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Modern Art in China, a time line

Modern Art in China, a time line

In February 1989, at the “China/Avant-Garde show” at the National Gallery of Art—the first Chinese government-sponsored exhibition of experimental art—the female artist Xiao Lu whipped out a pellet gun and fired two shots into a mirrored sculpture made from two telephone booths , which she created with another artist, Tang Song. Police officers swarmed into the museum. The international media covered the story as an act of rebellion. Xiao was embraced by the Chinese intelligencia as a hero and became the most famous female Chinese artist ever. Some even said the incident was an inspiration for the Tiananmen Square demonstration a couple months later.

Later Xiao said that the motivation for her action was not political or aesthetic but emotional. She was expressing anxiety over her relationship ship with Tang which was on the decline, and firing at a reflection of herself. Many found this revelation trivialized what was perceived as a great revolutionary act.

 

In the mid 1990s, the art scene was still largely underground and most artists were poor, often living in squalid conditions. Modern artists were accused of being sources of “spiritual pollution” and worried about being arrested if they talked to foreign reporters. With money in short supply, censors watching them and no galleries to market their works, they mounted one-night shows that doubled as rent parties in their small apartments.

 

On his only visit to China in 1982, Andy Warhol wrote: “I went to the Great Wall. You know, you read about it for years. And actually, it was really great. It was really, really, really great.”Warhol painted Mao because Life magazine called him the most famous man in the world.

 

 An exhibition featuring Chinese artists at the Saatchi Gallery in London called “The Revolution Continues” drew lots of attention in late 2008. On the Chinese modern art scene today John Howkins wrote in The Australian, “One of the most vibrant scenes is contemporary art. New movements multiply with bewildering speed, as cities, artists and international dealers promote their favorites... the Stars Group, Scar Art, the Red Brigade, Nativist Realism, Cynical Realism, Rational Painting, the Stream of Life, the New Generation...and Political Pop through to Youth Cruelty and Visual Comics. This rapid turnover is caused partly by Chinese people's instinct to operate in groups and partly by their mania for labels. [Source: John Howkins, The Australian July 28, 2008]

 

Chinese Art Schools and Artists

 


 

Work by Wang Guangyi Artists have traditionally been required to belong to the China Artists Association. Until fairly recently there were very few art galleries in China.

 

The Central Academy of Fine Arts in Beijing is China’s top art school. Less than 10 percent of those who apply are accepted. Among the famous contemporary artist that have studied there are Liu Wei, Fang Lijun and Zhang Huan, Faculty members include the artists Liu Xiaodong, whose works have sold for as much as $8.2 million, Sui Jianguo, regarded as China’s best sculptor; and Xu Bing, the winner of a MacArthur Foundation genius award. Many of the school’s professors have become millionaires from selling works by their students.

 

In the Maoist era the Central Academy of Fine Arts occupied a small area near Tiananmen Square, It had only 300 students and professors who mostly taught Social Realism and prepared students to work for the state. In 1989 its students created the “Goddess of Democracy” statue that was a focal point of the Tiananmen Square protests. Today the school occupies a new 33-acre campus and has 4,000 students, a 160,000 square-foot museum, spacious classrooms and studios and the latest video editing equipment. Students tend to be less idealistic than they were in the past and more commercial minded.

 

Works by students who have not even graduated from the Central Academy of Fine Arts in Beijing are being featured at major galleries and being sold for thousands of dollars. Collectors often show up at the university to search for rising talent. Some artists sign their works with their e-mail addresses and cell phone numbers.

 

Faculty members at the Central Academy of Fine Arts have told the New York Times that today’s students are less interested in politics and more interested in their personal struggle. One artist, whose works feature subjects that look himself dressed in women’s clothes, performing violet sexual acts, told the Times his art tells “my own story, my mentality. The whole process of art is like a process to cure myself.”

 

Traditionally students have been taught to paint by painting the same figurative works over and over in a training method that emphasized discipline. At the Central Academy of Fine Arts these training methods have given way to a freer teaching styles that encourage students to look deep in themselves of inspiration,

 

Other noteworthy schools include the China Academy of Art in Hangzhou (formally known as the Hangzhou Academy) and the Sichuan Fine Arts Institute. The latter has a reputation for producing innovative painters. In 2007 it received more than 64,000 applications for 1,600 openings.

 

Chinese Modern Art in the 1980s

 


 

Work by Xu Bing In 1982, a couple years after the Cultural Revolution ended, there were only 100 or so graduating art majors in the whole country. Today there are around 260,000. The revolutionary Stars Group was formed in the late 1970s.

 

 The relatively free-wheeling 1980s is regarded by some as a sort of golden age of Chinese modern art. Many critics argue that more innovative works emerged during that period than during the painting boom that followed when artists became more commercially aware and made “a fortune manufacturing machines to read credit cards.”

 

The 1980s is regarded as key period in Chinese modern art. Artists from the influential 1985 New Wave include Wang Guangyi, Xu Bing, Geng Jianyi and Hunag Yongping. Some of their works are clearly copies of Picasso, Munch and the Dada artists but others are original and offer insight in what Communist China was like as it was emerging from the Cultural Revolution.

 

In 1988, an exhibition of relatively modest nude oil paintings in Beijing was singled out by Communist officials as a display of Western decadence and closed down. A protest over the closure grew into larger protests that led to the crack down at Tiananmen Square.

 

The “China Avant-Garde” show in 1989 at the National Gallery if Art in Beijing was a defining moment in the Chinese modern art scene. It was the first contemporary art exhibition permitted in an official forum. It lasted for only a few hours. It was shut down after a performance artist entered the show with a gun and shot two bullets through her work—a pair of mannequins in phone boxes.

 

One famous work from the 1980s is A Book form the Sky by Xu Bing. Attracting a lot of attention when it was shown at the National Art Museum , it consists of a bunch of books and wall scrolls that appear to replicate ancient literary text but up are comprised of intelligible characters. The work was interpreted by many to be criticism of Communist propaganda.

 

Chinese Modern Art in the 90s

 


 

work by Zhang Xiaogang In the early 1990s the art scene in Beijing was centered around an artist colony called Dong Un (East Village) behind the city’s Third Ring Road. There was a very lively underground scene there. Shows were held in basements in out-of-the-way areas to avoid police detection. If an exhibit stayed open a week that was considered a long time. Artists sometimes moved four or five times a year. After one controversial exhibition in 2001 police raided the colony and arrested some of the artists and razed the village and built a public park in its place.

 

“Apartment art’ described the movement and experimental and avant guard artists who showed their art in private or alternative spaces because had no other place to show their art. The artist Wang Gongxin told the China Daily, ‘The government didn’t allow our works to be shown in public galleries,, so young artists of the time were looking for a private space to transform into a contemporary space.”

