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May 1, 2008
Guangdong Issues Guideline for "On-Site
Transformation" of Processing Trade Enterprises
The Hong Kong Special Administrative Region Government's Economic and Trade
Office in Guangdong (GDETO) has learned that Guangdong Customs has implemented
the Customs Guideline for "On-Site Transformation" of Processing Trade
Enterprises (Trial Implementation) to facilitate the "on-site transformation" of
processing trade enterprises.
"On-site transformation" refers to the establishment of a foreign-invested
enterprise by an enterprise originally engaged in processing with supplied
materials commissioned by a foreign company. The new FIE is to be established on
the existing processing site of the enterprise to continue to carry out
processing trade business. Such establishment is necessitated by the change in
business mode of the foreign company. The guideline sets out procedures for the
customs registration of "on-site transformation" of processing trade
enterprises, including handling of non-priced equipment and bonded materials,
transfer of equipment, and formalities for advance lifting of customs
supervision on the equipment.
For details of the guideline in Chinese, please visit GDETO's website at
http://www.gdeto.gov.hk/chi/letter/docs/080418.doc.
April 13, 2008
 A call
for celebration By Joan Chen
I was born in Shanghai in 1961 and grew up during the Cultural Revolution.
During my childhood, I saw my family lose our house. My grandfather, who studied
medicine in England, committed suicide after he was wrongly accused of being a
counterrevolutionary and a foreign spy.
Those were the worst of times.
Since the Cultural Revolution ended in the late 1970s, however, I have witnessed
unimaginable progress in China. Changes that few ever thought possible have
occurred in a single generation. A communist government that had no ties to the
West has evolved into a more open government eager to join the international
community.
A state-controlled economy has morphed into a market economy, greatly raising
people's standard of living. It's clear that the majority of the Chinese people
enjoy much fuller, more abundant lives today than 30 years ago. Though much
remains to be done, the Chinese government has made rapid progress in opening up
and trying to be part of the international community.
Last month I went to China and spent four weeks visiting Shanghai, Beijing, Hong
Kong and Chengdu. The people I met and spoke with are proud and excited about
the Beijing Games. They believe that the Olympics are a wonderful opportunity to
showcase modern China to the rest of the world. Like many Americans, most
Chinese people are disturbed by the recent events in Tibet. But after watching
the scenes of violence and arson by the rioters, some believe that the
government is doing the right thing in cracking down to restore order.
The Olympic torch just passed through California. In a resolution criticizing
China, Chris Daly, a member of the San Francisco Board of Supervisors, said that
demonstrating against the torch relay would "provide the people of San Francisco
with a lifetime opportunity to help 1.3 billion Chinese people gain more freedom
and rights." To his credit, Mayor Gavin Newsom did not sign Daly's resolution.
This statement could not be further from reality. For one thing, the Chinese are
a proud people. They want freedom and greater rights, but they know they must
fight for them from within. They know that no one can grant them freedom and
rights from afar. The stigma of Western imperialism and the Opium Wars also
remains a strong reminder of the past, and Chinese people do not want their
domestic policies to be dictated by outside powers. They also do not want the
United States to boycott the opening ceremonies of the Games. The U.S. boycott
of the 1980 Games in Moscow and the Soviet boycott of the 1984 Olympics in Los
Angeles accomplished nothing. A U.S. boycott of the opening ceremonies in
Beijing would be counterproductive for relations between the two countries.
For decades, anti-China human rights groups in Washington have spent millions of
dollars denouncing China. To many Chinese, it seems that this lobby is the only
voice that's acceptable or newsworthy in the U.S. media and to the U.S.
government. But times are changing. We need to be open-minded and farsighted. We
need to make more friends than enemies. Remember what a little ping-pong game
did for Sino-U.S. relations in the 1970s? Let's celebrate the Olympics for what
the Games are meant to be — a bridge for friendship, not a playground for
politics.
Joan Chen is an actress and director. She became a U.S. citizen in 1989. She
wrote this commentary for The Washington Post.
April 12, 2008
Settling matters through arbitration
When it comes to disputes, many Chinese enterprises first think of litigation.
But legal experts suggest arbitration is also an effective and efficient method
to resolve differences. At a recent seminar on international arbitration, local
enterprises were encouraged to make good use of arbitration. The seminar was
jointly organized by the Beijing Arbitration Commission, China International
Economic and Trade Arbitration Commission and Jones Day International Law Firm.
Over 100 participants including senior experts from Chinese and foreign
arbitration institutions, scholars, legal counsel and representatives from
renowned Chinese and foreign enterprises, attended the seminar. As China's
economy continues to grow, there is greater interaction between Chinese and
foreign enterprises and the number and scale of disputes, such as intellectual
property rights, trade and human resources, is likely to grow.
Tao Jingzhou, a partner at Jones Day Beijing office, says arbitration is being
used more widely by the international community as an important tool to resolve
disputes arising from international economic and trade activities. This is
because of the many advantages arbitration brings. These include simple
procedure, high degree of autonomy, easy enforcement, confidentiality, and the
increasing number of professional arbitrators.
Tao says arbitration amounts to nothing more than a private forum, chosen by the
parties, with a decision and award granted by an arbitrator, applying the
procedural rules chosen by the parties. The main advantage of arbitration is the
time factor, Tao says. If properly planned, an arbitration procedure can take
place within a few months, particularly if the parties choose to designate a
fast-track procedure to deal with certain type of disputes.
The parties also have an opportunity to choose their own arbitrator, and
accordingly, may decide to utilize the services of an expert with knowledge of
their particular dispute, rather than a legal expert with little knowledge of
the practical issues in dispute. The parties may even decide to be represented
by experts rather than by legal representatives.
Tao adds confidentiality is also a big advantage.
April 9, 2008
Protesters' behavior sullies their message
- SCMP
The behavior of protesters who have tried to sabotage the Olympic Games
torch relay can only be condemned. Whatever point they were trying to make has
been lost by the reckless and violent manner in which they have disrupted an
event that is about unity and peace.
Democracies provide a plethora of avenues to voice concerns such as those over
Tibet and human rights in China. Hijacking the symbolic start to the world's
foremost sporting occasion is not a valid route. To do so, as happened in Paris
yesterday and London the day before, is, as Beijing Olympic organising committee
member Sun Weide so correctly observed, "disgusting". Those using the occasion
to take China to task must bear firmly in mind that there is a time and place to
make their voice heard.
Demonstrators in Paris and London purposefully ruined the relay by trying to put
the flame out. How this achieves their goal of highlighting alleged human rights
abuses on the mainland is a mystery. The athletes who so proudly represented
their nation as torch-bearers had their moment of glory robbed. Onlooking crowds
who had come to revel in the Olympic spirit similarly lost out. Far from being
the display of free speech that some observers contended them to be, the actions
of Tibetan activists were, instead, a show of the loutish side of the protest
movement.
The consequence was clear as the flame passed through Paris yesterday: the
torch-bearers were kept far from crowds who had turned out to see them by a
cordon of 65 motorcycle police, 100 firemen, 100 police on in-line skates and
nearly 50 vehicles with more than 200 riot police. It would be a shame if such
security became a feature of the relay as it passes in coming days through San
Francisco, New Delhi and other cities where activists have promised protests.
But Paris also showed how protesters can get their message across peacefully.
Athletes involved were wearing buttons reading, "For a better world", while the
city hall was draped with a banner supporting human rights. These may be low-key
ways of pointing out China's deficiencies when it comes to the grievances of
activists, but they still let Beijing know of their concerns in no uncertain
terms.
Demonstrators have the right to make their point, but they must not do so
through disrupting official events, with media-grabbing stunts or boycotts. If
there are to be demonstrations, they must be peaceful and orderly and staged in
an appropriate manner. Police have every right to take firm action against those
who deliberately attempt to disrupt the torch relay.
China is showcasing its developments through staging the Olympics; they are, in
effect, the nation's coming out party. But the Games themselves are grounded in
international togetherness with the sports and the athletes involved firmly at
the centre. Politics have no part in this. To use the occasion to push an
agenda, as Tibetan activists have so far done with the torch relay, is to
denigrate the event and those taking part. Mixing politics with sports is not in
the spirit of the Games.
Multi-entry visa ban until after Games -
Hurdle to mainland trips for frequent travelers
Beijing has stopped issuing multiple-entry visas, risking major inconvenience to
foreigners who travel to the mainland regularly, especially on business. Hong
Kong travel agents say the ban will stay in place until after the Olympic Games.
Travelers are now restricted to single- or double-entry visas valid for 30 days.
Multiple-entry visas that have not expired are still valid.
Andrew Work, executive director of the Canadian Chamber of Commerce, said the
ban would create serious inconvenience for foreigners living and working in Hong
Kong. "This is a real hassle for foreign small- and medium-sized business owners
... it's bound to slow business down and we hope that normal access to the
mainland will be restored soon."
One travel agent who declined to be named said: "People have been asking to
renew their multiple-entry visas but no one can get more than a double-entry
visa. We were told this was because of the Olympics and that the ban would be
lifted in September after the Games had finished." Daryl Bending, of Concord
Travel, said even permanent Hong Kong residents who had previously been given
three-year multiple-entry visas were affected. "No one is being given more than
a double-entry visa. The reason given was the Olympics but there were
suggestions that after the Games things would return to normal," he said.
Agents said they were told of the move on March 27. Hong Kong-based China-visa
agency Forever Bright says on its website the ban will apply until October 17.
The Office of the Foreign Ministry Commissioner in Hong Kong was unavailable for
comment.
Mr Work said: "I found out at a chamber meeting for the chairs of all the
chambers in Hong Kong. It's headed by [Chief Secretary] Henry Tang Ying-yen. At
the end of the meeting someone mentioned the ban on multiple-entry visas. It
took us all by surprise. Even Henry Tang didn't know." A senior source from the
Hong Kong General Chamber of Commerce said: "We have got similar complaints and
this will hinder business activities."
A government spokesman said: "The Hong Kong General Chamber of Commerce recently
raised concern about new visa arrangements implemented by mainland authorities
and the administration is looking into the matter."
Travel agents also said the cost of single- and double-entry visas had risen.
The typical cost of a single-entry visa obtained through a travel agent for a
British passport holder is now HK$850 for a single-entry visa and HK$1,050 for a
double-entry one. At the end of last year, a six-month multiple-entry visa cost
HK$1,080.
Australians, Canadians and most Europeans can expect to pay HK$500 for a
single-entry visa and HK$600 for a double-entry one. Six-month multiple-entry
visas for these nationalities previously cost about HK$450.
