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China Web & Software development environment

China Web & Software development environment

The sheer volume of information being generated in China is having a huge impact on how business operate in China. What was not possible to code and develop in China just 3 years ago, is now possibly, more efficient than coding and development in traditional locations such as the US and India. China’s ability to develop, search and hyperlinking technologies has risen exponentially. However, the challenge has now become one of attracting talent rather than searching for non-existent competencies or trying to develop technical expertise in-house.

 

 

The China's Developer Survey Report 2017, commissioned by Alibaba Cloud Developer Community (ACDC), surveyed over 7,032 developers in Mainland China. In this report, developers shared their preferences for software development, including their favorite OS, development environment, programming language, database, framework, and codebase. Among other things, you can find out about China's software development trends and practices in fields such as cloud computing, big data, artificial intelligence, blockchain, and security.

 

 

Top 25 trends of developers in China.

1. Windows is still the favorite OS

67.2% of developers prefer Windows, 20.3% prefer MacOS (OS X), while only 12.5% prefer Linux or other operating systems (OS). Some of the main motivations of using Windows include the familiarity of the OS and the availability of platform resources in China.

2. JavaScript is the most widely used development language

While SQL is the most popular development language worldwide, developers in China still prefer JavaScript and Java. Developers proficient in Java and Python paid significantly higher than peers.

 

 

3. WordPress and Discuz! are the top web applications used by web developers

Owing to the popularity of blogs and forums in Mainland China, Discuz! and WordPress are the heavy favorites among web developers.

 

 

4. 92.1% of developers in China are male

The developer community in China is heavily male dominated, with only 7.9% of developers are female. This number is slightly higher than the global average of 88.6% (2017 Stack Overflow Global Developer Survey).

5. Beijing is the most popular city for developers, followed by Hangzhou

Hangzhou, with the presence of Internet giants such as Alibaba, has transformed from being a fairly unpopular city to the second most preferred city for developers in China.

6. Front-end engineering is the most important skill for front-end developers

Developers with "front-end engineering" skills are highly employable in Mainland China. Front-end engineering mostly involves feasibility analysis and optimization of projects through detailed planning.

7. Eclipse is the most popular development environment

The top four integrated development environment (IDE) in China are Eclipse, Notepad++, Visual Studio, and Sublime Text. Major factors for deciding on a development environment include cost and ease of use.

8. MySQL is the most widely adopted database

The “Open Source” nature of MySQL makes it a popular choice among developers compared with more traditional databases such as SQL Server. Oracle is also a popular option, but its adoption is hampered by its price tag.

9. There is no preferred cloud deployment model among developers in China

Private, public, and hybrid cloud are all of equal importance in China. Instead of having preference on a single deployment model, developers in China focus on the coexistence of multiple alternatives for different applications.

10. Being a developer pays well in China

A typical developer in Beijing earns an average of RMB 9,240 (USD 1457) a month, which is higher than the city average. The monthly income for 32.2% of developers in China falls within the RMB 10,000 – RMB 20,000 range.

11. DingTalk is becoming increasingly popular among high-income developers

In China, there are no concrete distinctions between enterprise and social communication tools. Developers prefer to use social IM tools, such as DingTalk, QQ, and WeChat, as their primary communication tool. DingTalk users tend to be those from higher income levels.

12. 49.2% of China's developers have started using Big Data storage solutions

Hadoop HDFS offline storage and Hbase online storage are two popular alternatives to relational databases for data storage. More and more enterprises in China are embracing Big Data and its technologies, specifically in the IoT, finance, and e-commerce industries.

13. Developers in China are a relatively young workforce

A majority (56.7%) of developers in China have only 0-3 years of work experience. This suggests that the developer community in China is less experienced as compared with international peers (42% have 3-10 years of experience).

14. Computer vision, NLP, and voice recognition are the three hottest topics in AI among China's developers

Developers in China are facing a multitude of challenges when dealing with neuro-linguistic programming (NLP) and voice recognition. These challenges stem from the complex structure of the Chinese language, as well as limited resources for voice data.

15. 71.8% of China's developers have Bachelor's degree or higher

This result suggests that China's developer are better educated than their global peers on average. According to the 2017 Stack Overflow Global Developer Survey, only 56.6% of developers globally have bachelor or higher degrees.