 

"Cynical Realism" is the name of the movement that sprung up after Tiananmen Square. Typical of this period was an oil painting by Fang Lijun showing a bald man with his back to the viewer, facing towards clonelike men in grey Mao suits; and sculpture by Wang Keping called “Fist,” consisting a wooden bust of a man with a giant hand wrapped around his mouth.

 

Modern Chinese art got its first major dose of international attention when Princess Diana showed up at the 1995 Venice Biennial, which featured several Chinese artists. Collector and fashion designer David Tang, the one who got the princess to come, later told Vanity Fair magazine, “I got the most famous person in the world to come and give us a lift, If this doesn’t succeed, nothing will.”

 

Chinese Modern Art in the 2000s

 


 

Factory 798 Artists working in the late 1990s and early 2000s explored the social dislocation and isolation associated with the economic reforms or did various takes on Mao or Chinese iconography.

 

The Beijing International Art Biennial was an enormous exhibition at the Millennium Monument Art Museum and the National Art Museum in Beijing. Dubbed “the largest international art gathering ever held in China,” its featured many non-Chinese artist. Shanghai also has a biennial. Large exhibitions of works by modern Chinese artists have also been held at galleries in London, New York and other places.

 

Even with this high profile exposure artists complain they get little institutional support and don’t have enough places to exhibit their works. Some have taken up living together in warehouses and pulling their resources so they can pay their bills and work. Some have been harassed by police. One group of performance artist cooked up a dish made with potatoes and jewelry and placed then in condoms that were buried in the earth. For their trouble police arrested them and put three them in jail for two months.

 

Chinese Modern Art Scene in the 2000s

 


 

work by Zeng Fanzhi On the art scene in China, Arne Glimcher, owner of a prestigious New York gallery, told Vanity Fair, “It’s a little bit like Germany after the Second World War. With the culture being annihilated, it was fresh to start again. Or like America in the 1950s when we really didn’t have an indigenous style, so we were fresh to start from scratch.”

 

On the art scene in Shanghai, one American architect and collector told Vanity Fair,“There’s a kind of energy. In the art districts, ladies in Bentleys pull up dressed to the nines, and slog through mud to get to a gallery where they’re seeing a new artist’s work, while some deranged person is quivering off to the side. There’s a visual bombardment to the place.”

 

On the art scene in Beijing one collector told Vanity Fair, “”If you got to other art centers of the world—London, New York, Los Angeles—you may hear about a new gallery opening here and there. In Beijing, you hear about entire neighborhoods opening up overnight. The construction happens so quickly, and the number of galleries and the amount of art that’s proliferating is just astounding.”

 

Li Xianting is regarded are leading force in the Beijing modern art scene. He was the editor of an official art magazine before he was canned for supporting controversial art. Gaudy Art is China’s version of Pop Art.

 

Arguably the most happening place for artists in China is Factory 798 in Beijing. See Factory 798, Beijing

 

 The Ullens Center for Contemporary Art (UCCA), opened by a Swiss collector in 2008 has become the center of art life in Beijing. The Pace Gallery has moved aggressively into China, opening a huge space here two years ago and signing up some of the biggest names in Chinese contemporary art, like Hai Bo, Li Songsong, Zhang Xiaogang and Zhang Huan,

 

2008 Jeffrey Hays

 

China key economic indicators for 1980...

China key economic indicators for 1980, 1990, 2000, 2011 and 2016.

Economic indicators for China 1980-2016.

SOURCE: IMF, WORLD BANK

 

 
Main indicators
1980
1990
2000
2011
2016

SOURCE: IMF, WORLD BANK

Real GDP growth (annual %) 7.8 3.8 8.4    
Gross domestic product, current prices (US$, billions) 202.46 390.28 1198.48 6988.47 11779.98
Gross domestic product per capita, current prices (US$) 205.12 341.35 945.6 5183.86 8522.86
Industry, value added (% of GDP) 47.10 42.83 45.76 46.75  
Gross domestic product based on purchasing-power-parity (PPP) share of world total (%) 2.19 3.88 7.14 14.35 18.04
Total investment, (% of GDP) 52.41 36.14 35.12 48.65 46.23
Gross national savings, (% of GDP) 48.84 39.22 36.83 53.81 53.47
Inflation, average consumer prices 50.86 100 200.49 261.38 303.9
Inflation, average consumer prices (% change) 5.99 3.1 0.4 5.5 3
Volume of imports of goods and services (% change) 17.38 -16.88 24.8 16.52 14.78
Volume of exports of goods and services (% change) 23.03 12.84 25.22 15.56 14.97
Value of oil imports (US$, billions) 0.66 5.21 18.9 226.75 230.33
Value of oil exports (US$, billions) 3.55 3.68 4.63 27.48 26.29
Population, millions 987.05 1143.33 1267.43 1348.12 1382.16
General government revenue (% of GDP)   19.02 13.78 20.87 22.71
General government total expenditure (% of GDP)   20.98 17.05 22.44 22.56
General government gross debt , (% of GDP)   6.95 16.44 26.88 10.93
Current account balance (US$, billions) 0.29 12 20.52 360.54 852.22
Unemployment rate (as % of total labour force) 4.9 2.5 3.1 4 4
Gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP (Current international dollar, billions) 247.89 910.93 3015.43 11316.22 18667.27

 

 

 

Pritzker Architecture Prize Awarded...

Pritzker Architecture Prize Awarded to Chinese for First Time

Chinese architect Wang Shu wins “architecture world’s highest honour”

 

Combining the use of old materials to celebrate the past with contemporary forms, Chinese architect Wang Shu won the 2012 Pritzker Architecture Prize on the 27th. Wang Shu is not only the first Chinese citizen to be awarded this honour, he is also the fourth youngest winner. Previously, Chinese-American I.M. Pei had also won this award in 1983.

According to reports, Thomas J. Pritzker, the head of the Hyatt Foundation which organises the prize, announced the winner Wang Shu on the 27th. He said, “The selection of Mr. Wang, 48, is an acknowledgment of “the role that China will play in the development of architectural ideals.”

 

Pritzker pointed out: “The question of the proper relation of present to past is particularly timely, for the recent process of urbanization in China invites debate as to whether architecture should be anchored in tradition or should look only toward the future. As with any great architecture, Wang Shu’s work is able to transcend that debate, producing an architecture that is timeless, deeply rooted in its context and yet universal.” [...]

 

Wang Shu was born in Xinjiang in 1963. He graduated in 1985 from Nanjing College of Engineering majoring in Architecture and gained a doctorate in Architecture in 2000 from Tongji University. He is currently the head of Architectural Arts School at the China Academy of Art, and is known as “The most cultured architect in China”.

 

A troubled history, but a bright future

A troubled history, but a bright future

We live in extraordinary times. The fifth year approaches of financial crisis in the developed countries. Significant parts of the world are unstable. But despite these challenges, there is much to celebrate in the relationship between China and the UK.

