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NPC roundup March 2015.

NPC roundup March 2015.

As one of the most important annual political gatherings in China, the NPC lays out the leadership’s plans and priorities for the coming year. Outcomes from the legislature are closely scrutinised by global businesses keen to anticipate the future direction of the Chinese economy and plan accordingly. 

Chinese Premier Li Keqiang’s annual government work report, delivered to the NPC earlier this month, featured a number of important announcements related to the following areas:

 

 

  • Lowered expectations for economic growth: China’s GDP growth target was lowered from 7.5% in 2014 to 7% this year, with Premier Li characterising the lowered expectations for economic growth as the “new normal”. Last year, the Chinese economy grew at its slowest pace since 1990, and the government is clearly accepting this lower rate of expansion as it continues to focus on restructuring the economy. Following Premier Li’s speech, the head of the National Development and Reform Commission (NDRC) emphasised that China will not introduce strong stimulus measures to boost economic growth this year.

 

  • Supporting employment and job creation: Premier Li said that over 10 million jobs would be created in urban areas in the coming year. With the number of college graduates expected to reach nearly 7.5 million this year, job creation is a top priority for the government. Premier Li also pledged to help people who have lost their jobs due to structural adjustments or steps taken to reduce overcapacity to secure new employment.

 

  • Improving environmental protection: As the government continues to focus on reducing pollution and improving environmental protection, energy intensity will be reduced by a target of 3.1% this year to cut emissions from major polluters.  

 

  • Fighting corruption: Premier Li reiterated the government’s commitment to continue fighting corruption and pledged to tighten supervision over public funds and state-owned assets.

 

  • Opening up China’s stock exchanges: Premier Li announced plans to link up the Shenzhen and Hong Kong stock exchanges on a trial basis, similar to the scheme launched between the Shanghai and Hong Kong bourses last November.

 

  • New plans for infrastructure investment: China plans to invest more than RMB 800 billion in railway construction and another RMB 800 billion in major water conservation projects in 2015.

 

  • Encouraging greater foreign investment: Premier Li vowed to further open up the service and manufacturing sectors by reducing the number of industries in which foreign investment is still restricted by half.

 

  • Supporting economic growth through Internet applications: Premier Li announced an Internet-plus action plan, which aims to further accelerate the contribution of new Internet applications to the Chinese economy. McKinsey forecasts that Internet applications could fuel between 7-22% of China’s incremental GDP growth until 2025.  

 

Elderly Care Institutions: New law for...

Elderly Care Institutions: New law for Foreign Investment
With a projected 636 million people over age 50 by 2050, or nearly 49 percent of the population (up from 25 percent in 2013) the government is now seriously looking at expanding care home facilities in China (there are currently estimated to be just under 3 million care home beds across the country). 
 
 
 
With the development of the economy, people's ideas on care-giving for the elderly are changing: A Chinese proverb calls filial piety, or respect for one's parents, "the first among 100 virtues. However many families have now moved away from traditional ideas of taking care of the elderly at home, especially in the larger cities and prefer well-equipped nursing homes. With this in mind the government is now courting investment into the sector with a new law pertaining to foreign investment in Care Institutions.
 
 
Announcement of the Ministry of Commerce and the Ministry of Civil Affairs on Matters Relating to Foreign Investors' Establishment of For-profit Elderly Care Institutions
Now 2014.
 
With a view of promoting the healthy development of the elderly care service industry in China and the opening-up of social service industry, and further implementing the Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reforms and Several Opinions of the State Council on Speeding the Development of the Elderly Care Service Industry (Guo Fa [2013]No.35), and in accordance with the Law on Sino-Foreign Equity Joint Ventures, Law on Sino-Foreign Cooperative Joint Ventures, Law on Wholly Foreign-owned Enterprises, Law on the Protection of the Rights and Interests of the Elderly and Measures for Permitting the Establishment of Elderly Care Institutions and other relevant laws, regulations and departmental rules, the Announcement of the Ministry of Commerce and the Ministry of Civil Affairs on Matters Relating to Foreign Investors' Establishment of For-profit Elderly Care Institutions (hereinafter referred to as the "Announcement") is hereby issued to announce matters relating to the establishment of for-profit elderly care institutions by foreign companies, enterprises and other economic organizations or individuals (hereinafter referred to as the "foreign investors") to engage in elderly care services in China as follows:
 
Article 1 Encourage foreign investors to establish for-profit elderly care institutions in China independently or with Chinese companies, enterprises and other economic organizations in a joint venture or cooperative way.
 
 
Article 2 The foreign-invested for-profit elderly care institutions shall abide by relevant laws, rules and regulations, aim at providing social services, pay tax in accordance with the law and operate in compliance. Their legal operating activities and their contributors' legitimate rights and interests are under the protection of law.
 