16. Node.js is China's favorite code operating environment

Similar to developers from around the world, Node.js, AngularJS, and .NET Core are the three most preferred application framework and codebase in China.

17. React Native is the leading cross-platform solution for mobile development

From food delivery to bike renting, mobile applications have become a necessity in China. For mobile developers, React Native and jQuery Mobile are the two most popular cross-platform solutions in China.

18. GitHub is the preferred repository for source code

30.7% of developers use GitHub to host source codes, while 30.5% of developers use internal corporate tools. China-developed repositories are still not widely adopted, with Alibaba Cloud Code repository being used by only 10.2% of developers.

19. China developers prefer Git over SVN

When teamwork is required, China's developers would first choose Git (45.9%) as the version management tool, while SVN (38.9%) comes second.

20. Agile development is widely adopted by developers in China

45.6% of developers choose agile/scrum development models as their first choice, followed by the traditional waterfall development model (36.4%).

21. Ethereum is the most widely used blockchain product

Ethereum is popular among China's developers because it is open source and provides good support for new developers. Because Bitcoin transactions is suspended in China (as of 2018), many developers are still exploring other possibilities of using blockchain as a service.

22. Continuous integration is still not widely adopted in China

As many as 49.5% of developers have never used any development integration management tools. However, there is also a significant minority (31.8%) of developers who use Jenkins to automate software development processes.

23. Security is a big concern for developers in China

70% of developers in China are well aware of the importance of security for enterprises, with a strong emphasis on invasion detection and loophole scanning. However, enterprises in China do not invest enough on security.

24. Web development, front-end development, and mobile development are the largest fields for China's developers

In China, 52.7% of developers are working on web development-related projects. Emerging fields such as Big Data, cloud computing, and security are still in great need for experienced developers.

25. …and finally, China's developers are in many ways similar to their international counterparts

From denim jeans to generic brand T-shirts, the go-to attire for China's developers is pretty similar with developers from across the globe. Furthermore, the vast majority of developers in China are self-proclaimed introverts and have close affinity for computer games.

 

 

Search Engine Optimization for China

Search Engine Optimization for China

By Saurav Bhattacharyya for China Brain.

 

When you are looking at optimizing your online presence in China, there’s really only one search engine to worry about; Baidu, which until recently claimed almost 80% of the search share. Last year it took a small dip when Qihoo, a local security vendor and internet provider, launched its own search engine, 360 Search and gained around 15% market share but it still handles 60-70% of all web searches in China.

 

 

In the same way that Google dominates the search space in the United States, Baidu dominate the mainland China search market. A combination of government restrictions, local knowledge, language skills, and more than a little skill has seen Baidu emerge as the search engine of choice for the half a billion Chinese who use the internet regularly.

 

 

As a result, Baidu’s search engine is the cornerstone for companies looking to expand their businesses in China. But even if a company has a handle on how to negotiate and optimize their website for foreign search engines attempting to do the same for Baidu is not possible: Baidu is not Google, and optimizing your site for Baidu is a different process than optimizing for Google.

 

 

Basics

  • Domain Name. Baidu prefers domains that use a .cn top level domain (TLD). While there will be .com and .net sites ranked by Baidu, and especially as the search engine expands its reach, Baidu continues to favor .cn domains and they consistently rank higher
  • Hosting. Whereas other search engines don’t particularly care where your site is hosted (save for any impact on site speed, of course) Baidu wants your site hosted in China. While Hong Kong servers also count for this purpose and has the bandwidth to serve the mainland, Taiwan definitely does not.
  • Physical Address. Baidu favors sites that have a physical presence in China, or at least the semblance of a physical presence. This doesn’t mean that you need to open and staff a Beijing office or rent space in Shanghai. But you should make sure that you have local Chinese contact details on your site.
  • Censorship. The Chinese government enforces a strict censorship regime for all online activities in China. Baidu indexes sites in line with this policy so anything that violates the censorship regime will see a site either refused listing or de-indexed from Baidu’s database.
  • ICP License. Typical of China’s bureaucratic governance all websites should apply for an Internet Content Publishing (ICP) license. It is not difficult to obtain but generally takes around a month to secure when documents are all in order. Without an ICP license, ranking high on a Baidu is difficult.