Britain, of course, is focused on two major events this year, the Olympics and Her Majesty’s Diamond Jubilee. But this is also the 40th anniversary of full diplomatic relations between our two countries. I believe history will judge the current strength of the Sino-UK partnership as being of pivotal importance in global affairs.

 

China and Britain have much in common. On the global stage, we share heavy responsibilities. We are two of the five permanent members of the United Nations Security Council, and our countries play a crucial role in seeking resolution to the financial crisis in forums such as the G20. There are many further tasks of mutual interest, from resolving poverty alleviation to tackling climate change.

 

We have a shared history of groundbreaking contributions that have benefited all humanity. China’s inventions include paper, printing and the compass. Britain was the cradle of the industrial revolution that profoundly reshaped the world. Both countries have very deep cultures that have contributed much to the world in the arts, literature and philosophy.

 

During the past 300 years, Sino-UK links have gone through a number of positive and negative cycles. Official ties between the two countries started with Macartney’s mission to China in September 1792, though historians have described this as “a dialogue between the deaf and the blind”. During the first Opium War in 1840, Britain forced open the door of China with gunboats. Relations between China and the UK and the rest of the West have since been defined by inequality, with China at a disadvantageous position.

 

There were some bright intervals. Seventy years ago, Chinese and British people stood shoulder to shoulder against the invasion of China by Japan. Then, those ties went into a deep freeze following the foundation of the People’s Republic of China in 1949. On March 13, 1972, China-UK relations were raised from charge d’affaires to ambassadorial level. Forty years on, in 2012, our countries are closer than ever before.

 

There have been some crucial milestones during the past four decades that have led to this point. The restoration of China’s position as one of the five permanent members of the UN Security Council was a key first move. Other notable steps were the British commitment to the one China policy on the issue of Taiwan and Tibet; the successful resolution of the Hong Kong question; the establishment of a comprehensive strategic partnership; high-level dialogue mechanisms, such as the annual summit of premiers: plus, economic, financial and strategic dialogue.

 

These strong political links have been matched by an extraordinary economic transformation. Sino-UK bilateral trade reached $58.7 billion in 2011, more than 200 times that in 1972, and the premiers of our countries have committed to raising the sum to $100 billion by 2015. Two-way investment has surged from zero to nearly $20 billion – in particular, Chinese investment in the UK is growing fast.

 

The collaboration between our countries is constantly widening and deepening.

 

Co-operation is advancing in the areas of energy efficiency, environmental protection, branding and financial services, and there are joint efforts involving infrastructure development, small businesses and research.

 

People-to-people and cultural exchanges are on the rise – there are now 47 pairs of sister provinces and cities – and there is a choice of more than 10 direct flights between our countries every day. More than 120,000 Chinese students study in the UK, compared with just 100 back in 1972. A total of 19 Confucius Institutes and 60 Confucius Classrooms have been opened in Britain. No other European country can compete in this regard. China will also participate in the 2012 London Book Fair as the “market focus” country, which will involve more than 300 related activities.

 

Of course, China and the UK differ in history, culture, social systems and values, so one should not be surprised when differences arise. In a mature relationship, some important principles need to be followed – we should respect each other, treat each other as equals and seek common ground while accepting the differences.

 

Over the past two years, since I came to London, I have visited many places in Britain and I have been deeply impressed by the enthusiasm for the growing links between our two countries. There is great mutual benefit to be had if we work to take the relationship to new highs over the next 40 years.

 

Liu Xiaoming is China’s ambassador to the United Kingdom

 

English Heritage China

China: The Case for Change On the Road...

China: The Case for Change On the Road to 2030

China should complete its transition to a market economy -- through enterprise, land, labor, and financial sector reforms -- strengthen its private sector, open its markets to greater competition and innovation, and ensure equality of opportunity to help achieve its goal of a new structure for economic growth.

 

 

These are some of the key findings of a joint research report by a team from the World Bank and the Development Research Center of China’s State Council, which lays out the case for a new development strategy for China to rebalance the role of government and market, private sector and society, to reach the goal of a high income country by 2030.

 

The report, “China 2030: Building a Modern, Harmonious, and Creative High-Income Society”, recommends steps to deal with the risks facing China over the next 20 years, including the risk of a hard landing in the short term, as well as challenges posed by an ageing and shrinking workforce, rising inequality, environmental stresses, and external imbalances.

 

“China’s leaders have recognized that the country’s growth model, which has been so successful for the past 30 years, will need to be changed to accommodate new challenges,” said World Bank Group President Robert B. Zoellick.

 

“The case for reform is compelling because China has now reached a turning point in its development path. Managing the transition from a middle income to a high-income country will prove challenging; add to this a global environment that will likely remain uncertain and volatile for the foreseeable future and the need for change assumes even greater importance.”

 

China has an opportunity to avoid the middle-income trap, promote inclusive growth, without further intruding on the environment, and continue its progress towards becoming a responsible stakeholder in the international economy,” he said.

 

The report lays out six strategic directions for China’s future: completing the transition to a market economy; accelerating the pace of open innovation; going “green” to transform environmental stresses into green growth as a driver for development; expanding opportunities and services such as health, education and access to jobs for all people; modernizing and strengthening its domestic fiscal system; and seeking mutually beneficial relations with the world by connecting China’s structural reforms to the changing international economy.

 

“Central to the report’s findings is the need for China to modernize its domestic financial base and move to a public financial system-- at all levels of government -- that’s transparent and accountable, overseen by fewer but stronger institutions, to help fund a changing economic, environmental, and social agenda,” Zoellick said.

 

“The reform agenda, with a stronger and more flexible financial sector, the promotion of innovation, and green growth as drivers of development, can lead to opportunities for creating new jobs and additional productivity within China as well as new opportunities for foreign firms.”

 

There is growing recognition, supported by the findings of the research report, that China’s growth will decline gradually in the years leading to 2030 as China reaches the limits of growth brought about by current technologies in its current economic structure. The report advocates Chinese policymakers should shift from a focus entirely on the quantity of growth to include the quality of growth as well.

 

The report makes the case for the government to redefine its role -- to focus more on systems, rules and laws -- to boost efficient production, promote competition, and reduce risks. It recommends redefining the roles of state-owned enterprises and breaking up monopolies in certain industries, diversifying ownership, lowering entry barriers to private firms, and easing access to finance for small and medium enterprises.

 

Reforms should include commercializing the banking system, gradually removing interest rate controls, deepening the capital market and further developing independent and strong regulatory bodies to support the eventual integration of China’s financial sector within the global financial system. Financial reforms in the next two decades should be decisive, comprehensive and well coordinated, following a properly sequenced roadmap. A priority is to liberalize interest rates according to market principles.