The move has surprised Howard Young, the tourism sector legislator. "The ban
will create a lot of inconvenience. I hope it's only temporary," Mr Young said.
Visas are taking longer to process. Paul Porter, a lawyer and regular mainland
visitor, said he had been told a visa now takes four days.
April 1, 2008
Who are they to judge? Western leaders are using Tibet to politicize the Beijing
Olympics with no regard to their own shortcomings By Michael
Chugani
It was fine when nations united in condemning the brutality of China's 1989
Tiananmen crackdown. Subsequent global pressure rightfully shone a bright light
on Beijing's terrible human rights behavior. But what we are now seeing is not a
conscience-driven joining of nations to put China right again. What we are
seeing is a ganging up of western leaders to use the unrest in Tibet to
embarrass China in its proudest moment - the staging of the 2008 Olympics.
They are acting as if they are a cabal of crusading white knights whose moral
duty it is to define right and wrong for others. Britain's Prince Charles tells
the Tibetan freedom movement he won't attend the Olympics opening ceremony. The
president of the European Parliament, Hans-Gert Pottering, threatens a
European-Union-wide boycott of the ceremony if Beijing uses force to quell
rioting mobs in Lhasa. French President Nicolas Sarkozy says he, too, may not
go, to protest against Beijing's behavior.
The latest to join this circus was US President George W. Bush - the man who
ordered the occupation of Iraq. Reliant on Beijing to help advance other
American interests, such as reining in North Korea and Iran, Mr Bush says he'll
keep his promise to attend the Olympics, but has lectured the Chinese for
occupying Tibet.
Maybe it is a western fear of a rising China that explains this behavior, or
maybe it's moral outrage - something that western leaders are good at using
selectively - over China's heavy-handed presence in Tibet.
If it is moral outrage, how come we are seeing so little of it in the case of
Israeli heavy-handedness towards the Palestinians? If it is moral outrage, why
did Mr Sarkozy just visit Britain? Isn't the United Kingdom a co-occupier in
Iraq? If it is moral outrage, shouldn't Prince Charles boycott his own country's
staging of the London Olympics in 2012 to protest against the Iraq invasion
under false pretences?
But western leaders, when challenged on their hypocrisy, are always fond of
saying the issues are not alike - the Israeli-Palestinian issue is not the same
as the China-Tibet issue and the Iraq occupation is not the same as the Tibet
occupation. That's like saying it is OK for Israeli troops to use force on
innocent Palestinians but not for Chinese troops to use force on rioting
Tibetans, and it is all right to invade Iraq to rid it of non-existent weapons
of mass destruction but not to seize Tibet and claim it as part of China.
But, even if we accept that the issues are not the same, why then is the Beijing
Olympics the same as the Tibet issue? Why make attendance of the Olympics
ceremony dependent on China's handling of Tibet? One is a sporting event and the
other a long-festering political issue.
Yet we have showbiz celebrities such as Steven Spielberg, Richard Gere and Mia
Farrow linking the Olympics to everything from human rights and Tibet to China's
policy on Darfur. If there is fair play, when the time comes, they should be
calling for a similar boycott of the London Olympics to protest against
Britain's part in the invasion of Iraq, its refusal to give up its remaining
colonies and its silence over America's gulag at Guantanamo Bay. But don't hold
your breath.
China knew the eyes of the world would be on it when it won the right to stage
the 2008 Olympics.
Beijing saw the pride of hosting the Games as a good trade-off for promising
human rights improvements. It may or may not have foreseen the timely Tibet
uprising to embarrass it. But, in any case, shouldn't we trust China for now to
keep its promise to change its behaviour in return for the Olympics prize,
instead of pushing it into a corner and thereby risk turning it into a resentful
beast that sees the west as out to get it? In return for this trust, Beijing can
start by being more open in handling the unrest.
The Olympics belongs to the athletes. Let's keep it that way. Let China have its
day in the sun and, if it breaks its promise to change, there's plenty of time
to deal with that later.
March 26, 2008
Move to "Go West" reaps encouraging
rewards - The country's "Go West" policy to develop the lagging western regions
is gaining ground, a United Nations report has shown.
The heartening signs are largely from government efforts to improve trade and
investment, the UN Economic and Social Commission for Asia and the Pacific (ESCAP)
said in its latest annual survey of the region. The report highlighted trade,
specifically exports, of the western regions showing a more rapid rise than
those of the coastal regions, even though western regions started from lower
levels. "A particularly encouraging trend for China's neighbors is the
relatively rapid export growth seen in many western regions," the survey said.
"The government is encouraging this trend through extensive projects to improve
cross-border transportation."
The country's Xinjiang Uygur autonomous region, which shares borders with
Afghanistan, Kazakhstan, Kyrgyzstan, Mongolia, India, Pakistan, Russia and
Tajikistan, is being seen as China's gateway to Central Asia. The region's trade
with Central Asia has tripled since 2002, reaching a record $9 billion in 2006,
the report said. In the Guangxi Zhuang autonomous region, cross-border trade has
also grown with neighboring Vietnam, rising by close to 50 percent in 2006 to
$1.8 billion. Similarly, Yunnan province's trade links have reportedly expanded
with Laos, Myanmar and Vietnam, while Mongolia and Russia have reported rapid
increases in trade with the Inner Mongolia autonomous region.
The "Go West" policy, started in 1999, is aimed at narrowing per capita gross
domestic product (GDP) income disparities, currently considered among the
highest in the world, the ESCAP reported. Priorities of the western development
strategy include infrastructure construction, environmental protection,
industrial upgrading, human capital accumulation, and science and technology
research. The report added that growth in the western regions was also supported
by greater foreign direct investment and backed by research and development.
"Foreign direct investment, a focus of the 'Go West' policy, increased
substantially in a quarter of the western provinces," the survey added. he ESCAP
said that growth was reported for Tibet, Qinghai, Gansu, Xinjiang, Ningxia,
Guangxi, Chongqing and Yunnan, along with a recent rapid increase in foreign
direct investment in Sichuan, Inner Mongolia and Shaanxi. Research and
development spending also reportedly grew more rapidly in four of the 12 western
regions - Ningxia Hui, Tibet, Inner Mongolia and Xinjiang Uygur - than most
coastal provinces.
These, the ESCAP said, helped final consumption increase more "in a quarter of
the western provinces than in the majority of coastal provinces".
The country will see a moderate slowdown in growth this year, but remained
underpinned by strong domestic demand and government social spending despite a
slowing United States economy, the ESCAP also reported. The report expected an
easing in growth to 10.7 percent from 11.4 percent in 2007 - the fastest for
China in 13 years - as a result of a slowdown in exports and government measures
to cool growth. "Investment continues to be the main driver of growth, remaining
resilient despite government cooling measures and with support from low real
interest rates," the ESCAP said. "A slowdown in exports and the government's
measures to cool the economy are the main reasons for the moderation," the
survey said.
The ESCAP also downplayed any significant impact on China's economy resulting
from a downturn in the US economy due to the ongoing subprime credit crisis. "In
a worse-case scenario - where the United States economy goes into a recession -
the impact on China will not be as great as on other Asia-Pacific countries," it
reported.
In terms of China's overall trade, the country witnessed increasing exports to
the European Union last year, a shift which compensated for a steady fall in
exports to the US - China's second-largest export market, the report said. The
country also witnessed a boom in trade with Africa.
Growth also came in service exports, which rose globally by an average of 16
percent over 1995-2006. "China had the best performance in transport services
exports of all Asia-Pacific countries, growing at 34 percent per year over
2000-2006," the ESCAP reported. However, the country is facing an increasing
challenge from inflation.
Last year, inflation rose dramatically to 4.8 per cent - the highest in a
decade, and three times the 1.5 percent reported in 2006. Higher international
oil and food prices were identified as chief inflationary concerns. "Rising food
prices are a bigger inflationary concern than oil prices because food accounts
for a far higher proportion of consumer spending. Food price inflation
particularly hits low-income households," the ESCAP said in the survey.
The country's fast-paced growth was coming at an increasing cost to the
environment, while the loss of arable land to manufacturing also raises
concerns, the ESCAP warned. "The destabilizing effect of growth on the
environment is becoming more apparent. Air pollution, especially in large
cities, is increasing the incidence of lung disease," it said.
March 18, 2008
Chinese Customs to Implement New
Enterprise Categorization System from 1 April
According to China's General Administration of Customs (GAC), as from 1 April
2008, a new enterprise categorisation system will be implemented under which
consignors and consignees of imports and exports as well as customs agents are
classified into five categories, namely AA, A, B, C and D. Category AA and A
enterprises will be eligible for express customs clearance procedures; category
B will be subject to regular measures; while category C and D enterprises will
be put under strict surveillance. Enterprises meeting the respective criteria
may file their applications with the local customs authorities via the customs
office at the place where they are registered.
For details of the new enterprise categorization system in Chinese, please
visit:
http://www.customs.gov.cn/YWStaticPage/433/4c0797e5.htm
March 8, 2008
 Environmentally-friendly bags to
generate sales - "Bring your own" more common.
The "plastic bag ban" issued by the State Council calls on the whole of China to
stop producing, selling and using ultra-thin plastic shopping bags after 1 June
2008. Supermarkets, shopping centres, commodities markets and other retail
venues won't be allowed to give away free plastic bags and shoppers will have to
pay for plastic bags if they don't have their own.
While plastic shopping bags are conceived as consumable items, they're also
increasingly seen as a source of pollution on the Mainland. The excessive use
and improper disposal of these bags have resulted in a waste of resources and
environmental damage, authorities conclude.
Yet, there's no denying that supermarkets, shopping centres, commodities markets
and other retail venues rely heavily on plastic shopping bags. A medium-sized
supermarket uses tens of thousands of these bags each day on fruit and
vegetables alone.
In compliance with the government's "plastic bag ban", some supermarkets have
started cutting down on plastic bag consumption and promoting the use of
eco-friendly bags.
Prompted by publicity and guidance, some businesses have already started to take
advantage of the ban. Many shopping centres are offering eco-friendly shopping
bags as gifts with purchases. It turns out that consumers love these eco bags -
and stores have improved their reputation while promoting sales.
Some manufacturers are taking the opportunity to market "handy" shopping bags
that are durable, foldable and easy-to-clean. These bags come in various sizes
and colours, and also have novel and unique designs. Most are made of non-woven
fabrics, paper and new biodegradable materials.
Furthermore, consumers are willing to use environment-friendly shopping bags
that can reflect their age, status and taste.