 
Article 3 Foreign investors intending to establish for-profit elderly care institutions shall submit the following materials on the application for establishment of foreign-invested enterprises to the competent departments of commerce at the provincial levels where the institutions are proposed to be located (namely the competent departments of commerce of all provinces, autonomous regions, municipalities directly under the Central Government, cities specifically designated in the state plan and Xinjiang Production and Construction Corps):
1. application for the establishment;
2. description about the conditions (including the place, security, health care and so on);
3. contract and articles of association (a foreign-invested enterprise only needs to submit its articles of association);
4. name  list of the members of the Board of Directors and directors delegation letter;
5. notice on the pre-approval for the names;
6. description of the foreign investors' working experience and relevant supporting documents, or the descriptive document on the engagement of management team equipped with corresponding experience in the elderly care service industry; and
7. Other materials required to be provided according to the laws, rules and regulations.
 
 
Article 4 A competent department of commerce at the provincial level shall make a written decision on approval or disapproval within 20 days upon its acceptance of the application concerned. Where the application is approved, the foreign investor concerned shall be awarded the Approval Certificate of Foreign-invested Enterprise, with words as "operate under the Permit for Establishment of Elderly Care Institutions" added in the column of business scope; where the application is disapproved, reasons therefor shall be told.
 
 
Article 5 A foreign investor shall handle the formalities for registration of foreign-invested enterprises within one month upon receipt of the Approval Certificate of Foreign-invested Enterprise with the administration for industry and commerce concerned.
 
 
Article 6 After the registration, the foreign-invested enterprise shall apply for and obtain the Permit for Establishment of Elderly Care Institutions in accordance with relevant provisions of the Measures forPermitting the Establishment of Elderly Care Institutions. No foreign-invested for-profit elderly care institutions or foreign investors shall provide elderly care service or charge fees or admit the elders in any name before obtaining the said permit and being approved for registration in accordance with the law.
 
 
Article 7 Foreign investors are encouraged to participate in the transformation into the enterprises from the institutions of public elderly care specifically providing for-profit services to the society. During the transformation, issues such as the protection of employees' interests and the value maintenance and appreciation of state-owned assets shall be handled properly.
 
 
Article 8 Foreign-invested for-profit elderly care institutions can engage in domestic investments relating to the elderly care service. Foreign investors are encouraged to develop the elderly care institutions on a grand scale, operate the same in a chain mode and develop quality brands of elderly care institutions.
 
 
Article 9 Foreign-invested for-profit elderly care institutions enjoy the same preferential tax policies and policies on reduction and exemption of administrative and institutional fees as those available to domestic-invested for-profit elderly care institutions.
 
 
Article 10 The application for establishing foreign-invested real estate enterprises that are set up through changing such usage conditions as the land use or the plot ratio of the land for construction of elderly care facilities shall not be approved. Foreign-invested for-profit elderly care institutions shall not engage in business such as residential discount for elderly care.
 
 
Article 11 Where the business scope of a foreign-invested for-profit elderly care institution includes the medical and health service, such institution shall handle the formalities for submission for approval in accordance with relevant policies.
 
 
Article 12 The competent departments of commerce at the provincial level shall strengthen the statistical work concerning foreign-invested for-profit elderly care institutions, and when issuing the certificate for approval, choose "Elderly and Disability Service"(Paragraph 8414 of National Economic Industrial Classification) in terms of the category of industry.
 
 
Article 13 Foreign-invested for-profit elderly care institutions established in accordance with the Announcement shall participate in the joint annual report of foreign-invested enterprises on time.
 
 
Article 14 The Announcement applies mutatis mutandis to the establishment of for-profit elderly care institutions by investors from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region. In case of any inconsistence between former provisions and the Announcement, the Announcement shall prevail.
 
 
Article 15 If the local competent departments of commerce and civil affairs encounter with any problems, please feel free to contact the Ministry of Commerce and the Ministry of Civil Affairs in a timely manner.
 
 
Contact person: Sun Xiaoyu, Department of Foreign Investment Administration, the Ministry of Commerce
Tel.: 010-65197327 Fax: 010-65197322
Contact person: Zhang Xiaofeng, Department of Social Welfare and Charity Development, the Ministry of Civil Affairs
Tel.: 010-58123258Fax: 010-58123256
 

 

 

Infographic by Smithstreet Consulting

Yinchuan

Yinchuan

A snapshot

 

Aptly known as the Phoenix city, Yinchuan is a city that is gradually rising into economic prominence. Located in the North West of China in the Ningxia Hui autonomous region, a third of Niangxia’s population is Muslim, compared to the national average of 1.8% in 2010. In recent years, Ningxia has been the centre of a government campaign to promote Arab investment there, resulting in promising investments and high tech development on top of the existing coal and mineral industries.

 

Province: Ningxia Hui autonomous region, North West China

Population: 2 million (3 million including those without residence permits)

Average residential cost: 5000RMB/sqm

Key Industries: Coal, metallurgy, Chemical manufacture, Agriculture, High-tech industry.

Provincial Government website: http://www.nx.gov.cn/

 

 

Development zones

 

Yinchuan Economic and Technological Development Zone (YETDZ), established in 2001 is home to over 2000 enterprises, focussing on pioneering high tech progression and information industry developments to modernise existing industries. The development forms part of the national ‘Go West’ development programme (西部大开发) designed to increase the infrastructure and industrial output of inland China. The area is rated a BB standard development zone indicating the area is still in the development stage. Within the development zone are 4 sections: the Overseas Returnees Pioneering Park, the Ningxia Software Park, the Ningxia SMEs Pioneering Park and the Ningxia High- and New-Tech Pioneering Service Center.