 

On land reform, priority should be accorded to protect farmers’ rights over agricultural land, expanding land registration and rental rights. To assist with labor reforms, changes in the residency permit system – the hukou – are a priority. While progress on hukou reforms will depend on fiscal reforms that balance revenue raising and spending authorities across different levels of government, it should begin and be completed by 2030.

 

To accelerate the pace of innovation, the report advocates greater efforts to build countrywide research networks, steps to improve the quality of tertiary education and links with global networks, supported by a stronger rule of law and intellectual property rights enforcement. It says such an open innovation system would be a prerequisite to benefit fully from global innovation links.

 

For China to advance the “going green” development agenda, it will need to look at long term market incentives to encourage enterprises and households to go green. This should include more public investments, and the better design and enforcement of regulations to complement market incentives, such as taxes, fees, tradable permits and quotas, and eco-labeling. China can establish itself as a global green technology leader by implementing stringent and effective policies to reduce greenhouse gas emissions. Stringent emissions reduction policies, such as carbon trading or carbon taxes, could spur innovation in green technologies.

 

To reverse rising inequality, the report says China will need to focus on a social protection system appropriate for China in 2030, with a special emphasis on the poor. It lays out the case for “flexicurity”. This can include reforms in pension and unemployment systems so workers have reasonable support in their old age or when jobless. This can ensure comprehensive coverage of pension insurance, especially for rural people and migrant workers in cities. The report also warns that extending the current level of urban services and social protection to rural residents and migrants -- well over half the population -- will pose a significant fiscal burden and should be implemented prudently.

 

To fund China’s priorities in the decades ahead, and to deal with external shocks, the report calls for further fiscal system reforms. These should include improving the efficiency of raising revenue and changing fiscal relations between different levels of government as well as strengthening the efficiency of public spending. There is untapped potential for revenues through higher taxes on energy consumption, taking dividends from state-owned enterprises, and levying taxes on personal incomes, motor vehicles, and property.

 

The report proposes a sequencing of reforms, as well as quick wins and actions to address short term risks. Support for reforms will be stronger if the plans are based on full participation throughout all levels of society. The biggest risk is that vested interests will try to thwart reforms.

 

As a key stakeholder on the global economy, China can consider how its structural reforms relate to rebalancing changes globally. China should support free trade and back a multilateral agreement on investment. China’s long-term interests lie in global free trade and a stable and efficient international financial and monetary system, relying on multilateral frameworks to help shape the global governance agenda.

 

China’s growing weight in world trade, the size of its economy and its role as the world’s largest creditor will make the internationalization of China’s renminbi inevitable. Acceptance of the RMB as a major global reserve currency will depend on the pace and success of financial sector reforms and opening of its external capital accounts.

 

For more information on this, please visit: www.worldbank.org/china

 

Tips for doing business in China

Tips for doing business in China

Research:

  • Firstly, consider what your company’s objectives are in China and carefully research your target market before developing a formal business plan. Discuss your strategy with a local representative who understands the market and economic conditions.
  • Consider the unique selling points of your product or service and whether there is actually a market for that product or service in China. If there is, you need to ensure you can be competitive in China and, more importantly, whether you have the time, resources and stamina to handle the demands of communications, frequent travel, product delivery and after-sales service.
  • All foreign investments need to be registered with the appropriate local and state authorities, which can be time-consuming and bureaucratic. Exporters will also need to deal with Chinese tax, accountancy and employment law, and China’s transport infrastructure and commercial legal system.
  • Understand the basic Chinese regulations which govern your industry or investment in China. Companies are often constrained in how flexible they can be due to the regulatory environment.
  • It is recommended that you have a website including product description, indicative FOB price, and unique selling points for your product or service.
  • It may be helpful to talk to other Australians with business experience in China, for example, Australia China Business Council members in Australia; China Australia Chamber of Commerce members in China and Austrade’s network of export advisers in both Australia and China.
  • The Internet can be an invaluable tool when it comes to researching country and market information before you even begin to formulate your strategy.

  

Market entry strategy:

  • When determining your market entry strategy, consider recent market trends and keep in mind your long-term and short-term requirements for infrastructure, labour and your customer base. Remember China is changing at a rapid pace and it is essential your research and market information is up-to-date.
  • Don’t automatically assume Beijing or Shanghai should be your target markets. Many other regions of China are substantial markets in themselves and competition can be less intense. It is therefore advisable to treat China as a global region in its own right and focus your initial market entry approach on a particular region or city.
  • It may be highly beneficial to employ an agent or distributor with marketing skills who has excellent knowledge of local market conditions and preferably speaks English. A good agent can greatly reduce set-up costs and time taken to enter the market. As well as having someone on the ground to look after your interests, you will have access to good local knowledge and contacts.
  • It may be highly beneficial to have your own well-briefed interpreter available to assist with discussions, formal presentations and explanation of technical issues.
  • Potential Chinese business partners are often more interested in the cost-effectiveness of the product rather than the product itself, so it’s important to be able to demonstrate how the product can save money.
  • Choose the right partners. In-market contacts are often more important than product and price.

 

Negotiations:

  • Always seek good quality independent legal, tax, and professional advice before signing anything that could have implications for your company. If you are setting up in China, it is important to get the business and tax structure right from the start.
  • Use a qualified legal firm with a presence in China to review all contracts. Failure to gain full information about a potential partner’s credit and professional background could lead to serious problems further down the road.
  • If you are concerned that your product is in danger of being copied, seek legal advice on how best to protect your intellectual property (IP).
  • Halve your expectations, and double your time and budget. Chinese business people prefer to establish a strong relationship before closing a deal.
  • Be prepared for tough negotiations and to deal with grey issues. Be firm, polite, and creative, but be prepared to say no.

 

Etiquette:

  • Building up good business relationships and trust is very important in China, so expect to spend a lot of time at meetings and banquets with your potential business partners.
  • Business meetings always start promptly, so it’s important to arrive early for the standard formal introductions. It is usual to be introduced to the most senior person at the meeting first, followed by the others in descending order of seniority.
  • A handshake is the standard way to greet men and women, whatever their age or seniority. Note that the Chinese respect their elders, so an extra show of courtesy in the presence of an older person will reflect well on you.
  • Business cards (ming pian) are essential in China, and it’s a good idea to have your card translated into Chinese on the reverse side. Present your card with both hands with the Chinese side face up. It’s a sign a respect to spend a few moments examining the business cards you receive rather than putting them away immediately.
  • When meeting potential business partners, it is helpful to know some Mandarin. Simple phrases such as ‘Ni hao’ (hello) ‘Zao shang hao (good morning) and Xia wu hao (good afternoon) can go a long way. Note that surnames are placed first, eg. Mr Yao Ming should therefore be addressed as ‘Mr Yao’.
  • A great deal of business in China is conducted over dinner, where very senior people may attend who were not at previous negotiations, but are key to the approval of a business deal. However, business dinners or lunches can also indicate a general warming of a relationship, and in this case, their role should not be over-stated.
  • Never begin eating or drinking until you host does. It is polite to try all dishes that are offered to you, but you can discreetly leave anything you don’t like at the edge of your plate. Don’t place your chopsticks pointing into the bowl – always place them horizontally on the hold provided.
  • Dinner speeches and frequent toasts are standard, with locally produced wines or ‘bai jiu’ spirit the usual drinks for toasts. It is customary for toasts to be made by both sides during the meal.
  • The Chinese generally like to give small and inexpensive gifts. It’s a good idea to bring small gifts with an Australian theme for your hosts and wrap them in colours such as red, yellow or gold, which are regarded as lucky in China. It is not customary for your hosts to open the gifts in front of you, unless you encourage them to do so.
  • Chinese negotiators are shrewd and know that foreigners will be reluctant to travel home from China empty-handed. They are willing to stretch out discussions, which can wear their foreign counterparts down. Be sure that your interpretations of any business deal are consistent with theirs and that everyone understands their duties and obligations.
  • Expect to encounter delays or frustration during your business dealings in China, but it’s important to remain patient and polite. The Chinese don’t like to ‘lose face’ so losing your temper or showing frustration will only set you back.
  • If you are beckoning to someone, motion towards you using your hand and palm pointed downwards – never palm up. Furthermore, don’t use your index finger or point when speaking.
  • Try to speak with your counterparts in short, simple, and jargon-free sentences.
  • Be aware that business in China slows down during the Chinese New Year – usually from late January to early February, and for periods such as National Day (1 October) and May Day (1 May). It’s best to avoid arranging meetings during these times.

 

Getting Cash Money RMB Out of China

Getting Cash Money RMB Out of China

Nov. 11 – An issue that frequently crops up at this time of year is the question of getting earned income out of China. As many expatriates look to leave to go home for Christmas, those piles of RMB that have been stacking up nicely begin to look mouth-watering in terms of repatriating the readies. But here comes a catch – for expatriates legitimately employed in China, and paying tax here, there is not a problem. But for those working in China’s grey economy – there is.

China employs strict currency regulations that are designed to prevent large amounts of currency moving out of the country. Your small amount may not seem like a huge deal, but if everyone moved out a few thousand dollars, it would impact upon China’s economy. The movement of illicit cash both into and out of China is known as “hot money” and it can seriously damage a country’s financial stability if not regulated. China controls and monitors the amounts of money coming into and out of the country through a mechanism known as SAFE – The State Administration of Foreign Exchange. In order to legitimately take money out of China (typically wire transfer), an application needs to be made to SAFE (your bank would normally assist with this procedure) with proof of income taxes paid in China, and details of the overseas bank account the funds are to be wired to. The onus is on the applicant therefore to demonstrate the money was legitimately earned and taxes have been paid on it. If so, the money is permitted to be repatriated and there is no daily or annual ceiling limiting the amount an individual can transfer. This should not be a problem for expatriates in China with proper working contracts, visas and tax registrations.

 

However, many expats in China fall into a different category. Either by design or default (Chinese employers sometimes take advantage and do not fully explain this issue), there are expatriates in China who are not properly registered with the authorities, are not paying taxes, and who have nonetheless acquired a bundle of RMB. Here, there is a problem. Firstly, such individuals cannot meet the SAFE requirements, and this becomes a block. Chinese banks will not allow you to exchange and wire overseas any amount over the RMB equivalent of US$500 for you without SAFE approval, and if there is no tax paid receipts (employers should provide this) or no work permit or visa, this route is barred.

 

It should be noted, though, that foreign nationals can transfer any amount under or equal to the equivalent of US$500 once per day without providing proof that the money was legitimately earned or that taxes have been paid on it. Chinese nationals are able to transfer the equivalent of US$2,000 per day into a foreign bank account, however Chinese nationals face a US$50,000 annual ceiling when exchanging RMB into foreign currencies while foreign nationals do not face such restrictions.

 

Under these circumstances, the only practical ways to solve this are as follows:

 

  1. If you thought your employer has misled you over your status, you may have a case. In which case, you’ll need to find a local friendly lawyer to assist. However this may take time to resolve.
  2. China does permit the traveling outside of China with up to RMB20,000 or equivalent. You may pack up to this amount and be safe (any more and you face confiscation of all the money if caught). The problem with this is that RMB is not freely exchangeable, and it may be hard to convert it when back home. Hong Kong does provide such facilities – although be warned – the exchange rate issue will be a killer.
  3. If more than RMB20,000, you may divide the total up among friends to limit the amount each carries. But make sure they’re good friends!
  4. If you have a Chinese friend that you trust, you can transfer the money to their Chinese bank account and they can wire a maximum of US$2,000 per day to your overseas bank account. You can also do this yourself, but foreign nationals are limited to US$500 per day.
  5. If you intend to return to China, deposit the money into a bank and withdraw up to the legal amount each time you leave.
  6. Convert your RMB into a saleable asset that you can convert to cash back home. China does limit the amount of goods value being exported from the country, but are less likely to question personal belongings. Buying and shipping items from a reputable Chinese fine art dealer may be a solution.
  7. Next time, be aware that working in China without paying tax is illegal. It can impact on even realizing the money earned. If in doubt, get a friendly lawyer to look at your employment contract terms and ensure that hard won income can be readily – and legally – repatriated.

 

In terms of item (6), I can relate a recent anecdote. Admiring a hugely expensive diamond necklace in a Chinese jewelry store recently, I enquired about who was going to be lucky enough to wear it. The carefully worded reply was “Oh Sir! This necklace will never be worn.”

 

This article is by Dezan Shira & Associates. For further information please contact the practice at legal@dezshira.com, or visit the firm’s web site at www.dezshira.com.

 

China Company registration and set up...

China Company registration and set up process.

Listed below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, along with their associated time and set-up costs.

1

Obtain a notice of pre-approval of the company name

The applicant picks up the application for company name preapproval from the local Administration of Industry and Commerce (AIC), or otherwise, downloads the form from AIC’s Web site. The applicant can be the representative designated by all the shareholders or the agent entrusted by all the shareholders. The completed application form shall be signed by all shareholders of the company. The application form together with the business licences or other registration certificates (if the shareholders are companies or other eligible entities) and the photocopy of the identity card of the individual shareholders shall be filed with the AIC. Effective July 1, 2004, enterprise name registration must follow the amended State Administration of Industry and Commerce (SAIC) rules (that is, the new Enterprise Name Registration Administration Implementing Measures, or Qi ye ming cheng deng ji guan li shi shi ban fa). According to the new registration rules, if the applicant goes directly to the AIC, a proposed company name is approved or rejected on the spot. This is newly regulated by Article 24 of the aforementioned measures and is implemented in practice. However if the application is made through mail, fax, email, etc, the proposed company name will be approved or rejected within 15 days.