These small shopping bags could constitute a huge potential market. Hong Kong
enterprises that have a leading edge in innovative design and marketing in the
packaging industry could be looking at plenty of opportunities.
87 Korean Firms Quit Qingdao Without
Paying Workers
In 2007, a total of 87 South Korean firms fled Qingdao. The illegal pullout
started in the second half of 2007 and the exodus led to a credit crisis for
Korean investment in China. This fly-by-night phenomenon is particularly common
in Qingdao, a city with a high concentration of South Korean businesses.
The Chinese and Korean authorities have opened all channels of negotiation to
help Korean firms leave China legally. A team from South Korea's Ministry of
Commerce, Industry and Energy has been dispatched to Qingdao to look into the
matter in the hope of repairing the tarnished image of Korean investment in
China. Chengyang is a district in Qingdao most affected by the illegal pullouts
and it accounts for 67.5% of the fleeing firms. According to Qingdao's foreign
trade and economic cooperation bureau, most of the companies affected are small
operations with an investment of US$300,000-500,000 and employing around 50
workers.
Shandong used to be a paradise for Korean investors due to geographical
proximity. According to China's Ministry of Commerce, there are about 46,000
South Korean firms in the whole of China, with about one third located in
Shandong, including 4,000 in Qingdao. There are over 100,000 South Koreans
living in Qingdao. In light of the importance of Qingdao to Korean firms, the
SME department under South Korea's Ministry of Commerce, Industry and Energy has
set up a representative office in Qingdao, while the city's foreign trade and
economic cooperation bureau also has a Korean section.
According to figures published by the representative office of the SME
department under Korea's Ministry of Commerce, Industry and Energy, 206 Korean
enterprises quit Qingdao without going through proper liquidation procedures
between 2001 and 2007. The number amounted to 87 in 2007 alone. These figures do
not include those in Jiaozhou and Yantai, which are by no means few in number.
Among these Korean firms that exit without proper liquidation, 15% were textile
enterprises and 30% were arts and crafts enterprises, with over 60% of them
being labour-intensive operations.
Super Luxury Hotel to Greet Shanghai World Expo
The management of Dubai's prestigious Burj Al Arab will be managing a
twin-block super-deluxe hotel in Shanghai's Xintiandi in a bid to offer better
supporting facilities to the Shanghai World Expo. Luwan district in Shanghai
took the lead in mapping out and kicking off 12 three-year action plans to
provide an additional 1.5 million sqm of commercial/office space and "luxury
accommodation" for the World Expo.
According to Li Zheng, director of the Luwan district government's research
office, Luwan will strive to upgrade its supporting facilities for the World
Expo by focusing on the construction of modern services clusters and the
improvement of urban living. The building of a super-five-star hotel forms an
important part of this endeavor.
The 27-storey 338-room twin-block hotel, initially named Hantang Hotel, sits on
sections 107 and 108 of Xintiandi. It is already at the interior decoration
stage, with official opening slated for summer 2008. A joint venture between
Shanghai Hotel Investments Ltd and the Shui On Group, the new hotel will be
managed by the world famous Dubai-based Jumeirah Group, which manages many world
renowned properties, including the super-deluxe Burj Al Arab in Dubai.
Luwan will have an additional 1.5 million sqm of commercial/office floor space
by 2010. Forty-two commercial restructuring projects are now underway on Huaihai
Road Central. Seven side streets on Huaihai Road will also undergo
transformation to form the Maoming South Road haute coutur street, Chengdu Road
modern lifestyle street, Yandang Road leisure activity pedestrian street, and
Madang Road classic taste street.
Foreign and Domestic Banks Actively Build QDII Brands
Since the launch of the qualified domestic institutional investor (QDII)
program on the mainland in 2006, various large foreign and domestic banks have
rushed to build their own brands and launch different types of QDII financial
products to meet the increasing demand for wealth management from mainlanders.
As of the end of October 2007, a total of 154 QDII bank products had been
launched by 16 foreign and domestic banks and the sales volume amounted to
Rmb35.196 billion and US$1.012 billion. Of these 154 products, 64 were offered
by 11 domestic banks capturing Rmb29.349 billion and US$0.317 billion in sales,
while 90 were sold by five foreign banks raising Rmb5.848 billion and US$0.695
billion.
Many of these QDII bank products have established a name in the market and have
built a brand in wealth management. The Industrial and Commercial Bank of China
launched the first wealth management product making offshore investment on
behalf of clients on the mainland and built the "Pearl of the Orient" brand.
Among this series, "Pearl of the Orient I" is the first QDII product investing
in offshore stock markets following the liberalization policy and
record-breaking sales have been attained. Other well-known investment product
brands established by domestic banks include "Huideyin" and "Haiyin I" of the
China Construction Bank, and "Delibao" and "Huijutong" of the Bank of
Communications. Investment products offered by foreign banks include "Dynamic
Return Investment" of the Standard Chartered Bank and "Jihuibao" of the Bank of
East Asia.
According to Li Fuan, director of the business innovation and supervision
department under the China Banking Regulatory Commission (CBRC), banks offering
offshore wealth management services are characterised by having a steady client
base, good reputation, extensive operation network, flexible and diversified
product designs, and rich product variety. The many offshore wealth management
products offered by them can meet the various demands of clients.
However, these products also have room for improvement. For instance, the sales
channels and coverage are limited, the marketing effort is not strong enough,
the brand advantage has yet to be formed, manpower support and backup system are
inadequate, etc. Also, policy constraints such as restrictions on investment
types, proportion and minimum amount have stifled the growth of QDII products.
With respect to the demand for wealth management, the vigorous boom in the
capital market in the last two years has greatly boosted the demand of mainland
investors for wealth management. The wealth effect of the stock market has also
caused saving deposits to flow in its direction. According to the statistics of
the People's Bank of China, in October 2007 the level of savings of mainlanders
dropped Rmb506.2 billion, the greatest drop ever in a single month. At the same
time, the trend of mainlanders terminating their insurance policies and
diverting the money to the stock market was obvious. The number of people
investing in securities and fund has continued to rise.
To meet the increasing demand for wealth management, CBRC will continue to
strengthen its support for commercial banks in providing offshore wealth
management services. Efforts will be made to create the conditions for further
liberalizing the investment market, allowing investors to participate more in
the international capital market. CBRC is also planning to extend the scope of
offshore stock market beyond Hong Kong to include other mature stock markets so
as to achieve a rational global distribution of assets for diversification of
risks.
According to Li, CBRC will conduct studies on the QDII business of commercial
banks, collecting information on the banks' development strategies, product
designs and marketing plans in relation to their QDII business. Meanwhile, CBRC
will call on the commercial banks to strengthen their ability in risk and
investment management, and will also continue with its efforts in enhancing
investors' investment experience and risk awareness so as to safeguard their
interests.
It can be expected that the demand for offshore wealth management of mainlanders
and the support of the central government will bring enormous business
opportunities for Hong Kong's professional service sectors such as financial
services, financial accounting, legal services and marketing.
Amid the increasing demand of mainlanders for wealth management, foreign and
domestic banks engaged in QDII business on the mainland have offered a large
variety of financial products but none of them have emerged as the leading
brand. Hong Kong financial institutions, with their rich experience in designing
and marketing financial products, coupled with the fact that Hong Kong is the
first stop of the mainland's QDII offshore wealth management business, have
first-mover advantage in formulating relevant marketing strategies and
developing QDII brands.
QDII can also drive the development of Hong Kong's marketing, accounting and
legal services sectors which can provide professional services for QDII business
such as market consultation, financial and legal services.
As China's QDII business is going to extend to international capital markets
beyond Hong Kong, Hong Kong's financial and other professional services sectors
stand to benefit by assisting the mainland to "go global" via Hong Kong.
March 5, 2008
Super Luxury Hotel to Greet Shanghai World
Expo
The management of Dubai's prestigious Burj Al Arab will be managing a twin-block
super-deluxe hotel in Shanghai's Xintiandi in a bid to offer better supporting
facilities to the Shanghai World Expo. Luwan district in Shanghai took the lead
in mapping out and kicking off 12 three-year action plans to provide an
additional 1.5 million sqm of commercial/office space and "luxury accommodation"
for the World Expo.
According to Li Zheng, director of the Luwan district government's research
office, Luwan will strive to upgrade its supporting facilities for the World
Expo by focusing on the construction of modern services clusters and the
improvement of urban living. The building of a super-five-star hotel forms an
important part of this endeavour.
The 27-storey 338-room twin-block hotel, initially named Hantang Hotel, sits on
sections 107 and 108 of Xintiandi. It is already at the interior decoration
stage, with official opening slated for summer 2008. A joint venture between
Shanghai Hotel Investments Ltd and the Shui On Group, the new hotel will be
managed by the world famous Dubai-based Jumeirah Group, which manages many world
renowned properties, including the super-deluxe Burj Al Arab in Dubai.
Luwan will have an additional 1.5 million sqm of commercial/office floor space
by 2010. Forty-two commercial restructuring projects are now underway on Huaihai
Road Central. Seven side streets on Huaihai Road will also undergo
transformation to form the Maoming South Road haute coutur street, Chengdu Road
modern lifestyle street, Yandang Road leisure activity pedestrian street, and
Madang Road classic taste street.
February 22, 2008
China's new individual tax threshold to go
into effect March 1
China's amended individual income tax law, which raises the tax levy
threshold from 1,600 yuan (about 220 U.S. dollars) a month to 2,000 yuan, will
go into effect on March 1, accompanied by some regulations on its
implementation. Individuals who earn money from contractual operations and
contract to lease businesses will also enjoy a raised tax threshold from 1,600
yuan to 2,000 yuan, according to the regulations.
This was out of consideration that the living costs of those individuals and
their family members had increased, said a joint explanation on the regulations
made by the Legislative Affairs Office of the State Council, Ministry of Finance
and the State Administration of Taxation.
Individual tax payers who have housing in China but work overseas, or live
overseas but earn income in China, will keep their tax threshold of 4,800 yuan a
month unchanged, according to the regulations. This will help reduce the gap
between tax thresholds of different taxpayers, the joint explanation said.
The raised individual tax threshold will reduce government revenues by 30
billion yuan annually, according to official statistics. It will also mean that
70 percent of income earners will be exempt from income tax, against 50 percent
now. The individual income tax cutoff point was raised from 800 yuan a month to
1,600 yuan starting in 2006. This was based on consumption expenditures for
basic living costs at the time.