Email: ycda.edb@ycda.gov.cn

Website: www.ycda.gov.cn

 

In 2012 Yinchuan was also designated as an Inland Opening-Up Economic pilot zone. Given that Muslims make up one third of the Ningxia population, in 2013, the China-Arab States Expo was help in Yinchuan, and the government has invested in developing this area as a hub for trade between China and Arab states. This drive has resulted in rapid increase in foreign investment and trade, in 2013 the total foreign trade in Yinchuan amounted to US$2.41 billion, up 80.9% year from 2012, and 2013 Utilised FDI in Yinchuan stood at $129 million. The gross industrial output value of the zone reached RMB 23.5 billion in 2012.

 

CBD

 

In 2012 construction was begun on a new CBD in Yinchuan, with around CNY 800 million invested in the project in that year. Named the Yue Haiwan CBD, it will complement the existing development parks and forge the way for further investment and development, with a view to being specially aimed at Arab investors. In mid 2013, the CBD development had already attracted 24 projects with a total investment of 17.9 billion yuan. While Yinchuan’s existing CBD is mostly empty, the imminent opening of the new project should create a thriving hub in the heart of the city.

 

 

Key industries

 

Aside from the development zone, Yinchuan has a strong infrastructure of existing industries contributing to the city’s GDP of RMB 127.35 billion in 2013, up 10% from 2012 and accounting for approximately 49.6% of Ningxia’s total. In an area rich in energy and mineral reserves, the energy industry is a key source of income to the area. 9 out of 10 Chinese national coal companies have bases in Yinchuan and Yinchuan is also a centre for petroleum processing and chemical manufacture. This heavy industry realised RMB 41.26 billion in 2013, up 12.5% from a year earlier.

 

Yinchuan is also a hub for certain agricultural industries. It is a designated national centre for beef and mutton imports, hosting the International Beef and Mutton Industry Development Forum in 2014. Yinchuan is also the most prolific area in China for the production of Chinese wolfberry products (also known as goji berries).

 

Logistics hub

 

Located on the end of the new Silk Road and near the Yellow river, Yinchuan has become a logistics hub both for land transport into and out of China and for transport between the East and West of Hina itself. By the end of 2015, Yinchuan will be linked to the high speed rail network, further improving its transport links. The main existing railway connections are the Baotou-Lanzhou railway and Baoji-Zhongwei railway, with an average 15 hour journey from Yinchuan to Beijing.

 

Foreign Investment preferential policies

 

Article 1: All the natural resources, industries, and marketsin Ningxia except those especially stipulated by the state are open to the whole country. State-owned, collective-owned, private-operated, the three types of enterprises, businessmen working on their own, colleges, universities, and research institutes in and outside of Ningxia are welcome to carry out multi-level, multi-form, multi-factor economic and technological cooperation or run enterprises with investment of their tangible and intangible assets. The autonomous region shall render prompt, satisfactory service in registration, approval of the establishment of projects, and the creation of necessary conditions.

 

Article 2: Productive enterprises with exclusive foreign investment (including bases established for the production of raw materials) may enjoy exemption from the income tax for five years upon the commission of the enterprises and a refund of 25 percent of the value-added tax, urban construction and maintenance tax, tax regulating the orientation of investment of fixed assets, and house tax within a period of five years after the enterprises are in operation. They shall be exempt from the tax for the use of land during the period of construction and for another five years after they are in operation. Enterprises engaged in the development of resources shall be entitled to a refund of the resource tax for three to five years and exemption from the additional fees of the circulation tax. The income of the enterprises during the income-tax exemption period shall be regarded as duty-paid. After the expiration of tax exemption, proper tax reduction shall be granted to the enterprises which have difficulties in operation or need a large amount of investment for technical renovations and expansions. Preferential policies can be liberalized to a proper extent in Taole County and the eight counties in the mountain area of southern Ningxia.

 

Article 3: Productive joint ventures and cooperative enterprises newly established in Ningxia as well as key extension projects approved by the state and autonomous region with the amount of investment by outside partners accounting for more than 25 percent of the total investment and the term of joint venture and cooperation more than ten years may enjoy a three-five years’ exemption of the income tax for the newly-added economic result in accordance with the ratio of investment by the outside partners, a 25 percent refund of the value-added tax and a 50 percent refund of the urban construction and maintenance tax, tax regulating the orientation of investment of fixed assets, tax for land-use, and house tax for five years. They shall also be entitled to exemption from the additional fees of the circulation tax as stipulated by the government of the autonomous region. During the tax exemption and reduction period, the profits distributed to them shall be regarded as duty-paid. Preferential policies may be liberalized in the eight counties in the southern mountain area and Taole County to a proper extent.

 

Article 4: Ventures with exclusive foreign investment and cooperative enterprises (with outside partner’s investment more than 500,000 yuan and the term of cooperation longer than five years) in tertiary industry (not including the development of real estate, recreational businesses, catering industry, and hotel industry) shall be entitled to a 3-4 years’ exemption from the income tax, a 1-2 years’ refund of the business tax, a three years’ refund of 50 percent of the urban construction and maintenance tax, tax regulating the orientation of investment of fixed assets, tax for land-use, and house tax.