 

2

Open a preliminary bank account; deposit fund in the account and obtain the certificate of deposit

The Company Law was modified on October 27, 2005, and became effective on January 1, 2006.
- Article 26 lowers the minimum capital requirement to CNY 30,000. According to this article, the shareholders, after paying the required initial capital contribution, may pay off their remaining capital contributions, if any, within 2 years after establishing the company. Note that the required initial capital contribution is at least 20% of the proposed company’s registered capital and shall not be lower than the legal requirement for the registered capital for particular industries.
- Article 27 provides the form of the capital contribution. According to this article, if the initial capital contribution is in cash, the shareholders must (a) open a preliminary bank account after obtaining preapproval of the company name; and (b) deposit the initial capital contribution into the bank account. If the initial capital contribution is in nonmonetary assets, the shareholder must transfer the property title of the assets to the company and the value of such assets must be appraised. The initial capital contribution must be verified by legally established verification institutes. The revised Company Law enables shareholders to contribute up to 70% of the registered capital of a limited liability corporation in “nonmonetary assets that can be monetarily valued and legally transferred.”

 

3

Obtain capital verification report from an auditing firm


An auditing firm has to prepare a report that verifies the company capital as past of the documents necessary for registration

4

Obtain registration certification "business license of enterprise legal person" with SAIC or local equivalent


To obtain registration certification

 

The company must file a completed application form along with the following documents:
- Notice of approval of company name.
- Lease or other proof of company office.
- Capital verification certificate or appraisal report.
- Articles of association, executed by each shareholder.
- Representation authorization.
- Identity cards of shareholders and identification documents of officers.
- Appointment documents and identification documents (certifying name and address) of the directors, supervisors, and officers.
- Appointment documents and identification documents of the company’s legal representative
- If the initial contribution is in nonmonetary assets, the document certifying transfer of the property title of such assets.
- Other documents as required by the authorities.

Within 15 working days from receipt of all documents, the AIC should decide to approve or not approve the company registration. After the company registers, it can proceed to have its seal carved, to open formal bank accounts, and to apply for taxation registration.

According to the new administrative rules, application forms may be downloaded from the local government authorities’ Web sites. Statutory time limits were introduced for acceptance of application documents and for registration decisionmaking, which differs according to the form of application. In practice, the decision will usually be made within 15 days of receipt of the application. Documentation requirements for company registration were standardized. The Registry is now required to publicly display them.
- According to Article 52, if an application is filed (by letter, telegraph, telex, fax, email, or electronic data exchange), the Company Registry must, within 5 days of receiving the relevant application documents and materials, decide whether to accept the application. If the application documents and materials are incomplete or do not meet the statutory requirements, the Registry must inform the applicant, within 5 days, of all contents subject to supplementation and correction.
- According to Article 54, if the organ in charge of company registration must verify the application documents and materials, it shall decide whether to approve the registration within 15 days of acceptance. In other cases, the organ must decide whether to approve the registration on the spot or within 15 days of acceptance.
- According to Article 55, if the organ decides to approve a company registration, it shall issue a “notice on approval for establishment registration” and inform the applicant to collect its business license within 10 days.

 

5

Obtain the approval to make a company seal from the police department

If all the shareholders are individual investors, the registration file will include the duplicate of the business license (the original and one copy) and the legal representative’s identification card. If registration is approved, a notice to make the company seal will be issued to the company

 

.

6

Make a company seal

To make the company seal, the company shall designate a company possessing a Shanghai Special Industry Permit (company seal carving) (????????????�??�????????????????????????????�?????????????? This process costs CNY 70–300, depending on the design and the quality.

 

7

Obtain the organization code certificate issued by the Quality and Technology Supervision Bureau

The company must apply for the organization code certificate within 30 days of obtaining the business license, by filing a completed application form with the Shanghai Organization Code Management Center (a branch of the Quality and Technology Supervision Bureau) along with the following documents:
- Business license (original and one copy)
- Identity card of the legal representative (one copy).

 

8

Register for both state and local tax with the tax bureau

The tax registration procedures have been simplified since 2004 with the implementation of the Administration Measures of Tax Registration, issued by the State Taxation Bureau. Two separate taxation authorities still exist (the state taxation bureau and local taxation bureau). However, company founders are required to file tax registration only once, to either of these two authorities. The statutory time limit is 30 days from the date of receiving the registration application.


The company must file the tax registration form and the initial tax reporting forms. Together with those forms, the company submits for review the following documents:
- Business license duplicate (original and one copy).
- Organization code certificate (original and one copy).
- Identification card of the legal representative (original and one copy).
- Identification card of the taxation personnel (original and one copy).
- Company seal and financial seal.
- Office lease agreement and receipt(s) for rent paid.
- Articles of association (original and one copy) and bank-issued account-opening certificate (original and one copy).
- capital verification report
-Photocopy of property ownership certificate
- land use right certificate
- commitment letter regarding the authenticity of the documents submitted.

 

9

Register with the local statistics bureau

Within 30 days of obtaining the business license, the company must apply for statistics registration by submitting to the local statistics bureau a completed statistics registration form along with the following documents:
- Business license (one copy)
- Organization code certificate (one copy).

 

 

* 10

Open a formal bank account of the company and transfer the registered capital to the account

The procedures and required documents for opening a company bank account and transferring the registered capital to it may vary depending on each bank’s practice.

 

11

Apply for the authorization to print or purchase financial invoices/receipts

After registering for state or local taxes and obtaining the tax registration certificate, the company must apply separately to the relevant authorities (that is, the state and local taxation offices) for approval to purchase and issue financial invoices/receipts. The taxation authority will issue the invoice purchasing book, if it agrees to grant the company such qualification, upon reviewing the following submitted documents:
- Tax registration certificate (one copy).
- Identity card of taxation personnel (one copy).
- Application forms.
- Models of invoice seal.

 

12

Purchase uniform invoices

The company must obtain and submit an application form to purchase uniform invoices (?????????????????????�???????�?. The form and the authorization book (from Procedure 10) must be submitted to the Tax Office.


The VAT and ordinary invoices are published by the tax authority for antiforgery reasons (with few exceptions). Taxpayers buy VAT and ordinary invoices from the tax authority.

 

13

File for recruitment registration with local career service center

Within 30 days of recruiting employees, a new company must register with the local career service center, sponsored by the local government. Relevant application forms which can be electronically downloaded or obtained from the local career service center shall be filled and submitted.

 

* 14

Register with Social Welfare Insurance Center

Within 30 days of establishment, the company must register for the payment of employee social insurance with the local social insurance office by submitting a completed social insurance registration form and the following documents:
- Company seal.
- Duplicate of business license (original and one copy).
- Organization code certificate (original and one copy).