However, the consumer price index rose several times last year, further
burdening low- and medium-income earners.
February 21, 2008
Guangzhou Likely to Raise Minimum Monthly
Wage to Rmb860
The labor and social security bureau of Guangzhou recently issued a notice
announcing that retrospective from 1 January 2008, with the exception of Huadu,
Panyu, Conghua and Zengcheng, monthly unemployment insurance compensation and
medical subsidies for the unemployed in Guangzhou have been raised to Rmb688 and
Rmb860 respectively. This adjustment has brought the total of the two benefits
to Rmb774/month, an increase of Rmb72. Back pay will date back to 1 January
2008.
The latest adjustment heralds even better news for the employed in Guangzhou ˇV
minimum monthly wage would be raised to Rmb860/month. According to regulations,
standard unemployment insurance compensation usually equals to 80% of local
minimum wage. Hence, the adjustment suggests that minimum monthly wage in
Guangzhou should be raised to Rmb860. According to news report, the new standard
of monthly wage would be effective from 1 April 2008.
It is understood that the labor and social security department of Guangdong has
established a system of making minimum wage adjustments once every two years.
Early this year, it was planned that the minimum wage across the province would
be raised by 12.9% on average on the basis of the 17.8% average increase in the
year before last. If Guangzhou is to raise its current minimum wage of
Rmb780/month to Rmb860/month, the increase falls within the provincial average.
New Rules on Environment and Livelihood
Take Effect in February
The Administrative Measures for the Prevention and Control of Environmental
Pollution by Electronic Waste, Measures for the Administration of Residential
Housing Maintenance Funds and other new regulations took effect on 1 February
2008.
Under the Administrative Measures for the Prevention and Control of
Environmental Pollution by Electronic Waste, units engaged in electronic waste
dismantling must make environmental impact assessment and build pollution
prevention and control facilities in accordance with law. Environmental
protection departments at county level and above must compile and publish a list
of units and individuals engaged in the dismantling of electronic wastes. Any
individuals and units (including individually-owned businesses) not on the list
(including provisional list) are prohibited from engaging in the dismantling,
utilisation and disposal of electronic wastes. The measures also ban the burning
of electronic wastes in the open or the disposal of such wastes by direct
dumping.
According to the Measures for the Administration of Residential Housing
Maintenance Funds, owners of residential and non-residential commodity housing
must make contributions to the maintenance fund based on the floor area owned.
The first installment of such contribution amounts to 5%-8% of the local
construction cost for each sqm owned. Misappropriation of maintenance fund is
punishable by confiscation of illegal proceeds and a fine up to 200% of the
amount misappropriated. Property management enterprises which misappropriate the
maintenance fund may have their business licence revoked if the circumstances of
the offence are serious.
Under the Measures for Land Registration promulgated by the Ministry of Land and
Resources, any transfer of land that is not registered has no legal effect even
if the transfer is made in accordance with law. However, inheritance and gift of
land have legal effect even if the land is not registered, but the land must be
registered when it is further transferred.
February 12, 2008
China Customs Relaxes Control on
Outsourcing Activities of Processing Trade Enterprises
To keep up with the changes in the development of the processing trade, the
General Administration of Customs (GAC) has decided to amend the Measures of the
Customs of the People's Republic of China Regulating Cargoes of Processing
Trade. Amendments include relaxing the restrictions on the contracting out of
processing activities by processing trade enterprises, allowing "operational
enterprises confined by their own production characteristics and conditions" to
commission contracting enterprises to process goods under processing trade for
them upon customs approval and completion of relevant procedures.
Formerly, only "processing trade enterprises confined by their own production
processes" were allowed to contract out such activities. Under the new measures,
processing trade enterprises can contract out their major production processes.
By so doing, processing trade enterprises can have their production processes
carried out in different factories, thereby solving production problems arising
from peak and low seasons and facilitating the relocation of their production
lines.
The amendments were examined and adopted by GAC on 4 January 2008 and
promulgated through Customs Decree No.168. The new measures will come into force
on 1 March 2008.
For details of the above decree in Chinese, please visit:
http://www.customs.gov.cn/YWStaticPage/433/c451612f.htm
February 5, 2008
Base for Overtime Pay Includes Fringe
Benefits and Bonus
According to the labor and wage department of the Guangdong Provincial Labour
and Social Security Office, the correct way of calculating overtime pay in
Guangdong is to take daily wage under normal working hours (8 hours) as the
base. The calculation formula is monthly wage under normal working hours divided
by 20.83, which is the number of working days a month.
The number of working days each month has been reduced from 20.92 to 20.83 when
the Regulations on Public Holidays for National Annual Festivals and Memorial
Days were amended, increasing the number of statutory holidays each year from 10
to 11.
According to the Regulations of Guangdong Province on Payment of Wages
promulgated by the provincial people's congress pursuant to the Labor Law and
other relevant laws, when an employing unit requires employees to work overtime
or extends their working hours, the workers should be paid overtime based on
their normal daily or hourly wage. The overtime pay should be 150% of daily or
hourly wage for working days, 200% of daily or hourly wage for rest days, and
300% of daily or hourly wage for statutory holidays.
As stipulated in the Regulations of Guangdong Province on Payment of Wages,
daily wage is monthly wage divided by the average number of working days each
month prescribed by the state, and hourly wage is daily wage divided by daily
working hours, which may not exceed eight hours.
The Guangdong Provincial Labor and Social Security Office also emphasised that
the base for calculating overtime pay is monthly wage divided by the average
number of working days each month (i.e. 20.83) based on an eight-hour working
day. For example, if an enterprise signs a labor contract with a worker offering
him a monthly package including Rmb1,500 in basic wage, Rmb200 in attendance
bonus and Rmb300 in other fringe benefits, it must take all three parts of the
package and not just the basic wage of Rmb1,500 as monthly wage under normal
working hours in the calculation of this employee's overtime pay. Benefits,
bonus and attendance bonus are also wage and remuneration for work done under
normal working hours and should therefore be included in the base for
calculation. In other words, the overtime paid to this worker should be Rmb2,000
divided by 20.83, and not Rmb1,500 divided by 20.83.
New Rules on Paid Annual Leave
The Regulations on Paid Annual Leave for Employees have finally gone into
effect. The following are some issues of particular concern to Hong Kong
businesses on the mainland. They are advised to have a good grasp of the
regulations as soon as possible to avoid getting into disputes with their
employees.
(1) How many days of leave is an employee entitled to have after working for six
years?
Some units originally offered employees "10 days annual leave after completing
five years of service". But under the new regulations, employees are entitled to
five days of annual leave after working accumulatively for 1-10 years, 10 days
of leave after working accumulatively for 10-20 years, and 15 days of leave
after working for over 20 years. Against this backdrop, how many days of leave
is an employee entitled to have after working for six years?
According to experts, the new paid annual leave regulations cover a wide
spectrum, and employees working in government departments, organisations,
enterprises, public institutions, private non-enterprise entities and
individually-owned businesses are protected by the regulations. The annual leave
mentioned in the regulations refers to a "minimum" standard. In other words,
units may not offer annual leave less than the standard prescribed in these
regulations.
Thus, an employee who has worked in a unit continuously for 1-5 years and does
not fit into the circumstances mentioned in Article 4 of the new regulations is
entitled to five days of paid annual leave provided that the leave regulations
of the unit have not changed. An employee who has worked for six years is still
entitled to 10 days of annual leave under the original leave regulations of the
unit. But if the unit's leave regulations are changed, the employee's leave
entitlement will have to follow the unit's new rules. Under the new regulations,
statutory national holidays and off days are not included in oneˇ¦s annual
leave. For employees who are entitled to winter and summer vacations according
to law, these will be deducted from their annual leave.
Enterprises are now busy coping with the new regulations. Units with an existing
level of annual leave higher than the new regulations said they would not cut
the days of annual leave for their staff. Other enterprises said that due to the
sudden increase in the number of people entitled to annual leave, they may treat
old and new employees differently, or "strike a balance" between the old and the
new to reduce the impact.
(2) How does "carried forward to the next year" work?
Under the new regulations, annual leave generally may not be carried forward to
the next year. But if any leave balance has to be carried forward to the next
year for production or work reasons, it may be only be carried forward for one
year.
According to experts, this has two levels of meaning. First, annual leave may be
taken in one go or several times within the current year. For example, an
employee may take a few days off in the first half of the year and take another
few days off in the second half of the year. However, one may not "overdraw" on
one's leave and take one's annual leave for next year, the year after next or
the years ahead. Second, a unit that needs to carry forward its employees'
annual leave to the next year may be required to seek approval from the
departments concerned. Detailed rules on this will be published at a later date.
The question of how the number of "years" is to be calculated, whether it is
calculated by calendar years or an employee's "actual years of service", will be
clarified in the implementation rules to be promulgated. As analysed by people
in the industry, the majority of work units may adopt the "actual years of
service" based on the nature of their business or make agreements in labour
contracts signed.
Some enterprises noted that after the promulgation of the new regulations there
are bound to be particular periods of time when more employees are inclined to
take their annual leave. They hope that employees would make applications in
advance according to the nature of their work so management can make
arrangements to prevent work from being affected.
(3) What are the standards for compensation and penalty?
In the case where a unit is unable to let its employees take annual leave for
work reasons, the unit should pay its employees compensation at 300% the daily
wage for each day of annual leave in addition to regular wage and fringe
benefits. As for the standards for daily wage, experts suggested using the same
method as for the calculation of base figures for overtime pay.
Some enterprises have misgivings about certain points of the new regulations.
For example, on the question of "the number of days of unclaimed annual leave",
given the lack of clarifications on "employees not taking their entitled annual
leave according to the arrangement of the employer", some enterprises are
worried that some employees may choose to "claim compensation instead of taking
leave", which is an abuse of the original intention of the legislation to
protect employees' rights. Instead of giving employees their much-needed rest,
this would increase the employer's payroll cost.
In the case where a unit does not give annual leave to its employees and does
not give compensation according to regulations, the personnel department or
labour security department of the local people's government at or above county
level will order it to make corrections within a given time limit. If it refuses
to do so, it will be penalised under relevant provisions of the Labour Law,
Labour Contract Law and Civil Servants Law. On the specific standards of
penalty, experts noted that in spite of calls for the enactment of paid annual
leave regulations in previous labour legislations, rules and standards of
penalty have never been clearly spelled out. A clear picture of the standards
for penalty would only be available after the promulgation of the implementation
rules.