 

 

Content

  • Language. Your site should present its content in Chinese, but be warned: not all Chinese is Chinese to Baidu. Baidu has a strong preference for Simplified Chinese (otherwise know as Mandarin) and while it will also index Traditional Chinese, it doesn’t rank dialects, Cantonese, or other foreign language sites (English, French, Spanish, or German) highly.
  • Meta-Tags. According to Search Engine Land Baidu’s ranking algorithm pays close attention to the meta-tags that Western search engines place less importance upon. A good web developer will help you get all these points right. These include:
    1. Title Tags. These should include your keyword and be written in the same style as per Google or another search engine. However, Baidu also encourages sites to put their brand or company name in every title, too, preferably at the end of the title.
    2. Meta-Descriptions. While a minor ranking factor for Google, Baidu ranks sites with relevant meta-descriptions that include the page or post’s keyword higher than those that ignore this meta-element. Make sure your meta-descriptions are well written to rank higher.
    3. Alt-Tags. Baidu prefers all images include an alt-tag that is relevant to the post and page it is published on. For businesses building a local Chinese site based on an existing English language site, these tags are so easily overlooked. Make it part of your initial site build to add these.
    4. H-Tags. Baidu treats h-tags similarly to other search engines. Every page should have at least a H1 tag, and H2 and H3 tags should be used to break up content without skipping any heading levels. Make sure your keywords are repeated in your H-Tags.
  • New Content. Baidu favors newer content over older content and so a useful optimization strategy is the regular creation and publication of new, fresh content. For business this could include hosting a blog, regularly adding press releases and media releases, and ensuring that content is engaging and is published on a regular schedule.
  • Unique Content. All search engine penalize duplicate content but Baidu is particularly harsh. Your content should be unique, not only on your site but also online. This means being aware of ‘scrapers’ and bots that take your content and republish it elsewhere on the web. Acting quickly to address instances of plagiarism will help avoid penalties from Baidu for duplicate content.
  • Anchor Text. Baidu pays close attention to your anchor text so for internal links (those directing users to another part of your site instead of an external URL) you should make sure you are aligning the anchor text with the nominated keyword for that page or blog post. This is good SEO practice for other search engines, too, but especially important for Baidu and in China more generally.
  • To the Top. Numerous China-based SEOs report that the Baidu crawlers are not as powerful as Google’s bots, and recommend placing important keywords near the top of the page. While this is a good strategy for Western search engines, too, it is especially important if Baidu’s crawler does not manage to make it to the bottom of your content before moving on.

 

 

Technical

  • Load Time/Speed. Speed is a ranking signal for most search engines, but for Baidu it is a very important signal. As a result you should aim to keep your page load times as low as possible. Having a local host and stripping the site of extraneous code (in particular anything that uses the Google API), heavy images, and unnecessary code will help here
  • Multiple Domains. Baidu penalizes sites that include multiple domains and sub-domains. Your Chinese site (.cn) should be only your Chinese site. Do not host your Taiwanese, Mongolian, or Vietnamese site on a sub-domain, or even on the same server. Stick to a single Chinese language or bi-lingual site with a single domain hosted in China.
  • Flash. While Google has had the ability to crawl and index Flash-based sites and Flash elements since 2008, Baidu does not crawl Flash and will not index Flash elements in its database. Avoid Flash altogether for your Chinese.
  • Baidu Webmaster Tools. Like other search engines, Baidu has its own Webmaster Tools package. It i worth registering with Baidu’s Webmaster Tools for, even if they remain less advanced than Google or Bing, they allow website owners to gather basic statistics, check sitemaps are correct, and check robots.txt films are in order. Find the (Chinese language only) Webmaster Tools here.

 

 

Link Building

  • Quantity Counts. Baidu is a little different to other search engines in that it considers the number of backlinks pointing to your site an important ranking factor in determining your site ranking. This, of course, opens the door to link farming and all sorts of black-hat SEO techniques that fail on Google but still work – to a certain extent – on Baidu. However, engaging in these sorts of practices is something you’ll do at your own risk: Baidu is constantly improving and while the end is not yet nigh for this sort of thing, it is growing closer every day.
  • Quality Counts. The quality of the backlinks pointing to your site continues to grow in importance on Baidu. As the search engine evolves, this is expected to only become more important, too. Hence, building quality backlinks to your website is going to be a key to achieving and maintaining a ranking for the keywords that you’ve identified as important for your Chinese language business activities.