After all these documents have been verified, the authorities will issue a notice to open a social insurance account for the company. The company must then apply to open a special account at the designated bank. The local social insurance office will issue the social insurance registration card to the company on receiving bank notification of account opening.

 

For China, Logistics Improvements Would...

For China, Logistics Improvements Would Deliver Big

China's e-commerce companies may yet turn a logistical nightmare into a dream business opportunity.

 

Massive government investment in road, rail and air infrastructure means that China's transport network is approaching developed-world standards. But the cost of moving goods from A to B remains high. Logistics costs as a percentage of GDP are around 21%, compared with 10% in the U.S. and 13% in India.

 

Part of that gap is explained by China's focus on manufacturing. But beyond that, the country has a fragmented system, high tariffs for road transport and multiple providers piling on fees. Even outside the manufacturing sector costs are high. A Chinese government investigation found that two-thirds of the retail price of vegetables represents logistics costs.

 

And even though costs are high, service is often poor. Local logistics providers are famously slow and unreliable. Assuring end-to-end delivery of products across provincial boundaries is a real challenge. That's a particular problem for e-commerce companies such as Alibaba Group, 360buy and Joyo Amazon, which rely on guaranteeing delivery of goods from supplier to customer.

 

The central government says it is committed to the development of a modern, efficient logistics network. But ambitious goals set in Beijing are running up against a difficult reality at a local level. Provincial governments benefit from local firms that contribute tax revenue, even if they are less efficient than larger national players. State-owned firms often run their own in-house transport and distribution services, reducing the size of the market for specialist logistics firms.

 

For third-party logistics providers, working through the tangle of local regulation has proved difficult, if not impossible. Jeffery Wong of global advisory firm KPMG says even the bigger players remain mainly confined to provincial markets. But for e-commerce firms, the rapid growth in online sales is providing both motive and opportunity to get to grips with the problem.

 

For Amazon in the U.S., efficient distribution has been the key to keeping prices low and gaining market share. The aspiration for e-commerce firms in China is to do the same. Online retailer Alibaba has invested in its own system of warehouses and is working with existing logistics providers to stitch together a national system, and 360buy is partnering with Wal-Mart to build a network.

 

The rapid growth of e-commerce means that major players can take advantage of scale in their operations. On a single day in November 2010, Taobao Mall, the business-to-consumer arm of Alibaba's online empire, shipped 15 million packages. Building an efficient logistics system won't be easy, especially for e-commerce firms whose core competences lie elsewhere. But the Chinese market is wide open. For companies that can get it right, the solution to a business problem could turn into a driver of future profitability.

 

Social insurance for foreigners, an...

Social insurance for foreigners, an unknown.

“Compared to October last year, many cities have issued implementing rules for the PRC social insurance contributions by foreign nationals,” said Gordon Feng, chair of Paul Hastings’ employment law practice in Shanghai. Beijing, Chengdu, Qingdao, Suzhou and Chongqing have all issued local implementing rules requiring foreign employees to enroll in government schemes for pension, medical care, work-related injury, unemployment and maternity.

 

 

With many of China’s foreigners residing in Shanghai, the city still maintains that contributions to the schemes are voluntary in the country’s most populated municipality. “It seems Shanghai is not interested in enforcing the Social Insurance Law against foreigners as it is keeping quiet about any implementing regulations and so far the enrollment remains voluntary,” said Feng.

 

Hong Kong, Macau, and Taiwan residents were also part of the initial measures, but later removed as previous legislation required contributions from them. “The Ministry of Human Resources and Social Security already had regulations for Hong Kong, Macau, and Taiwan residents in place, requiring them to enroll in the social insurance system, but the enrollment was not mandatory in practice before October 15, 2011” said Feng. He believed HMT residents were later removed because otherwise the rules would have been redundant.

 

The southwestern city of Chengdu and the eastern city of Suzhou are two cities where contributions are mandatory. Despite the removal of HMT residents, Chengdu and Suzhou are unique in that their implementing regulations included HMT residents. “The Chengdu Circular and Suzhou Circular do not go against the Ministry because previous regulations required HMT residents to pay social insurance,” commented Feng.

 

But what about enforcement? China is notorious for releasing measures where enforceability is non-existent. Despite repercussions of forced transfers from the social insurance administrative authority and interest fee penalties of 5% for non-compliance, there has not been any news that they have been enforced or companies employing foreigners chased for contributions.

 

Social insurance for PRC nationals is a far greater problem in China. The social insurance centre does not have the energy or the appetite to go after foreigners. Foreigners are such a small percentage of the population compared to local residents, and the authorities already have a big problem dealing with nationals.

 

Even though stories of enforcement or penalties have yet to surface, Feng always recommends his clients to follow local laws. Companies employing several foreigners need to be careful, as enforceability of the measures could increase at anytime. It remains to be seen which other municipalities will release circulars and whether Shanghai will require such regulations.



By David Tring www.chinalawandpractice.com

Structure of the Chinese Government...

Structure of the Chinese Government, 2012

All power within the government of the People's Republic of China is divided among three bodies: the People's Republic of China, State Council, and the People's Liberation Army (PLA). This article is concerned with the formal structure of the state, its departments and their responsibilities. Most, but not all, positions of significant power in the state structure and in the army are occupied by members of the Communist Party of China which is controlled by the Politburo Standing Committee of the Communist Party of China, a group of 4 to 9 people, usually all older men, who make all decisions of national significance. As the role of the Army is to enforce these decisions, the support of the PLA is important in maintaining Party rule.

Power is concentrated in the Paramount Leader, currently Hu Jintao, who heads all three bodies: He is General Secretary of the Communist Party and of the Central Committee, President of the People's Republic of China, and Chairman of the Central Military Commission. Recently, experts have observed growing limitations to the Paramount Leader's de facto control over the government.

The legal power of the Communist Party is guaranteed by the PRC constitution and its position as the supreme political authority in the PRC is realised through its comprehensive control of the state, military, and media. According to a prominent government spokesman:

We will never simply copy the system of Western countries or introduce a system of multiple parties holding office in rotation, although China’s state organs have different responsibilities, they all adhere to the line, principles and policies of the party.

The primary organs of state power are the National People's Congress (NPC), the President, and the State Council. Members of the State Council include the Premier, a variable number of Vice Premiers (now four), five State Councilors (protocol equal of vice premiers but with narrower portfolios), and 29 ministers and heads of State Council commissions. During the 1980s there was an attempt made to separate party and state functions, with the party deciding general policy and the state carrying it out. The attempt was abandoned in the 1990s with the result that the political leadership within the state are also the leaders of the party, thereby creating a single centralized focus of power.

At the same time there has been a move for having party and state offices be separated at levels other than the central government. It is unheard of for a sub-national executive to also be party secretary. This frequently causes conflict between the chief executive and the party secretary, and this conflict is widely seen as intentional to prevent either from becoming too powerful. Some special cases are the Special Administrative Regions of Hong Kong and Macau where the Mainland Chinese national laws do not apply at all and the autonomous regions where, following Soviet practice, the chief executive is typically a member of the local ethnic group while the party general secretary is non-local and usually Han Chinese.