No Age or Gender Limit in Recruitment Ads
Starting from 2008, recruitment ads may not include any limits on the age, sex
or education level of the applicants, or such practice will be considered
employment discrimination. Effective on 1 January, the Employment Promotion Law
creates a level playing field for equal opportunity in employment.
According to Wang Dexiu, deputy director of the Beijing labour and social
security bureau, the Employment Promotion Law stipulates clearly that all
employers and employment agencies must provide all applicants with equal
employment opportunity and employment conditions. Employment discrimination is
prohibited.
In recruitment ads, the right applicants can be sought by listing the type of
work, job nature and scope of suitable candidates under "Job Requirements". But
no age or sex limits must be imposed.
January 30, 2008
China to issue IPR strategy in 2008
After two and a half years of preparation, China plans to release its
national intellectual property rights (IPR) strategy this year, according to the
State Intellectual Property Office.
The strategy will have three stages: information, services and trade, said Tian
Lipu, head of the office, during a conference on Tuesday.
The strategy began to be mapped out in July, 2005. So far, China has drawn up 20
methods to protect IPR, including improving the protection system, strengthening
law enforcement and raising public awareness.
"The strategy is vital to fully implementing the power of the country's
intellectual property rights system and to promote the development of the
country's economy and science," Tian said.
Tian noted that in 2007, China saw significant progress in protecting IPR in
various areas, industries and companies.
Organizations for guiding the strategy were set up in 17 provinces, autonomous
regions and municipalities. Guangdong, Guizhou, Shandong and Shanghai
municipality have already issued their own strategies.
China will set up about 40 service centers for IPR protection. The centers will
provide consultations and financial support for those who can't afford to pursue
cases.
January 29, 2008
 Outbound tourism sector to open
wider
The China National Tourism Administration will pilot a project this year to
select joint venture tour operators to handle some outbound business. It is the
first time that the administration has decided to open its outbound business to
joint ventures and foreign investors. Shao Qiwei, head of the administration,
told a conference in Beijing on Friday that it will "steadily promote" the pilot
project, and open the industry wider, but further details were not immediately
available.
Foreign tour agencies and joint ventures are currently allowed to operate only
inbound and domestic travel, and are barred from outbound business, which is the
most lucrative part of the market. Opening the outbound market is not part of
China's commitments to the World Trade Organization. But the opportunities
offered by outbound travel have attracted many foreign operators to China,
according to industry insiders.
In recent years, a few foreign tour firms attracted by China's huge potential
have entered the country as joint ventures or solely funded branches. They
insist on keeping their business in China, even though that means they earn
little or have to suffer losses.
Positive signs began to emerge last year, when the tourism administration
allowed Hong Kong and Macao-funded tour agencies to cater to mainland tourists
in eight provinces and regions bound for the two special administrative regions,
a decision that has not adversely affected domestic Hong Kong and Macao tour
operators.
"There is no need to worry that opening outbound business to foreign firms may
throw the market into disorder. Similar cases, such as allowing in foreign
banks, have proven this will not occur," an industry insider said.
China's tourism sector is believed to have huge potential, as the World Tourism
Organization forecast it would grow into the world's fourth-largest source of
outbound tourists by 2015. By then, 100 million Chinese will travel overseas
annually.
Last year, 40.95 million Chinese traveled overseas, up 18.6 percent from 2006.
The administration forecast that the number of outbound travelers is expected to
increase 10 percent to 45 million this year.
"As our holiday system is improving, China will develop into an enormous tourist
market. The outbound and domestic travel markets will both develop fast," Shao
said.
Chinese tourists' outbound travel destinations have expanded from 20 in 2002 to
the current 134 countries and regions.
The United States is the latest to open its door to China. The first
group of Chinese tourists are expected to make trips there this spring.
January 22, 2008
SAT Launches National Crackdown on
Production and Sale of Fake Invoices
This year, the State Administration of Taxation (SAT) and the Ministry of
Public Security will launch a joint nationwide crackdown on the production and
sale of fake invoices and the illegal issuance of invoices.
The unlawful act of invoice frauds has been moving towards specialization and
going online. In view of this, SAT is determined to tackle the problem by
combining crackdown with prevention.
First, efforts will be made to strengthen control at source and improve the
management mechanism. The local tax authorities will make a thorough inspection
of invoice printing factories, with special attention paid to the purchase,
storage and use of special anti-counterfeiting products and the security
measures for every step of invoice printing. Tax revenue sources will be closely
monitored, while strict management over the collection, purchase and use of
invoice by taxpayers will be enforced to ensure the proper use and flow of
invoices in a legal, standard and orderly manner. Policy incentives will also be
given to taxpayers for the use of tax-control cash registers to promote the
control and management of invoices and tax revenue sources.
Second, a centralized crackdown on the production and sale of fake invoices and
the illegal issuance of invoices will be waged. SAT will join hands with the
Ministry of Public Security to crack down on the production and sale of fake
invoices and the illegal issuance of invoices and to smash criminal dens and
syndicates.
Third, action will be taken to curb the "buyer's market" for the production and
sale of fake invoices and the illegal issuance of invoices. Efforts will be made
to strictly enforce the financial management system and take effective measures
to curb the demand and "market" for the production of fake invoices and the
illegal issuance of invoices. As a general practice, for all income received
from production and business activities, invoices must be issued according to
the relevant regulations. Enterprises and establishments which have obtained
invoices by illegal means or invoices not measuring up to requirements may not
use such invoices to claim cost deductions or as reimbursement vouchers.
Fourth, efforts will be made to improve the relevant laws and administrative
regulations as soon as possible and to increase penalties for invoice-related
violations.
SAT has already submitted the revised draft of the Measures for Invoice
Management to the State Council. It has also suggested to the legislature that
steps should be taken to revise and improve the relevant laws and regulations,
and to tighten the criminal and administrative penalties for such acts as the
buying, carrying, mailing, transporting and peddling of forged invoices and the
transmission of illegal invoice information. This could provide a sound legal
basis for the prevention and crackdown of this type of crimes.
January 17, 2008
China Bans Production and Sale of
Ultra-Thin Plastic Shopping Bags from 1 June
The General Office of the State Council has recently issued a circular on
restricting the production, sale and use of plastic shopping bags. Starting from
1 June 2008, the production, sale and use of plastic shopping bags with a
thickness of less than 0.025 mm (ultra-thin bags) will be banned nationwide.
Supermarkets, shopping malls, commodities markets and other retail venues will
not be allowed to provide free plastic bags and shoppers requiring these plastic
bags will have to pay for them.
The circular also calls on the State Administration of Quality Supervision,
Inspection and Quarantine (AQSIQ) to speed up its work of drawing up national
standards for plastic bags and establishing a product quality supervision
mechanism for plastic shopping bag manufacturers. Enterprises that produce
ultra-thin plastic bags illegally, do not affix (print) the quality
certification logo on the plastic bags they produce as required, or engage in
other illegal or irregular acts, will be ordered to cease production in
accordance with the Product Quality Law and other laws and regulations. The
illegally produced products and ill-gotten gains will be confiscated and the
manufacturers will be fined accordingly.
The National Regulatory Commission for Standardisation has conducted studies on
drawing up the relevant standards since the end of last year. According to
informed sources, the project is fully underway and all the standards will be
ready before the 1 June deadline. The standards will cover product standards as
well as testing standards mentioned in the State Council circular. The
standardisation commission expects to publish a consultation draft for plastic
shopping bag standards before the end of January.
January 10, 2008
Customs-Approved Enterprises May Declare
Imports and Exports in Advance
Is it possible for an enterprise to make customs declaration before the
arrival of the means of transport carrying the import goods or before export
goods have arrived at the customs supervision zone in order to speed up customs
clearance? The General Administration of Customs has recently given the
following reply to this question on its website.
Article 18 of the Measures of the People's Republic of China Governing Customs
Declaration of Import and Export Goods which entered into force in November 2003
stipulates that with the approval of Customs, the consignee/consignor of
import/export goods and customs declaration agents may declare to Customs in
advance after obtaining the bill of lading or cargo manifest data, and
submitting for inspection the relevant papers, approval documents for
import/export cargoes and other documents required by Customs.
Advance customs declaration is an express customs clearance procedure that
allows enterprises to have all papers examined before the arrival of consignment
so that they can pick up their shipment as soon as it arrives. Like other
express customs clearance procedures, advance customs declaration must first be
approved by Customs on the basis of the enterprise's credit position. In
general, advance customs declaration requires that the manifest data for
import/export goods must be sent to Customs and that details such as product
name, specifications and quantities have been verified as correct. However,
express clearance enterprises approved by Customs may also make advance customs
declaration without manifest, but the manifest must be checked and verified at
the time of clearance, which means that the manifest must be sent to Customs
before customs clearance.
According to the same article, the validity of the licence of imports/exports
being declared for inspection and examination in advance should be the date on
which the Customs authority accepts the declaration concerned. According to
Article 13 of the Administrative Measures on the Levying of Customs Duty on
Import and Export Goods, for import goods declared in advance with Customs
approval before arrival, the tax rate in force on the declared date of arrival
of the means of transport carrying the said goods should apply.
Moreover, according to provisions in the Circular of the General Administration
of Customs on Issues Relating to the Advance Customs Declaration of Import Goods
under Temporary Safeguard Measures, goods subject to temporary safeguard
measures are not eligible for advance customs declaration except for the goods
of enterprises entitled to express customs clearance procedures.
The consignee of import goods or its agent may declare the goods to Customs
(both online or on paper) after the shipment and before the arrival of the goods
and after the inbound manifest has been sent to and confirmed by Customs (except
for advance declaration without manifest). For export goods, the consignor of
export goods or its agent may make customs declaration within three days of the
arrival of the goods at the customs supervision zone. In order words, advance
customs declaration is not without time limit. In practice, some enterprises may
make customs declaration a long time in advance, such as six months or even one
year in advance, in order to clear customs before their licence expires. Such
actions are in serious violation of Customs regulations.
January 2, 2008
State Council Announces Transitional
Preferential Policies for Corporate Income Tax
The State Council has recently issued a circular on the transitional
preferential policies for corporate income tax. According to the circular,
following the implementation of the new Corporation Income Tax Law on 1 January
2008, enterprises entitled to lower tax rates under the old law will be given a
five-year grace period before they are required to pay the statutory rate.
Enterprises formerly subject to a preferential corporate income tax rate of 15%
will pay tax at 18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011, and finally
25% in 2012. For enterprises formerly subject to a corporate income tax rate of
24%, they will pay tax at 25% starting from 2008. In the Table on the
Implementation of Transitional Preferential Policies for Corporate Income Tax
annexed to the circular, 30 provisions in tax laws, administrative rules and
relevant documents regarding enterprises entitled to transitional preferential
treatment are listed.