 

Article 5: Ventures with exclusive foreign investment, joint ventures, and cooperative enterprises established in the autonomous region may enjoy a 30-50 percent discount of the fixed land price for using cultivated land upon approval by the government. They shall be allowed to transfer the right for the use of land after five years of operation.

 

Article 6: Those engaged in the development of agriculture, forestry, animal husbandry, and fishery shall be exempt from the agricultural tax and tax for special agricultural and forestry products for six years from the year they begin to make profit. Those engaged in the development of poverty-relief projects in the eight counties in the mountain area and Taole County shall be exempt from the agricultural tax and tax for special agricultural and forestry products for ten years. The wasteland they need can be provided by means of assignment.

 

Article 7: Ventures exclusively with one’s own investment and proprietary cooperative enterprises engaged in highly-processing agricultural resources and the amount of investment surpassing two million yuan shall be exempt from the income tax for eight years beginning with the year they are in operation. Those with investment surpassing five million yuan may enjoy income-tax exemption for ten years beginning with the year of operation.

 

China Overseas: Looking beyond the headl...

China Overseas: Looking beyond the headlines.

A special report by China Dialogue on China's overseas investments, including articles on Africa, South America and Asia. Please click here to download the full report

 

 

 

Chinese companies stuck in image crisis overseas

How NGOs can help Chinese firms do better overseas

Social instability main threat to China overseas

Why China must strengthen environmental standards

China’s non-interventionist aid stance on the way out

Why does no one like Chinese companies overseas?

China and Latin America: Which way now?

China develops Latin America’s clean energy

Who will feed China’s pigs? And why it matters

China’s firms battle each other in Africa

China’s energy footprint in Central Asia

Chalco: praised overseas but a major polluter at home

Don’t get excited about Chinese nuclear exports yet

Chile’s pollution grows to meet China's copper demand

Combating illegal timber: what action will China take?

Chinese banks ignore Ecuador mining campaigners

Chinese influence creates mixed feelings in Cameroon

 

APEC 2014

APEC 2014

With the closing of APEC earlier this month, its staging in Beijing has provide the organization with some much needed limelight. The aspirations expressed and announcements made were by no means small: A USD 40 billion fund for infrastructure development, blueprint for the pursuit of a Free Trade Area for the region (FTAAP), US-China agreement of the reduction of Carbon emissions, Russian-Chinese agreement to use national currencies for trade settlements, as well as many other bi-lateral agreements between APEC members.

 

  

 

With the emphasis of agreements firmly on Infrastructure development China has taken a leading role in the pursuit of what was described by President Xi as the ‘Asia-Pacific dream’, described as: having more economic vibrancy, free trade and investment facilitation, better transportation links, and closer cultural exchanges. He urged the region's economies to explore new drivers for growth and draw a blueprint for comprehensive connectivity.

 

The following documents represent the major initiatives and findings of the meeting:

 

Report to implement the APEC connectivity blueprint.

The Report to Implement the APEC Connectivity Blueprint supports the implementation of the APEC Connectivity Blueprint for 2015-2025 which was endorsed by APEC Leaders

 

APEC Economic Policy Report on Good Regulatory Practices.

This is an executive summary of the 2014 APEC Economic Policy Report which highlights the challenges of APEC economies in implementing Good Regulatory Practices and suggests further steps in promoting the use of GRPs.

 

Key Trends and Developments relating to Trade and Investment Measures and their Impact on the APEC region.

Prepared by the APEC Policy Support Unit (PSU) to inform APEC ministers, officials, and stakeholders on recent trade and investment trends in the region, as well as trade and investment-related measures recently implemented by APEC member economies.

 

Trade and Economic Growth: 25 Years of a Stronger Relationship within APEC.

The purpose of this Policy Brief is to explore the correlation between trade and the gross domestic product (GDP) within APEC and show the importance that trade plays in APEC’s economic growth vis-à-vis the rest of the world.

 

Education insight report.

Education insight report.

A snapshot of education and related developments that occurred in China in the first half of 2014, prepared by Education New Zealand. 

 

 

China’s Ministry of Education released its full year figures on the number of students who travelled abroad in 2013. The figures show a record number of students – 413,900 – studied overseas.While the number of students heading overseas reached an all-time high last year, the rate of growth slowed significantly. Whereas previous double digit growth in the number of students heading overseas had almost become expected, 2013 bucked the trend with 3.5 per cent growth. This compares to a growth rate of 18 per cent in 2012 and an annual growth rate of 28.2 per cent between 2000 and 2010. 

 

For the full report please click here to open the PDF.

Sina Corporation.

Sina Corporation.

Sina Corporation is an online media company targeting the global Chinese community. Founded in 1998 and headquartered in Shanghai, it is publicly traded in the US on NASDAQ where it IPO`d in 2000. It operates some of the most popular web portals and social media sites in China which feature targeted content. Users browse most content for free, and the company monetizes its readership by selling advertisements similar to traditional media formats. Historically, the company’s web portals have been the most important channel for reaching users, but its social media platform, Weibo, continues to gain in significance for the company following its launch in late 2009.