Under the Constitution of the People's Republic of China, the NPC is the highest organ of state power in China. It meets annually for about two weeks to review and approve major new policy directions, laws, the budget, and major personnel changes. Most national legislation in the PRC is adopted by the Standing Committee of the National People's Congress. Most initiatives are presented to the NPCSC for consideration by the State Council after previous endorsement by the Communist Party's Politburo Standing Committee. Although the NPC generally approves State Council policy and personnel recommendations, the NPC and its standing committee has increasingly asserted its role as the national legislature and has been able to force revisions in some laws.

Source

Redrawn from File:Gov.jpg

Author

Communist Party of Hong Kong

 

Importing Environmental Technologies...

Importing Environmental Technologies to China

By mid-2007, the Shuikoushan Non-Ferrous Metal factory in Hunan Province faced a crisis. As part of its 11th Five-Year Plan (2005-2010), the Chinese government was closing down high-polluting factories–and the Shuikoushan factory was among those at risk. The 110 year-old state-owned factory, with a gross annual income of more than US $1 billion and 12,000 employees, was emitting high levels of heavy metals into the local water supply. This polluted water was flowing directly into the Xiang River and affecting the drinking supply for millions of people within the nearby city of Changsha. Despite several attempts to remove the heavy metals by using conventional chemical treatment methods, the factory continued to emit dangerous levels of pollution.

In late 2007, US-Pacific Rim International, Inc.(USPRI), a US consulting company that assists US companies market and sell their products and technologies in China, began to promote the electrocoagulation (EC) water treatment system of one of its client companies, Kaselco, to the factory. USPRI highlighted the EC system’s unique electrochemical process to remove heavy metals from water. Faced with the risk of closure, the Shuikoushan factory decided to try the product.

 

During a pilot test of the EC system in late 2007, the factory found it could almost completely eliminate the heavy metals that the factory was emitting. After three months of further tests and negotiations, the Shuikoushan factory decided to purchase and install the EC system.

 

The EC system began operating in May 2008, and the results were dramatic. The factory was able to reduce the amount of heavy metals it discharged by almost 99 percent, meet the highest national water pollution emission standard and treat 4,100 tons of water a day. Deputy Director of the Hunan Provincial Environmental Protection Bureau Xie Lishuai inspected the EC system and praised the project as a model for wastewater treatment. In the space of several months, the Shuikoushan factory had gone from being a dangerous polluter to a socially responsible enterprise.

 

Even as China faces enormous environmental challenges, success stories like Shuikoushan’s EC system reveal an excellent opportunity for US environmental companies to export their advanced technologies to China. American companies can play a role in helping China address its environmental problems.

A review of some of China’s environmental statistics demonstrates that as China continues its rapid growth, it also faces significant environmental challenges. Currently, 70 percent of the country’s rivers, lakes and reservoirs are not safe for human use, 70 percent of its energy comes from high-polluting coal and 5,800 square miles of its grasslands are lost to desertification every year.

 

As these environmental problems grow, the market for environmental products and technologies is expected to expand as well. The China Greentech Report 2009 estimates that by 2013 the market for environmental technologies will be between US $500 billion and US $1 trillion. According to the US Foreign Commercial Service, the greatest opportunities for US environmental companies lie in municipal and industry wastewater treatment technology, hazardous waste and medical waste treatment technology, waste-to-energy technologies, de-SOx and de-NOx technologies, as well as air and water monitoring equipment.

 

Investments by the Chinese and US governments on a variety of environmental initiatives in China also offer opportunities for US greentech companies. Of China’s US $586 billion 2008 stimulus plan, approximately 37 percent is dedicated to greentech-related projects. China’s upcoming 12th Five-Year Plan (2011-2016) is also expected to build on the 11th Five-Year Plan’s significant focus on the environment.

US-Chinese government cooperation on environmental issues has also been growing. During President Obama’s visit in November 2009, the US and China committed to spending at least US $150 million of public and private funding on a US-China Clean Energy Research Center, as well as agreeing to a host of other initiatives related to energy, coal and shale gas.

 

The complexity of many environmental problems will also require collaboration between US environmental companies. Multiple companies may be needed to complete just one environmental project. For example, a lake clean-up project could require different companies to provide industrial pre-treatment, pipes for dredging and adequate infrastructure. Such collaboration is especially important for small and medium-sized enterprises, when they approach Chinese municipalities and companies they can offer comprehensive environmental solutions. Public-private initiatives such as the American Water Working Group, sponsored by the Foreign Commercial Service, and the US-China Energy Cooperation Program, based out of AmCham China, are promising examples of such collaboration.

 

Even while there are bright prospects for US environmental companies in China, the challenges of cost, intellectual property rights (IPR), lack of transparency in project bidding and domestic competition must be recognized by any greentech business that wants to export to the Chinese market.

 

The advanced nature of some US technologies means their prices can be relatively high in China, but still find a place in the market. While the higher costs of certain US technologies will price them out of some markets here, it should not lead US environmental companies to give up on the country completely. Many Chinese companies respect, and are willing to pay a higher price for, high-quality US technologies. In addition, while costs may be too high in some regions of China, in more developed parts of the country, Chinese companies and state-owned enterprises will pay for exceptional US products. Further, companies should consider becoming original equipment manufacturers in China for all or part of their products in order to drive down costs.

 

As with any company that wishes to export its technology to China, US greentech companies should be particularly concerned about IPR. Even as IPR enforcement has improved in recent years, and even if appropriate safeguards are taken, it is almost certain that companies will have some of their technology copied in China. Recognizing this reality, and treating it as part of a business strategy rather than a legal issue, is a necessity for any US environmental company looking to export to China. To stay ahead of IPR violations, companies must ensure that their products remain leaders in their field.

 

The lack of transparency in the bidding process for environmental projects can also prove a challenge for US companies. In order to address this issue, companies should hire Chinese staff or engage local sales agents to represent them in the bidding process. Local knowledge of Chinese culture and business practices will enable Chinese staff to illuminate the complex and opaque bidding process for American companies.

 

Significant public and private sector investments in China’s green industry means US environmental companies will face growing competition from local Chinese companies. Nonetheless, American companies can continue to offer unique technologies in China. In order to offer the greatest value, US environmental companies exporting to China should conduct thorough market research, determining where the country lacks advanced and integrated technology to meet their greatest environmental challenges.

Exporting environmental technologies to China holds enormous potential for small and large US companies. While selling greentech products also presents some challenges, these issues can be addressed by taking a realistic approach to the Chinese business environment. By increasing US environmental exports to China, US companies will not only expand their market, but will also help raise China’s living standards.

 

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