For details of the circular in Chinese, please visit:
http://www.gov.cn/zwgk/2007-12/29/content_847112.htm
December 29, 2007
China Publishes Second Catalogue of
Products under the Prohibited Category in Processing Trade 2007
China's Ministry of Commerce has officially issued Announcement No. 110 on
details of the Second Catalogue of Products under the Prohibited Category in
Processing Trade 2007 (Prohibited for Export), which will come into effect on 21
January 2008. The newly promulgated catalogue covers a total of 589 products
under 10-digit commodity codes mainly coming from industries such as
resource-intensive products, chemicals and steel products.
For details of the above catalogue in Chinese, please visit:
http://www.mofcom.gov.cn/aarticle/b/c/200712/20071205301279.html
December 18, 2007
Guangzhou Issues Emergency Circular to
Prevent Year-end Massive Layoffs
As the Labor Contract Law is about to come into force, Guangzhou has issued
an emergency circular to prevent companies from rushing to lay off workers ahead
of the implementation of the law. The emergency circular stipulates that any
incident of terminating the employment of more than 20 workers has to be
reported to the labor authorities, even if the termination is due to expiry of
contract.
The Guangzhou labor and social security bureau points out that many labor
contracts signed between employing units and their employees will expire on 31
December. The emergency circular serves to prevent employing units from
circumventing the new law by terminating such employment contracts as they
expire at the end of the year.
According to the Circular on Strengthening the Administration of Massive
Layoffs by Employing Units issued by the Guangzhou municipal government, any
enterprises, individual economic organizations, private enterprises, government
organs, government enterprises and social bodies at or below city level laying
off their employees on a large scale by means of dismissal, suggesting to the
workers that they should resign or change the nature of employment (e.g. change
to secondment or contract-based employment), or altering the terms of the labor
contract, will be subject to special administrationˇ¨ as from 31 December, no
matter whether the laid-off workers will be re-employed or sign a new labor
contract with a new employment unit.
The circular states that employing units can only carry out lawful massive
layoffs under two conditions: first, the enterprise is on the brink of
bankruptcy and has been ordered by the people's court to undergo reorganization;
second, the enterprise has run into great difficulties as regards production or
operation and falls under the enterprises in difficulty category confirmed by
the municipal government. Other than these, employing units must continue to
honor the labor contracts and may not dissolve the employer-labor relationship.
It is understood that currently many enterprises try to circumvent the Labor
Contract Law by two ways. One is they would not renew the labor contract with
their employees upon expiry in order to avoid signing non-fixed term contracts
with those workers who would have worked for the company for 10 years in the
following year. The other one is they would change the nature of employment to
secondment basis.
According to the Guangzhou labor and social security bureau, as labor contracts
are normally made on a calendar year basis, many of them will expire by the end
of the year. Under the circular, any employing unit terminating the service of
over 20 workers or more than 10% of its staff approaching the end of their labor
contract has to submit a written report to the labor and social security
department in advance.
Within 15 days upon receipt of the report, the labor and social security
department should give written comments to those enterprises found not meeting
the conditions for making massive layoffs. A copy of the comments will be sent
to the social security authorities, which will refuse to handle the application
for stopping payment of social security contributions by the enterprise
concerned. This move of not allowing non-compliant enterprises to stop making
social security contributions testifies to the fact that stringent measures are
adopted by the labor authorities to curb unlawful massive layoffs by employing
units.
For the full text of the Circular on Strengthening the Administration of Massive
Layoffs by Employing Units in Chinese, please visit
http://www.gzlss.gov.cn/newhtdocs/view_zcfg.php?id=2445
December 17, 2007
China to conduct first read draft laws on
food safety, state assets, social insurance
China's legislature is to conduct the first reading of three draft laws on
food safety, state assets and social insurance later this month. The 31st
session of the Standing Committee of the National People's Congress (NPC) was
expected to convene from Dec. 23 to Dec. 29, according to a statement issued
after a meeting of the chairman and vice-chairpersons of the NPC Standing
Committee on Monday. The draft law on food safety has been a hot topic in China
since 2005 due to increasing incidence of food scandal.
China now has a food hygiene law to regulate issues of food safety but many
lawmakers said it does not meet the need of practice. The draft, based on the
food hygiene law, proposed a food safety risk supervision and evaluation
mechanism. This was to provide a "key basis" for constituting food safety
standards and food-born disease control measures and to set up related
institutional systems covering food production, processing, delivery, storage
and sales, according to a statement issued by the State Council on Oct. 31 when
it passed the draft.
Li Changjiang, director of the General Administration of Quality Supervision,
Inspection and Quarantine (GAQSIQ), said last month that the draft law
encouraged supervision from the public and media. It also tightened the penalty
on producers that violated the law and relevant government departments that did
not serve their duty.
A national campaign to improve food safety and product quality was ending in
China on Dec. 25. The four-month action implicating various ministries and
departments had covered the production and distribution of food.
Most of the goals set before the campaign have been fulfilled and the next task
was to prolong the good situation by setting up an effective mechanism, Li said.
Draft amendments to the laws on frontier health and quarantine, the protection
of cultural relics and individual income tax would also undergo a first reading,
the statement said.
China was amending the law on frontier health and quarantine in response to the
International Health Regulations (IHR) 2005 issued by the World Health
Organization (WHO) that took effect in June, according to Zhi Shuping, the
GAQSIQ vice director, on the administration's official website in June. The
regulation, to control the cross-border spread of epidemics, such as plague,
cholera and yellow fever, had added new duties to the government departments.
Domestic laws and regulations also needed amending in line with it, Zhi said.
The WHO said on its website that the revised IHR established an agreed framework
of commitments and responsibilities for states and WHO to invest in limiting the
international epidemic spread. Under the regulations, the states would be
required to report all events that could result in public health emergencies of
international concern.
During the session, lawmakers would continue reviewing the draft anti-drug law
and the draft law on labor dispute mediation and arbitration. They would also
review the draft amendments to the laws on road transport safety, science and
technology progress, and prevention and control of water pollution.
They would also go through a report submitted by the chief executive of Hong
Kong Special Administrative Region (HKSAR) on the outcome of the public
consultation on the Green Paper on Constitutional Development. It also included
whether to amend the methods for selecting the chief executive and for forming
the Legislative Council in 2012.
The State Council, China's cabinet, would submit to the session three reports on
health care system reform, food and drug quality supervision, protection of
legal rights of employees and rural area development.
Guangzhou Launches New Version of Labor
Contract
Guangzhou's labor and social security bureau launched a new version of labor
contract on 3 December 2007 for enterprises to download from its website for
use. Most of the enterprises in the city indicate that they would use the new
version as soon as possible.
A major breakthrough of the new labor contract is that it includes special
provisions for probation period and requires enterprises to clearly state their
place of work and ensure that all employees have signed labor contracts. These
new changes are meant for the better protection of workers. Changes in the
provisions of the new and old versions also reflect a shift of emphasis in the
work of the labor department.
Many provinces and cities have launched new sample labor contracts recently.
Enterprises can choose whether or not to use them, but past experience suggests
that sample contracts are often adopted.
While small and medium-sized enterprises rarely draft their own labor contracts,
large enterprises may prefer using their own. Labor contracts prepared by
enterprises themselves must be examined by the labor departments. Contracts
containing provisions and wording not in compliance with the norm or removing
details to the disadvantage of the employer are considered to be unacceptable
and may not be used.
According to the Guangzhou labor and social security bureau, the time is not yet
ripe to require that all labor contracts be filed with the labor departments for
the record. Labor departments would only inspect labour contracts on a random
basis.
Shanghai Maps Out Three-Year Action Plan for World Expo
Pudong earlier held a roadshow for the promotion of investment in the Sanlin
World Expo Functional Area and announced its three-year action plan in the
run-up to the World Expo.
Ten large projects involving a total investment of Rmb6.5 billion have already
kicked off in Pudong's Sanlin district.
The Sanlin World Expo Functional Area, embracing "one centre, two belts and five
blocks", will have two basic functions, namely modern living and modern service.
The "one centre" is at the core area of the expo park, planned to house
Shanghaiˇ¦s urban public activities, fully serving the functions of displaying
science and technology and conducting cultural exchanges during the World Expo.
The "two belts" refer to the promenade along the Huangpu River and the Shangnan
Road industrial belt, which runs along the central axis of the World Expo site.
The "five blocks" include a business, convention and exhibition, cultural, and
creative industry block; a riverside ecological tourism block; a comprehensive
trade, commerce and regional headquarters block; a cultural, leisure and modern
living block; and a cultural, commerce and residential block.
According to the 11th five-year program for the Sanlin World Expo Functional
Area and the industrial development plan being drawn up, Sanlin will develop
commercial, cultural, information, intermediary and consultancy services along
the Bailianjing rivulet, Shangnan Road and other areas around the World Expo
Park. Meanwhile, district-level comprehensive commercial, cultural and
entertainment facilities will be built at the heart of Sanlin's Lingzhao
district on both sides of the Middle Ring Road. Industrial projects supporting
the Pudong New Area High-Tech Industrial Park will be developed at the Sanlin
Hengda commercial district, Beicai Urban Industrial Park and the Sanlin Urban
Industrial Site to the south of the Outer Ring Road. Creative industries and the
headquarters economy will be developed in the older part of Sanlin to the north
of the Outer Ring Road, the centre of Beicai district to the south of Gaoke Road
West, and the New Hope site in Zhangjiang to the west of Luoshan Road.
December 13, 2007
State Council Promulgates Implementing
Rules for Corporate Income Tax Law
On 6 December, China's State Council promulgated the Implementing Rules for
the Corporate Income Tax Law, which will come into effect on 1 January 2008.
In March 2007, the National People's Congress passed the Corporate Income Tax
Law of the People's Republic of China, to be enforced on 1 January 2008,
unifying the corporate income tax regimes for domestic and foreign-invested
enterprises on the mainland. The implementing rules were drawn up to explain in
detail the provisions of the Corporate Income Tax Law for its smooth
implementation.
Under Article 57 of the Corporate Income Tax Law, "old enterprises" which were
entitled to preferential tax treatments such as lower tax rates and fixed-period
tax reduction and exemption according to the previous tax law will be subject to
transitional preferential tax policies. In view of the massive content of these
policies and their transitional nature, the State Council will formulate the
transitional measures separately to ensure the stability of the implementing
rules. Therefore, the implementing rules do not provide for any specific details
on these transitional measures.