 

 

The company sells advertisements, which constitutes about 80% of its revenue, on its web portals (please click here to see it’s various portals) and social media properties. Sina operates multiple portal sites for audiences in different places (mainland China, Taiwan, Hong Kong, etc), featuring a wide range of content. The mix of content enables the company to offer advertising clients placement in specific areas of interest (sports or finance, luxury etc) to reach their target audience. The majority of Sina’s advertising business is brand advertising, which focuses on building a brand opposed to influencing an immediate purchasing decision.

 

Pricing for advertising can vary based on the portal property, as well as which channel (sports, auto, finance, news, entertainment, etc.) the advertiser chooses. Examples of pricing are shown below (taken from the 2014 advertising rate card

·         Homepage banner (top of page, 1000x90 pixels, all 5 slots): 450,000 RMB per    day (or 100 RMB per CPM/day)

·         Homepage banner (top of page, 1000x90 pixels, first slot in rotation): 430,000   RMB per day

·         Homepage button (near top of page, 240x350 pixels): 450,000 RMB per day

·         Fashion page button (marriage section, 300x200 pixels): 15,000 RMB per day

·         Homepage text links (near autos section): 180,000 RMB per day

·         Sina news page text link (near society news, right side): 12,000 RMB per day

Major revenue streams are from customers in the automotive, fast-moving consumer goods, Internet services, financial services, IT and telecommunication industries. The company suggested that its target customers are multinationals and large domestic companies looking to build their brand within China.

 

The company’s non-advertising business includes Mobile Value Added Services, Weibo Value Added Services, online games, and other fee-based services the company provides.

 

Current company information and investor news is available via its English homepage found here

Coming to a bank near you: globalization...

Coming to a bank near you: globalization of the Renminbi.

It`s simply a question of when the renminbi (RMB) will become a global currency rather than if. The Internationalization of the RMB is an inevitable progression for an international economic power such as China. Its currency, which is still carefully managed by the government, has a market share well behind the US dollar and the euro and currently barely traded on foreign exchange markets. But volumes are climbing steadily and all the signs point towards the RMB gaining greater stature as a stable reserve currency of choice.
 

 


Late last year, as the world’s largest exporter and manufacturer, the RMB overtook the euro to become the second most used currency in global trade finance after the dollar, according to the Society for Worldwide Interbank Financial Telecommunication. And it also became the ninth most traded international currency.


China’s tight control on the nation’s capital account: the flow of funds both in and out of the country, seems to be the only outstanding issue in the RMB`s rise. Whilst international trade goes some way in redressing the balance, China needs a more efficient and most importantly, transparent, financial market.


The currencies of countries that play a major role in world trade have tended to become reserve currencies, i.e. held in significant quantities by national banks to protect nations against currency fluctuations. Central banks are now beginning to hold part of their foreign exchange reserves in RMB, albeit in small amounts, and the People’s Bank of China has set up 24 arrangements with international counterparts to allow it to swap the RMB in exchange for their own currencies.


China has begun to loosen its control over its financial markets and gradually open up access to its onshore markets. In 2007, the Chinese government began issuing RMB-denominated notes, bonds and funds, known as “dim sum bonds,” in Hong Kong. Since 2009, companies in Mainland China have been able to complete cross-border trade in RMB which allows companies to reduce transaction costs, better manage foreign exchange risks and speed up payments.


The reduced influence of the US dollar and diversification of currency reserves are key, if we are not to see a repeat of the 2008 financial crisis hit Asian Central banks again. More choices in international reserve currencies provide greater checks and balances to the international financial system worldwide.


While there are obvious benefits from the RMB challenging the dollar’s dominance, there are also numerous risks, predominantly the ability of Chinese policymakers to have total control of the economy, as has been the case for the last 30 years.  Secondly currency fluctuations can impinge significantly on China export sector which is already suffering from higher labour cost.


Countries are going to need to be able to trade in something besides dollars. It simply makes sense that if a large proportion of an emerging-market country's trade is with China, it should do its trades in RMB. However the key is stability in monetary policy and China`s need to make its currency reserves work on the international stage.

 

China Greentech report 2014.

China Greentech report 2014.

The China Greentech Initiative (CGTI) has now released its 2014 report.  Greener, Smarter, More Productive, the fifth in a series that was first launched at the World Economic Forum in 2009.

       


Increased awareness in China of the need to tackle pollution and improve the quality of life in Chinese cities is driving some significant changes in policy. The Report contends that to maintain a national GDP growth target of 7.5% through 2014, Chinese economic policy must be accompanied by an equally resolute vision for cleaner growth. Building on the new approach outlined in last year’s report, the latest edition offers a path forward for China to adopt a greener, smarter and more productive model of development.

The 2014 report asserts that there is a profound opportunity for leading companies to integrate their products and services to customize replicable solutions for China’s project owners and governments in the areas of industrial efficiency, distributed energy, greener buildings and cleaner mobility.

