unless the company elects that the deeming provision should not apply.
- Abolish the staged increases in annual fees between 2008 and the transition date. The transition date has been brought forward one year from 31 December 2010 to 31 December 2009. Read the rest of this entry »
Hong Kong celebrated its tenth anniversary since returning to mainland China on Sunday. As with any arbitrary anniversary, this presents a moment to look back at that was, and what has happened since. Hong Kong has come a long way since those uncertain days in 1997. SARS and the Asian financial crisis hammered the city already weary of mainland rule, the financial crisis beginning only a day after the hand-over, SARS taking upwards of 300 Hong Kong residents and quite nearly its tourist industry as well.
Hong Kong has bounced back, surpassing all expectations that many observers had ten years ago. Its stock market surpassed New York as the second most popular place, after London, to float new stock listings, with the biggest new listing coming from the mainland. Hong Kong’s close ties to the booming economy of the mainland have given its own economy renewed power. Read the rest of this entry »
Companies in Shenzhen have recently received letters from the local Public Security Bureau (PSB) reminding them to register their internet access or face punishment and blockage from the internet for six months. This reminder is in line with a rule that states every company with access to the internet must register with the Shenzhen PSB within 30 days of establishing connection.
According to sources at the Shenzhen PSB, the rule has been on the books since 2002 but a lack of public awareness has led them to issue the recent warning.
In addition to the registering with the PSB, the bureau is requiring all companies to install a piece of software that monitors all employee internet activity. The software records and tracks what sites employees go to, enabling the company, according to the PSB, to “see if an employee has accessed an illegal websites, or sent any illegal information.” Read the rest of this entry »
The Notice on Relevant Issues in the Administration of Foreign Trade in Free Trade Zones and Bonded Logistics Parks was issued on July 13, 2005 and clarified that trade companies inside the Yantian & Futian FTZs may apply to the Ministry of Commerce for foreign trade and distribution rights. Since the first of March, the approval right has been decentralized. Hence, Shenzhen BOFTEC is able to approve the application of adding foreign trade and distribution rights, raised by foreign trade companies inside the Yantian & Futian FTZ.
We are aware that in practice since the end of 2006 such applications have been submitted with increasing regularity. So far, a few foreign trade companies in Yantian and Futian have already obtained foreign trade & distribution rights from the Shenzhen BOFTEC. With the said rights granted, they may engage in distribution activities inside China without having to employ agents to do it for them. Read the rest of this entry »
As a consequence of being the main pioneering area for the reforms and opening up policies of the People’s Republic of China and as well as the world’s factory hub for more than a decade, investments in Pearl River Delta are increasingly being more affected by pollution related problems. Environmental issues here, more than anywhere else in China, have drawn the close attention of the national and local governments. When setting up a factory in China, especially if you plan to locate it in the Pearl River Delta, we strongly suggest you to take into consideration the medium and long term environmental costs and related issues.
Local governments will consider environmental costs in three main areas. If your business involves pollution, even if only incidental, you will need to pay for a report by a qualified agent to obtain an environmental evaluation report. Consequently, based on the report you will need to install equipment expected to minimize the environmental impact of your production according to government requirements. And since environmental protection procedures take time – depending on your own manufacturing processes involved as well as the efficiency of governmental departments and qualified agents involved – you will need to wait till the whole procedure has been completed. This process is now a precondition to get a registration in most cities. Therefore, when setting up the factory, you should take the time needed for an environment related evaluation into consideration. Read the rest of this entry »
Guangzhou and Shenzhen
Foreign trading companies registered in free trade zones (FTZs) are, in theory, allowed to expand their business scope to enjoy the rights of import/export and distribution in China now widely conducted through foreign invested commercial enterprises (outside FTZs). In practice, however, we have found that some of the FTZs are not implementing this locally for the time being, and still force FIEs to use local agents and traders to facilitate their transactions.
Usually, the expansion of the business scope will need to be accompanied by an increase of registered capital.
We have recently supervised a number of set ups in various FTZs, which applied different practices and regulations to the same investment scenario, even within the same city; it is therefore advisable to seek professional help and compare the practices in different zones before a decision is taken. Read the rest of this entry »
With the spreading development of foreign direct investments across China, not only big cities, but also second tiers city have become more concerned about how to make most from the limited land they have. The southern Chinese city of Zhongshan it’s an interesting example in this regard.
While the Zhongshan Government has issued a wide range of policies for the development of both city social life itself and industry growing in East Zhongshan, it has also issued its own catalogue for industrial investment, with four categories - main encouraged industries, territorially encouraged industries, limited industries and prohibited industries. This policy will probably help to sustain the cities business environment, but will also influence and determine both domestic and foreign-invested companies successes and failures.
Furthermore, recently the government issued a notice on strengthening the management of industrial factory. In the past, many factories in Zhongshan were built up without caring too much about regulatory requirements or performing necessary construction procedures, fire control or other procedures. It meant that having completed the construction, the investor started production in locations without having performed environmental impact evaluation, lease registration, fire control examination, and on occasions without the required business registration documentation. Read the rest of this entry »
As China Briefing readers probably know by heart, since December 11, 2004, foreign investors have been allowed to engage in wholesale, retailing, agency and franchising activities in Mainland China through the so-called FICE structure (Foreign Invested Commercial Enterprise).
This new legal structure opens up an unlimited range of potential business opportunities. Meanwhile, as the authorities gain more experience, such entities are becoming much easier and quicker to set up. Since March 1, 2006, for example, power of examination and approval for FICEs, has been decentralized from Ministry of Commerce (MOFCOM) to commercial departments of provinces, autonomous regions, municipalities or even directly to the state-level economic and technological development zones. Read the rest of this entry »
for Dezan Shira & Associates, the foreign direct investment legal and tax practice responsible for China Briefing 