For details of the Implementing Rules for the Corporate Income Tax Law in
Chinese, please visit:
http://www.chinatax.gov.cn/n480462/n480513/n480902/7163829.html
December 4, 2007
Drive to auto developments in Dalian
 Volkswagen AG held its ground
breaking ceremony in October for Volkswagen Automatic Gearbox Dalian Co Ltd, its
first wholly-owned subsidiary in China, situated in the Dalian Development Zone.
This added another world-renowned auto parts company to the city.
The new company is Volkswagen's latest in the Dalian Development Zone after its
joint-venture engine production project with FAW. Increasing investment in
Dalian has become an integral part of Volkswagen's global strategy.
The new project is slated for building completion at the end of 2008 and the
company is to begin production in 2009. It will produce Volkswagen's latest
DQ200 double-shift automatic gearbox for its two sedan car joint ventures in
China - FAW Volkswagen and Shanghai Volkswagen.
According to Volkswagen global vice president Winfried Vahland, the DQ200
gearbox, which was originally designed for sports cars, makes use of the latest
double-shift gear-changing technology, saving fuel and reducing carbon emission
but still aiming to give drivers a better driving experience.
Dalian is of immense importance to the rejuvenation of this old industrial base
in northeastern China and Volkswagen will give new drive to the development of
car manufacturing and auto parts production in the city.
The ground breaking ceremony for this project is said to be only the start of
further cooperation between Volkswagen and Dalian. Dalian's government says
it'll support Volkswagen's further expansion in the city.
November 27, 2007
Serviced apartment market gains strength -
Lower entrance costs, higher returns and fewer regulations attract foreign
investors By Sandy Li
China's serviced apartment sector is on a strong growth path and the lure of
lower entrance costs, higher rental returns and fewer regulatory restrictions is
drawing foreign investors to the market, analysts say. Property consultant Jones
Lang LaSalle Hotels forecast that 1,380 new serviced apartments would come on
the market in Beijing over the next three years and 3,300 more apartments would
be released in Shanghai over the next five years. Foreign investors entering the
market also had their sights on second-tier cities such as Tianjin, Dalian and
Hangzhou, where the serviced apartment sector was still in its infancy, it said.
Comparatively unscathed by government restrictions, the serviced apartment
sector was becoming a popular target of foreign investors, said Angela Lee, a
Hong Kong partner specialising in property law at legal firm Baker & McKenzie.
Singapore-based Frasers Hospitality has taken on the management of a growing
number of properties on the mainland.
"China is a very important market for us and we are looking to rapidly expand
with the set-up of our new `gold standard' suites in first and second-tier
cities," Frasers chief executive Choe Peng Sun said. The group aimed to manage
more than 4,000 serviced apartments in over a dozen cities across the mainland,
Mr Choe said. Besides Beijing, Chengdu, Guangzhou, Hong Kong, Nanjing, Shanghai,
Shenzhen and Tianjin, Frasers is also talking to property owners in other
gateway cities such as Dalian, Suzhou, Xian, Chongqing, Hangzhou and Wuxi. "We
view second and third-tier cities as viable markets for further expansion as
economic growth is strong and investment costs are lower compared with
first-tier cities," Mr Choe said. Aside from securing management contracts,
Frasers said it was also looking at various forms of investment including
co-investment and acquisitions.
In September, the firm bought a 357-unit luxury residential project at Guanghua
Lu, Beijing's business centre, from Hong Kong-listed Sino-Ocean Land (SEHK:
3377, announcements, news) Holdings for US$130 million. The project is due to be
completed in the first quarter of next year.
Ascott Group, the biggest serviced-apartment operator in Asia and Europe, said
in May it aimed to boost the number of its serviced apartment units on the
mainland to 10,000 by 2010.
Derek Lai Kam-hung, a director of the hospitality investment department at DTZ,
said the operating costs for serviced apartment projects were lower than those
of a hotel since there were no function rooms, banquet halls and restaurants.
"But owners, particularly of properties managed by international operators, are
able to charge higher rates than ordinary residential projects since upscale
developments provide services similar to hotels," Mr Lai said.
David Ma, a director and general manager of Hon Kwok Project Management, a
subsidiary of Hon Kwok Land & Investment, said the company was "definitely"
interested in the serviced apartment sector. Hon Kwok converted 62 units at City
Square in Shenzhen into serviced apartments to cater for expatriates. "Most of
the apartments have been taken up by Japanese expatriates working in Shenzhen
since we put them on the market in June," Mr Ma said.
Rents for the serviced apartments, measuring from 40 to 70 square meters, ranged
upwards from 10,000 yuan per month, he said, compared with rents of 3,000 to
4,000 yuan per month achieved by individual owners in the same development. Hon
Kwok has kept one block at City Square for long-term investment and sold the
remaining five blocks to individual buyers who have also rented out their units.
Mr Ma said the company also planned to expand its serviced apartment portfolio
on the mainland under the Bauhinia brand, which also operates and manages
serviced apartments in Hong Kong.
Karen Li Kan Fung-ling, a director of corporate development at USI Holdings - a
sister company of Singapore-based WingTai Asia - said the company was confident
of the sector in view of growing arrivals of expatriates on the mainland. "There
is a huge demand. We will have five to six serviced apartment projects on the
mainland in the next three years," Mrs Li said.
USI has two serviced apartment projects in Shanghai and Beijing under its Lanson
Place brand. Lanson Place Jin Lin Tian Di Residences is in Shanghai and the
Beijing project is due for a soft opening in the second quarter of next year. Yu
Yang, the Shanghai chief representative of fund manager Grosvenor, said the
company chose to offer its recently acquired Lakeville Regency in Shanghai as
furnished apartments for lease.
In September, Grosvenor bought two 14-storey luxury residential blocks in
Shanghai's Xintiandi, developed by Shui On Land (SEHK: 0272). Sources said the
fund paid about 446 million yuan for the property. Mr Lai said top-end units in
Shanghai managed by international chains could charge as much as US$30 per
square meter per month.
November 26, 2007
 Foreign foraging in
Wuhan's food industry
According to Wuhan's agricultural bureau, foreign capital has captured a
growing share of the Wuhan market. In the first nine months of this year, sales
by 200 or more leading agricultural establishments at district level or above
reached an aggregate of Rmb12.3 billion, more than half of which was
attributable to foreign investment.
Hong Kong's Coland Group invested Rmb60 million in an aquatic products
processing base in Xinzhou early this year. When completed, it will be the
largest of its kind in Wuhan.
Also, letters of intent have recently been signed in Wuhan for cooperation in an
Rmb1.4 billion project involving China Resources Beer and another Rmb700 million
project with Xiamen Yinlu. It has also been confirmed that the Jiangsu Yurun
Group will build a Rmb800 million food processing project adjacent to Dongxi
Lake. Upon completion, this processing base will be able to handle the
slaughtering of two million pigs and deep-processing of 30,000 tonnes of pork
annually.
Existing industrial projects in Wuhan have also expanded their operations. COFCO
invested Rmb80 million to build a cold meat base in Jiangxia in November 2002.
The company has recently announced its plan to increase investment to build a
deep processing base for meat products.
What makes Wuhan's food industry so attractive to foreign capital? Xiao Xiaoqiu,
head of the industrial department of Wuhan's agricultural bureau says the city
is a transportation hub and enjoys advantages in accessibility, market and
financial services. These advantages allow enterprises to organize
industrialized production within the shortest radius for raw materials.
Dong Youxin, head of the foreign trade department of Wuhan's agricultural
bureau, said the arrival of foreign-invested enterprises not only helps increase
the value of local agricultural products and boosts their sale in the country
and overseas, but enriches the local market with a greater variety of foods.
China to tighten rules over investment
The Chinese government will be implementing stricter rules when approving new
investment projects and other new projects. According to a document published by
the State Council on Wednesday, all projects are required to comply with land
use, energy efficiency, market access and environmental protection criteria.
Information of projects requiring an investment of more than RMB 50 million,
will be recorded and updated by relevant departments and sent to upper-level
regulatory authorities. Beginning from January 2008, such projects are required
to disclose their basic information on the website or other means, for public
viewing.
The government will also be strengthening the supervision of approved projects
and retain the authority to halt or penalize projects, that are found to be an
infringement of the guidelines and rules.
According to the document, incompetent management and poor law enforcement have
resulted in excessive investment growth and duplications. As such, China has to
tighten rules over the supervision and management of projects.
The new rule was implemented as a result of growing concerns over the rapid
economic growth. GDP in the first three quarters grew by 11.5% over the same
period last year, while consumer price index (CPI) grew by 6.5% in October,
adding to the government's speculation on inflation.
Apart from growing GDP and CPI figures, increasing urban fixed-asset investment
also raised policy-maker's concern. During the first ten months of the year,
urban fixed-asset investment surged 26.9% year-on-year, while the figure in the
first nine months climbed 26.4% year-on-year.
Chen Jijun, senior analyst at CITIC Securities<600030>, expects the Chinese
government to implement a series of tightening measures to curb the fast
expanding economy, especially in the real estate sector.
China seeks balanced trade
China plans to increase imports from Latin America and Central and Eastern
Europe by introducing more products from these regions through an upcoming event
in Beijing to Chinese consumers.
The director of the trade development bureau of the Ministry of Commerce (MOC),
Feng Hongzhang said the exhibition of Latin American and Central and Eastern
European products is expected to attract more than 150 enterprises from 16
countries from the regions. "As the organizer of the fair, we also invited some
3,000 professional domestic buyers from trading companies and supermarkets,"
Feng said.
The exhibition, which will show case agricultural products, food, alcohol and
equipment during the three-day event, is scheduled to open tomorrow in Beijing.
This move intends to help products from these regions to be better known among
Chinese people, consequently increasing their exports to the country. It is also
is in line with the government's push to reduce its huge trading surplus.
Last year, China's trade with Latin American countries hit US$70.2 billion, up
39.2% from a year earlier, and China's trade with 13 countries in Central and
Eastern Europe more than doubled from two years earlier to reach US$22.6
billion, according to China's General Administration of Custom statistics.
The goal of the campaign is to achieve more balanced trade. Chinese government
expects enterprises from these regions to make full use of all international
fairs, expos and trading events to boost popularity of their quality products
and services in the Chinese market.