Since the release of the first report, China has emerged as an innovative driver of greentech industry development; and is fast becoming a hub for more productive practices and implementation that can be profitably adopted by global industry stakeholders. The report outlines ambitious new central and local government plans for pollution reduction; and highlights how forward-thinking companies can use innovative technologies, best practices, and global collaboration models to accelerate China's sustainable growth.

 

Please click here to downlaod the report as a PDF.

Performing due diligence on Chinese...

Performing due diligence on Chinese Companies.

Irrespective of where you are in the world and who you are about to do business with, due diligence is essential to protect yourself. In China things can be a little more difficult due to language issues and access to information but not impossible. Here is our checklist of things to do based on 20 years of doing business here.

  1. Ask for a copy of the company’s business license, this provides the most basic of information relating to the company:  Official company name, date of formation, business scope and name of business owner.

 

  1. If possible, check with local State Administration for Industry and Commerce (SAIC) on the legitimacy of the business details you have been provided.

 

  1. Points to notice on the license would be: Is the business scope in keeping with the type of business you will be conducting? Is the registered capital in keeping with the business you will be conducting: typically a Consulting company might have just 100,000 rmb in registered capital, whilst with a manufacturing company you would expect a few million rmb.

 

  1. Who is the person you are talking with? Is he using a company email or a personal one. Whilst it is not uncommon for legitimate people to be using  personal emails such as xxx@126.com or xxx@shou.com it should make you a little more cautious as to who they really are. Consider if you dealing with an official company representative or a middleman/broker? Does my contact have binding legal authority over the company?

 

  1. Take a look at the company website. Compare the information that is available on their English to their Chinese language site, and note any discrepancies you may find. See where the company is located, dose this match up with the registration address. If not it`s worth asking a few more questions.

 

  1. If your being asked to make a payment, is it to a Personal bank account with somebody`s name or to the official Company account with the company name? Whilst it is not unusual to use personal accounts in China to mitigate tax, ask to be given the company Bank details just as a further check on legitimacy. Further all Chinese companies should be able to provide you with a official Chinese Invoice issued by the Tax administration (not a Invoice printed on a company letterhead), if they say they are unable to it would be for one of 2 reasons: they are mitigating tax (in which case you may negotiate) or simply they are unable to since they are not tax registered.

 

  1. With a manufacturer do they have a quality control system in place? Do they have an international quality accreditation? If so, ask for a copy and check with the authorization organization. It is also worth checking the company against:

The International Suppliers Blacklist:

Trademark Office of the SAIC

State Intellectual Property Office

 

  1. Depending on the amount of money involved in your transaction:

Consider hiring a verification company to pay a visit to your Chinese supplier. Commonly 30% is usually acceptable as a retainer and the balance, 70%, with the B/L.  Also consider other ways to pay such as Letter of credit, to reduce the risk.

 

In the case of any dispute, a written procedure for Arbitration (either in China or elsewhere) instead of the Chinese Courts is always preferable: it will save you lots of money and time.

 

  1. Lastly consider the time spent at meetings and banquets as part of the process. You might think this is laborious, but the Chinese are using this time to establish whether you will make a suitable and trustworthy partner and whether they want to enter into a long-term business relationship with you. It is wise to be doing the same.

 

Whilst the realities of doing business with China can seem daunting they are not insurmountable. Do not presume anything, but do ask for information and proof. Again if your not comfortable with anything, ask and always use your instinct.

Insurance companies of China

Insurance companies of China

Having experienced rapid expansion and growth over the last decade the industry as a whole is still considered to be in its infancy even with a compound annual growth rate of 28-30% for the 2009-2013 period. FDI has played a major role in the development of the industry accounting for about half of the companies currently operating in the mainland. The market is mainly focused on two segments: auto and commercial property insurance however health insurance is becoming significantly more widespread along with emerging non-life insurance products like product liability, credit and marine insurance etc. Currently, auto insurance accounts for over 70% of the premium in the non-life insurance sector (please click here for KPMG`s latest outlook on auto sector insurance).

 

 

As a whole the industry is investing more in risk segmentation, new distribution, product innovation, and customer services. Sustained growth of the China non-life insurance market will be maintained over the next few years.

 

The list below comprises China`s top 10 Insures:

 

No.1 China Life Insurance Co Ltd

China Life Insurance Co Ltd is the largest life insurer in the People's Republic of China. The company offers individual life insurance, group life, accident insurance, and health insurance policies. China Life commands 45 percent of the market, and holds the number one position in 29 of the country's 31 major markets.

Total Assets: $321.205 billion

 

No.2 Ping An Life Insurance Company of China Ltd

Ping An Life Insurance Company of China, Ltd. is a major subsidiary of Ping An Insurance (Group) Company of China, Ltd. It was established in year 2002. For the past 10 years, Ping An Life has been growing rapidly as China's insurance industry has expanded, achieving a leading position in both scale and service quality. It is now the world's second-biggest life insurer by market value.

Total Assets: $117.795 billion

 

No.3 China Pacific Insurance (Group) Co Ltd

China Pacific Insurance (Group) Co Ltd ("CPIC") is an insurance group basically encompassing by China Pacific Insurance Company, a company established on 13 May 1991. The head office of CPIC is located in Shanghai.

