By I-Ting Shelly Lin
In March, the Beijing Municipal Administration of Industry and Commerce, the Tax Bureau, the Commission of Development and Reform, and other relevant bureaus issued a series of policies and measures designed to improve the ease of doing business in the capital city. Beijing businesses now enjoy simplified establishment procedures, reduced costs, and greater transparency on the government’s actions.
The reforms should be familiar to anyone who has read a World Bank Doing Business report: manual transactions are now online; procedures have been streamlines and shortened; costs have been reduced. Every little counts. The initiative will undoubtedly help businesspeople in the capital.
Perhaps more interestingly, the initiative follows direction set by the president’s office in 2017: metropolitan cities like Beijing were told to lead efforts to improve the business environment. National-level reforms changed China’s investment landscape significantly for foreign investors last year; subnational reforms like Beijing’s may lead the way in 2018.
Foreign investors in Beijing should review the reforms to understand if there are any benefits that may be derived, while other observers should look at the Beijing reforms as a possible marker for cities like Shanghai, Guangzhou, and Shenzhen.
Beijing may very well set the tone for reforms in other cities over the year ahead.
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Establishing a business
The authorities have shortened the registration process for newly established companies. Now, newly established companies may complete the entire registration process for business operation five days after submitting an application, compared to the previous 15+ days.
The authorities also plan to establish one-stop service stations for business registration in each district of the city. The service stations will provide “one window,” accepting all application materials that are required by authorities to obtain a business registration.
However, in a bid to encourage online business registration, the authorities have shortened the online process from eight days to between one and three days. The online application process should proves fastest for most businesses, as same day approval is possible. An estimated 10,000 enterprises have obtained electronic business licenses in Beijing.
Further, the government is now offering free official chops for newly-established enterprises, which will be automatically recorded to an exchange database between Administration of Industry and Commerce (AIC) and Beijing Municipal Public Security Bureau (PSB).
This measure is designed to reduce setup costs; enterprises in Beijing are expected to save a total of RMB 60 million (US$9.54 million) annually.
The authorities have combined a number of processes under one platform, which will reduce the property registration time to between one and five days. Transaction, tax, and registration department processes have now been streamlined and moved online under a single platform.
Following the reform, the authorities expect over 90 percent of applications to be completed through this online real estate ownership registration platform by the end of 2018.
First time applications for VAT invoices are now more efficient. This new process will allow taxpayers to collect the equipment, as well as paper invoice, at their local tax bureau within one day of the online payment.
The authorities have streamlined the application for housing fund. Applicants now only need to complete one form, compared to the old six.
The reform includes provisions to support small and medium-sized enterprises (SMEs), namely through a reduced guarantee cost, and a new one-time financial guarantee evaluation process.
In order to reduce capital guarantee companies risk on financing for small and micro-sized businesses, the Beijing municipal government and the central government established an RMB 500 million (US$79.54 million) guarantee fund to support small and micro businesses to pay loans.
Reports show that this fund has already supported more than 3,000 small and micro businesses.
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The authorities are now able to provide approval for automatic import and export licenses within one day, compared to the old five day processing time. The authorities have also reduced the processing time for online quarantine from 36 hours to two hours.
The authorities now plan to provide project approvals simultaneously, rather than separately by department. Further, the amount of time required for the examination of new construction projects has been reduced from 109 days to between 29 and 44 days.
Obtaining basic services
The authorities have reduced the overall number of documents, as well as the amount of information, required to obtain electricity.
Small- and micro-sized businesses, for example, no longer need to fill out any paperwork, and the total number of procedures have been cut in half. The reform also grants small and micro-sized enterprises access to savings up to RMB 1.2 billion (US$191.4 million) of total electricity expenses.
The authorities have also limited the turnaround time for applications enterprises to obtain access to public infrastructure services, including electricity, water, gas, and heat. The application now takes under 15 working days to process.
Social insurance guidance
The Beijing Municipal Human Resources and Social Security Bureau put forward 12 specific measures and 30 guidelines to handle social insurance issues, including social insurance registration and account management.
Applicants applying for social insurance are now only required to visit social security institutions no more than one time. 80 percent of future social insurance administrative affairs will be able to be completed online.
Applicants are also now able to make appointments through online platforms and WeChat when applying for social insurance.
Major services like the registration of insurance, reporting of increase and decrease of personnel, change of information, and declaration of payment are now open for applications every business day of the month.
Moreover, the government has built social insurance exchange service platforms that offer the convenience of paying social insurance via cyber banks, mobile banks, or third-party payment methods.
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Increasing foreign economic participation
Beijing’s business environment reforms are just some of the city’s recent measures to promote investment.
For example, the municipal government released guidelines to attract foreign investment to Beijing. The city promises to help multinational companies establish headquarters in Beijing by promoting key industry parks and encouraging foreign investment into high-end technologies.
It also recently released Guideline on Expanding Market Openness to Foreign Investors and Improving the use of Foreign Capital, which encourages investment in science and technology, Internet and information, culture and education, finance, commerce and tourism, and health and medical services.
Further, the authorities in Beijing will also seek to encourage foreign talent to come to the city. This is incentivized with medical and endowment insurance, support for obtaining local school placement for children, as well as granting foreign talent the opportunity to purchase commodity housing and register for property rights.
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