China to Provide Supportive Fund for Outsourcing Service Providers

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Apr. 30 – The Chinese Ministry of Finance (MOF) and Ministry of Commerce (MOC) jointly released the “Circular Concerning the Effective Implementation of the Application for and Administration of Developmental Funds for Enterprises Undertaking International Outsourcing Services for 2013 (Caiqi [2013] No.52)” on April 9, 2013, which will provide retrospective supportive funding to enterprises that offer outsourcing services to foreign clients anytime between July 1, 2012 to March 31, 2013.

In order to encourage the development of China’s outsourcing services industry and, hence, steer foreign trade growth away from the current reliance on the exporting of goods, the MOF and MOC have both offered supportive funding to outsourcing service providers since 2008. This funding is predominately used to support:

  • Model cities’ building of public service platforms;
  • Obtaining internationally accepted accreditations for outsourcing service providers;
  • Personnel training for outsourcing service providers; and
  • The provision of training services to outsourcing service providers from training institutions (including colleges)

Qualified outsourcing service providers should fulfill the following requirements:

1) Foreign trade business operator registered in China with an enterprise legal person status, and having truthfully filed the relevant reports as required by the Service Outsourcing Statistics Reporting System;

2) No record of administrative punishments pertaining to import and export, finance, tax, foreign exchange and customs;

3) Having signed mid- or long-term outsourcing service contract(s) with an outsourcing company and having had fulfilled one of the following conditions:

  • The enterprise’s revenues from providing outsourcing services is no less than US$500,000, with more than 50 percent of the revenues having come from providing outsourcing services to foreign clients; or
  • The enterprise’s revenues from providing outsourcing services is no less than US$5 million, with more than 35 percent of the revenues having come from providing outsourcing services to foreign clients

4) Employees with college degrees or above who are capable of providing outsourcing services, market expansion and project management activities constitute more than 70 percent of the enterprise’s total employees.

Qualified training institutions should meet the following requirements:

  • Possess practitioner qualifications to train outsourcing service providers
  • Equipped with space, facilities, professional teaching material and faculties that meet the requisite conditions
  • Possess experience in providing customized training programs for enterprises that offer outsourcing services
  • Equipped with a sound financial system and qualified financial management staff
  • The relevant training project is non-profit in nature
  • No misrepresentation or concealment of the training institution’s previous year’s financial reports

Supportive funding includes the following:

  • RMB5 million to model cities to be used for purchasing equipment for improving and maintaining public technology, information and training service platforms.
  • Up to RMB500,000 to enterprises for maintaining and upgrading programs that have obtained specified certifications (such as SWIFT and CMM; up to three certified programs per enterprise).
  • Up to RMB4,500 for training support for each additional new staff member with a college degree or above hired by outsourcing service providers on contracts with terms that exceed one year.
  • Up to RMB500 for each additional staff member with graduate degree hired by a training institution on contracts with terms that exceed one year.

Procedures and application deadlines vary by city. The deadline for each city to file applications to the MOF and MOC is June 10, 2013.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email china@dezshira.com, visit www.dezshira.com, or download the company brochure.

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