Total Assets: $117.795 billion

 

No.4 New China Life Insurance Co Ltd

New China Life Insurance Co Ltd, headquartered in Beijing and founded in 1996, is an insurance company. The company primarily provides life insurance services. After the company went public in 2011, the total assets of the company reached 565.849 billion yuan.

Total Assets: $92.123 billion

 

No.5 Taikang Life Insurance Co Ltd

Taikang Life Insurance Company Limited is a Beijing-based, China-incorporated life insurance company. It is one of the largest in China and offers services ranging from life insurance to asset management. It was founded in 1996 and has branches in Beijing, Shanghai, Hubei, Shandong, and Guangdong.

Total Assets: $71.879 billion

 

No.6 Sino Life Insurance Co Ltd

Sino Life Insurance Co Ltd, incorporated in 2002, is a nationwide professional life insurance company in China currently headquartered in Shenzhen.

Total Assets: $31.888 billion

 

No.7 Taiping Life Insurance Co Ltd

China Taiping Insurance Group Ltd ("China Taiping") is a Chinese state-owned financial and insurance group whose management headquarters is located in Hong Kong. China Taiping is currently the longest standing national brand in China's insurance industry. It had already become an industry leader in the 1940s after its foundation in Shanghai in 1929.

Total Assets: $31.339 billion

 

No.8 AIA Group Ltd

The business that is now AIA was first established in Shanghai over 90 years ago. It is a market leader in the Asia-Pacific region, except for Japan, based on life insurance premiums, and holds a leading position across the majority of its markets.

Total Assets: $11,223 billion

 

No.9 CCB Life Insurance Co Ltd

CCB Life Insurance Co Ltd, headquartered in Shanghai, is an insurance company and its principle shareholder is China Construction Bank, one of China's major banks.

Total Assets:  $4.281 billion

 

No.10 Manulife-Sinochem Life Insurance Co Ltd

Manulife-Sinochem is a joint venture company between Manulife (International) Limited and Sinochem Finance Co Ltd (a member of the Sinochem Group). It was the first Chinese-foreign joint-venture life insurance company established in China.

Total Assets: $2.081 billion

China Railway Engineering Corporation...

China Railway Engineering Corporation.

China Railway Engineering Corporation (CREC) 中国中铁 is the second largest construction contractor in the world and occupies the 102th place on the Fortune Global 500 list. The Beijing-based SOE, together with its main rival, China Railway Construction Corporation, are of vital importance to the infrastructure expansion plans of China. The Group has 46 subsidiaries, including 28 wholly owned subsidiaries, 15 holding subsidiaries, 4 branch companies and 3 joint venture subsidiaries. CREC's construction teams are found in over 1,000 cities throughout China. In addition to the core business of construction, the company does surveying & design, installation, manufacturing, R&D, technical consulting, capital management as well as international economic and trade activities.

 

  

 

CREC has shown strong financial performance in recent years, as is shown in its financial results below (for its full annual report please click here). The company signed new contracts worth ¥929.6 ($149.2) billion dollars last year (2013), while existing contract revenue was ¥1.38 trillion ($222.3 billion).

 

 

2013

2012

Change %

Revenue

¥540.4($86.7) billion

¥465.6 ($74.7) billion

16.1%

Gross profit

¥40.3 ($6.5) billion

¥35.6 ($5.7) billion

13.4%

Net Profit

¥9.4 ($1.5) billion

¥7.4 ($1.2) billion

26.8%

 

 

Three sources constitute the majority of CREC’s revenue: railways, highways and municipal  construction. Last year the company built 4,843 kilometres of railways, 1,008 kilometres of new highways and 199 kilometres of light railway and subway lines. Notable projects include:

 

 

 

Railway lines

Highways

Municipal works

Nanjing - Hangzhou

Dali – Lijiang

Beijing Subway

Hangzhou - Ningbo

Fengjie – Wuxi

Shenzhen Subway

Tianjin - Qinhuangdao

Kunming – Bangkok

Shanghai Metro

Xiamen - Shenzhen

118 kilometres in Ethiopia

Guangzhou Subway

Addis-Ababa railway

Jiujiang Yangtze River

Shenyang 4th Ring Road

Tbilisi railway

Bristol Grieg cable bridge (Morocco)

Liuzhou Guangya Bridge

 

 

Other business areas in which CERC operates are: engineering equipment manufacturing, surveying, design, consulting, property development and natural resources mining, with the latter two showing the fastest growth.

 

 

Increasingly important, but often overlooked, is the China Railway Resources Group (CRRG), responsible for precious metals, ferrous and non-ferrous metals extraction, as well as logistics and surveying. With a strong focus on mineral extraction, specifically gold, copper, coal, cobalt, silver, nickel, zinc, lead and graphite, the Group has an active presence in Qinghai, Xinjiang, Inner Mongolia and Heilongjiang (where CRRC and Baoan Steel have signed an agreement to cooperate over a graphite mine). International operations in Congo, Australia, Laos and Venezuela (CREC began construction in 2009 of the Anaco-Tinaco railroad, an 800 million USD project to build a 471 km high speed railway line across the country).