November 16, 2007
China Releases New Catalogue on Foreign
Investment in Industry
With State Council approval, the National Development and Reform Commission and
the Ministry of Commerce have jointly released the latest Catalogue for the
Guidance of Foreign Investment in Industry recently. The new catalogue, which
takes effect on 1 December this year, will replace the 2004 version.
In the new catalogue, revisions have been made mainly in the following five
areas:
Expansion of the scope of liberalisation and promotion of industrial structure
upgrade. In the manufacturing sector, foreign firms will be further encouraged
to invest in the high-tech, equipment manufacturing and new materials production
industries. In the services sector, China will, in fulfilling its WTO
commitments, actively and appropriately expand the scope of liberalisation by
adding "service outsourcing", "modern logistics" and other items to the
encouraged category and reducing items under the restricted and prohibited
categories. Meanwhile, foreign investment in traditional manufacturing
industries in which domestic enterprises have already mastered the necessary
technologies and have strong production capacity will no longer be encouraged.
It has also been clarified that the items under the restricted category in the
Catalogue for the Guidance of Industrial Restructuring will also apply to
foreign investment.
Resources conservation and environmental protection. In order to encourage
foreign investment in the development of the recycle economy, clean production,
renewable energy, ecological environment protection and comprehensive
utilisation of resources, relevant items have been added to the encouraged
category in the catalogue. Foreign investment is no longer encouraged in
projects involving important mineral resources that are rare in China or
non-renewable. Also, the exploration of certain important non-renewable mineral
resources is now off-limits to foreign investment, while foreign investment in
high energy consumption, high resources consumption and high pollution projects
will be restricted or prohibited.
Adjustment in export-oriented policy. In view of China's growing trade surpluses
and fast expanding foreign reserves, foreign trade policy that puts lop-sided
emphasis on exports will no longer be implemented.
Promotion of coordinated regional development. In line with the strategies of
developing the western region, boosting the rise of central China and
rejuvenating old industrial bases in the northeastern provinces, the provision
"apply only to the central and western regions" has now been removed from items
under the encouraged category in the catalogue.
Protection of national economic security. Prudence will be exercised in the
liberalisation of certain strategic and sensitive industries with an important
bearing on the nation's economic security. Appropriate adjustments will be made
to the relevant items to strike a balance between domestic development and
opening to the outside world.
November 6, 2007
Reaching for riches - The city of Yiwu is the major production center of
China's small goods, such as these cups, which are exported to the world. Zhou
Xiaoguang worked her way up to become a multi-millionaire. By
Xie Fang
Nearly three decades ago, teenager Zhou Xiaoguang struck it out alone to do
small business in Northeast China. She squeezed into a train with two big
packages full of embroidered goods. The weight of her load seemed to threaten to
put her on the ground. Her face drooped with exhaustion. The worse part was that
the Zhejiang native was too poor to afford a hard berth ticket. So, she spent
the following three days sitting in the corner of a carriage door. The place in
which she stood was so narrow, she couldn't even stretch her legs and the nearby
toilets filled the air with a foul stench. At that point, Zhou would have given
anything to be able to give up and go home.
"I felt as if I was wronged to have to start working as a vendor at such a young
age, and people hardly showed their respect. Instead, I become something of a
spectacle," Zhou recalls, frowning behind her huge desk. Today, her spacious
office takes up a tiny corner of the six-storey building in which she and 28
other family members live and work. The oldest daughter in the family, who had
to work hard to keep her little brother and five younger sisters from starving,
has become a billionaire who owns one of the world's largest accessories
manufacturing bases in Yiwu, East China's Zhejiang Province.
Currently she employs a workforce of 6,000, and her company's annual export
value has reached $30 million over the past few years. Her sales network covers
more than 70 nations. The delegate to the National People's Congress is not sure
how many business trips she has made by now - flying first class and staying in
five-star hotels - but she vividly remembers her early days when she lived as a
vagrant trying to get her business off the ground. "The experience that came
with these hardships is priceless," she says. The 46-year-old mother of two
enjoys having a big family. She and her 28 family members live in the top floor
of the family company's six-storey building in Yiwu's Qing Kou Industry Zone .
Everyone has a private bedroom and shares a huge living room, which is spacious
enough to play basketball. Three maids are responsible for the family's daily
meals, and two big round tables are set up in the dining room: One is for
adults, the other for children. Except for traveling, the chairperson of the
Neoglory China Holding Group (NCHG) seldom eats out and cherishes every chance
to dine with her family. After meals, she goes to her office and works late into
the night. "I am always the pillar of my family, while the family members
provide emotional support and care for me. We have a wonderful relationship,"
she says.
Zhou entered the accessories business in 1986, a year after she married Yu
Yunxin, who also sold embroidery. "What I noticed while making my early sales in
Northeast China was that local women loved colorful hair ornaments," she
recalls.
"I found it inspirational to see that everyone wants to look beautiful, whether
she is rich or not. So, I believed the business potential was huge." The couple
bought a booth at Yiwu's Small Commodity City. Her husband was responsible for
purchasing material, while she and her sisters manned the booth in the day and
processed accessories at night. Sometimes, even her youngest son would make
contributions to the family business. In 1995, they invested several million
yuan in opening an accessories factory in response to a call from the local
government to develop industry.
"The money was all of our savings from a decade of hard work. I could not help
worrying about what kind of life we would face if we failed," she admits. "But
my husband said we could start from scratch, as long as we are diligent and
determined." The company developed dramatically over the following years.
However, the management became a headache for Zhou because of her limited
educational background.
So, in the late 1990s, Zhou and several local enterprisers enrolled in the Party
School of the Central Committee of Communist Party of China, where the
countrywoman first learned about human resources and financial management. Since
then, she continued to invest in education for herself, as well as her staff, to
keep them on the cutting edge.
She invites experts or professors to teach at the company - paying the highest
premiums for the highest quality advice - sometimes for as much as 13,500 yuan
($1,800) per person per day. Currently, there are more than 4,000 accessories
enterprises in the city, 600 of which are run by her former employees. Rather
than reducing prices to remain competitive, Zhou has increased prices to make
room for these small enterprises to survive in the market.
"People of same profession don't have to be enemies," she says.
And she says she doesn't worry about other companies copying her products. "They
follow me so quickly that it only drives me to move even faster," she adds. In
2003, the successful businesswoman was elected as a delegate to the 10th
National People's Congress. She even put up her own money to fund an
advertisement on TV to garnish suggestions from the public so that she could
propose them at the congress. There is no doubt Zhou could enjoy a comfortable
life, especially since her elder son, who will soon complete a master's degree
in business in Britain, has offered to share her burden. But Zhou has no plans
of retiring.
"Running an enterprise is the process of learning and solving problems. From
this point of view, I am still learning," she says.
November 2, 2007
 
Regional freight transport market on
growth path - Quayside cranes....the first 6 eRTGs and 1 dual-hoist tandem-lift
were delivered in early August to DCB - Andrew Milliken joined MTL on July 1st
as Managing Director of Da Chan Bay
All signs point to strong growth in China's freight transport sector, across all
modes, according to Business Monitor International's China Freight Transport
Report for the second quarter of 2007. Over the next five years, freight carried
(measured in million tonne-km) is expected to grow at an averae of 15.6% per
annum, placing China at the higher end of BMI's Asia Pacific and world ranking.
The BMI report states that China scores relatively high on the freight sector
competitive environment, primarily because the market has begun to be opened to
foreign companies in rail, road, sea, air and general logistics. A significant
number of foreign companies, including the larger global players, are all
involved in China's freight transport sector.
Another area worth noting is BMI's assessment of China's labor force. The
official census to take place in China was carried out in 2001. The results
(which have been questioned by western demographers) show China had a total
population of 1.28 billion in 2001, an active population of 737 million and an
activity rate of 57.8%. According to official statistics, China's unemployment
rate is just 3.6%, a figure that excludes workers from state-owned enterprises
who have recently been made redundant, and the millions of Chinese peasant
farmers who work only part of the year. The average wage in manufacturing in
China was 917 RMB (US$110.70) per month in 2002, or 12.5% higher than in 2001.
The BMI report continues to say that the China labor force is comparatively
heavily regulated, according to the World Bank's Employment laws index. Its
score of 47 indicates that regulations are tighter than the East Asia and
Pacific average, and a bit tighter than OECD high-income states. Disaggregating
the data, the regulations for hiring workers are more relaxed than those for
firing workers, with scores of 17 and 57 respectively, which suggests a slightly
less regulated workforce than regional peers.
China, the BMI quarterly report concludes, is expected to undergo a massive
program of urbanization in the next 20 years that could see as many as 300
million peasant farmers leave the land in search of work in the cities. The
challenge will be for authorities to create new jobs for these people.
On the microeconomics side, manufacturing centers continue to boom and reinvent
themselves, with stricter environmental requirements--both government- and
privately-driven, ethical production, more socially responsible labor force
relations, and, most importantly perhaps, the greater understanding of the need
for supply chains and logistics. Dr Victor Fung, chairman of the Li & Fung
Group, at a recent seminar held by the Li & Fung Institute of Supply Chain &
Logistics, said that companies can capitalize on the opportunities provided by
China's burgeoning economic growth through redesigning their value chain to
drive efficiency and performance. Dr Fung said that lessons can be learned from
recent product recalls and defective goods coming out of China, as both buyer
and suppliers ensure that the supply chain contains the checks and balances that
could prevent these type of problems.
The shipping and transport of cargo to and from the manufacturing regions of
China continues to rise as the raw materials flow in and the goods head for the
North American and EU markets. There have been interesting trends in these flows
in the past summer months. In the transpacific, for instance, while imports into
West Coast ports for the first quarter this year were still about 2.4 million
TEUs compared to 982,238 TEUs for exports, the growth rate, however, showed that
exports were growing faster at 4.9% than imports (3.7%). For the shipping trade,
this scenario provides an improved balance to the trade even as some exporters
from the US West Coast ports start to feel the pinch of heightened trade with a
lack of empty boxes or not enough capacity on carrier vessels. And with the
lower dollar, the trade is healthier on the transatlantic as well, as the
European market hankers for more imported goods.
Maersk Line, inarguably the world's largest shipping company (see AXS-Alphaliner
graph), have had to improve capacity management to deal with changing trends in
the world's busiest trade lanes. "Maersk Line has more effectively managed our
capacity this year, following the capacity rightsizing done during the prior
slack season. The contracting season allowed us to make advances on a number of
fronts, not least, improved surcharge collection. While we have not yet seen the
end of this year's peak season demands, it has progressed smoothly. Demand |