Qingdao

Qingdao

A Snapshot

 

Qingdao is one of China's most dynamic, and possibly livable costal cities. An important international trade port located along the western coast of the Pacific Ocean in the south of the Shandong Peninsula, it is a main transportation hub for Northeast Asia. The original port built in 1892, then know as Tsingtao, now connects with 450 ports in 150 countries. The city currently boast numerous development and trade zone including: National Qingdao Economic and Technological Development Zone, Qingdao High and New-Tech Development Zone, Qingdao Qianwan Bonded Port Area, Qingdao Export Processing Zone, Qingdao West Coast Export Processing Zone, Sino-Germany Ecological Park, and Jiaozhou Economic and Technological Development Zone.

 

 

With a population of just under 8 million, Qingdao is also a major National Tourism city, know for it`s restored European buildings, beaches and International Conference venues. The city hosts the China International Consumer Electronics Show (SINOCES), the China International Marine Fair, Qingdao International Fashion Week, and the Qingdao International Beer Festival annually.

 

In recent years, Qingdao has been positively promoting the construction of a blue economic zone (for marine sciences) and a high-end industrial cluster, to build a advanced manufacturing base lead by companies such as Haier and Hisense.

 

Industries:

 

Logistics.

Valued at 412 Billion USD in 2011 the modern logistics industry in Qingdao has developed quickly in recent years: 6 major logistics parks, including Qianwan International Bonded Port. Four logistic centers, including the west coast export processing area, and six distribution centers, including Jiaozhou and Fu’an. Qingdao is now home to over 30 domestic and international logistics companies. Small and medium-sized logistics companies, in particular, are being actively encouraged to strengthen resource integration to meet the demands of national diversified logistics.

 

 

Tourism.

More than 50 million tourists visited Qingdao in 2013 catered to by over 155 star-rated hotels, including the international: Intercontinental, Hyatt, Kempinski, Accor chains. The city is currently focused on developing resort and vacation facilities and accelerating the development of Shi Laoren Resort, Phoenix Island, Langyatai, Tianheng Island, Lingshan Bay and Aoshan Mountain Hot Spring areas.

 

The municipal government is currently implementing plans to expand it`s port facilities to allow the city to become the `Home Port’ for a domestic cruise industry with an annual capacity of over 1 million passengers. Cruise operator Carnival expects to carry 500,000 Chinese cruise passengers in 2015, up from 350,000 this year.

 

 

Service Outsourcing.

The city currently has 167 outsourcing companies registered, employing around 30,000 university graduates, the largest seven companies accumulated accounting for over $10 million USD in revenue, including Lucent Technologies, Caterpillar, Qingdao Risong, and Unihub.

 

The city's Preferential Policy on Developing Service Outsourcing in Qingdao was launched in 2008, to provide financial support for the service-outsourcing sector. A supplemental policy on Service Outsourcing came out the following year to provide financial incentives to pay income and business taxes. It put more than 40 million RMB into the development of service outsourcing, a major force behind development in the city.

 

The city has a number of service outsourcing parks, with a total area of 1 million square meters, and more than 500 companies focusing on: software development, digital animation, data processing, integrated circuitry design and industrial engineering.

 

 

New Energy Companies.

Currently, there are five companies specializing in producing solar photovoltaic devices in Qingdao: Qingdao GIGA Solar New Energy Co (specializes in producing single crystal silicon, polysilicon, film solar cells and components). Abo New Energy Co. NESI Solar Co (solar film batteries). China Creative Wind Energy Co (on-grid wind power generation apparatus). Shandong Datang Corporation (wind power generation apparatus).

 

 

Established Industries.

Electric appliances- The leading companies, such as Haier, Hisense, and AUCMA are developing quickly and developing support companies so that, now the city has almost 1,000 supporting manufacturers, producing a range of goods.

 

Petrochemicals- As one of China`s major ports a whole range of companies have established industrial facilities in the city including: Sinopec Qingdao Refining & Chemical Co, Anbang Petrochemical, Huanhai Oil Technology, Yellow Sea Rubber Group, Guangming Tire, Huntsman Textile & Dying and BASF Pigment.

 

Automobiles - The city has 20 automobile manufacturers (18 for special models) and 260 spare-parts manufacturers, 82 of them large-scale.

 

Textiles and garments- The textile and garments industry has been evolving from traditional textiles to garments, household textiles, materials for fabric, dying and textile machinery which are all done in large scale production plants.

 

Ship and marine engineering- A ship and marine engineering area has been established on Huang Island at Haixi Bay, and at Jimo and Jiaonan. The Haixi Bay site is a production base for large barges, offshore platforms, low speed diesel machinery, large rollers, decks, ship electrical systems, and water loading. The Jimo and Jiaonan areas are bases for R&D centers for high value-added oil tanks with a 100,000-ton capacity, special ships, high-tech barge equipment, and support products. Companies, such as the China Shipbuilding Industry Corp, Branch Five, CNOOC Offshore Engineering, PetroChina Offshore Engineering, Yangfan Shipbuilding, and Harbin Engineering University research center all have facilities here.

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