 

 

Conclusions

Search engine optimization (SEO) should be seen and a progressive thing done over months, not a one time fix: its all about making small changes and refinements over time. Expect your site to progressively gain viewers and site search position for your main keywords.

 

 

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Saurav Bhattacharyya is Managing Director of China Web Designers, a Beijing based website localization and development company. Having lived and workied in China since 1997, he has an excellent understading of the China internet landscape and issues foreign companies, in particular, face when considering their on-line presence.

 

China How To: hosting your website in...

China How To: hosting your website in China

Want to sell a product or target visitors in China, in which case you will need a China server for your website. Whilst there are hundreds of hosting platform with a data center in USA, Europe, and Asia, you have limited choices in China.

If you are looking to do business in China you really need to host your site locally to ensure speed of user access, Regulatory compliance, better search engine rankings and to ensure that your site is withing the Great Chinese Firewall.

Lastly be aware that hosting in China is more expensive than in another region.

 

 

 

 

The list below commprises the main hosting providers with data centers in China.

A word of Warning: Unfortunately most of the following mentioned sites are in the Chinese language. So be ready to use a translation tool if Chinese is not your language.

 

 

1. AWS

AWS (Amazon Web Services) has collaborated with a local partner to offer cloud services. Currently, AWS is available in the following locations.

  • Beijing
  • Ningxia

You won’t see all the products offered in China as you may see in AWS global. However, it got sufficient list of products to fit from small to enterprise level of applications.

If you are looking for a vast range of products and cost-effective solutions, then AWS would be a good choice.

 

 

2. Sino Hosting

One of the popular one out there offers shared hosting, VPS, and dedicated servers. Sino got servers in the following locations.

  • Shanghai
  • Beijing
  • Changsha
  • Hong Kong

You can get it started with shared hosting from less than $10 per month. Sino provides one-click software installation like WordPress, Joomla, Drupal, Magento, etc.

Support is available in English and provides ten days refund for shared hosting.

 

 

3. Alibaba Cloud

Need more coverage in Mainland China?

Probably Alibaba Cloud has got the highest number of data center locations in China.

  • Hangzhou
  • Shanghai
  • Qingdao
  • Beijing
  • Zhangjiakou
  • Shenzhen
  • Hong Kong

If you are not from China and need support on ICP application, then Alibaba Cloud would be a lifesaver.

Similar to AWS, Alibaba Cloud offers a full range of infrastructure services like CDN, VM, load balancer, database, backup, storage, etc

 

 

4. GZIDC

GZIDC provide a large number of hosting related services including the following.

  • Web hosting
  • Domain registration
  • Cloud services
  • Host rental
  • and much more…

Under cloud services, you can choose to host your applications in the following multi-line DC.

  • Guangdong
  • South and North China
  • Hong Kong

 

 

5. Western Digital

West is another popular offer all-in-one hosting solution. With more than 15 years in the industry, West has a good name in support and uptime.

 

 

6. HA Bang Net

Optimized Hosting for WordPress, HaBangNet server is located in Beijing.

The starter plan cost around $10 per month, and it comes with cPanel where you can install your favorite software like Joomla, WordPress, etc.

In starter plan, you get 5GB SSD storage, one free domain, 100GB bandwidth, etc.

 

 

7. Jinshan Cloud

Jinshan cloud is one of the top three public clouds in China. They got multiple products.

  • Server
  • Database
  • Object storage
  • CDN
  • Load balancing
  • Security-related
  • Video solution
  • Web application firewall

Jinshan is available with 19 data centers.

 

 

8. Tencent

Tencent cloud is trusted by more than 10,000 developers worldwide including popular products in China like QQ, WeChat.

 

Provisioning servers and other cloud services are easy with Tencent, and you pay for what you use.

If you are a startup or running existing business in a traditional data center, it would be worth to include Tencent in the list while moving the Cloud for lower cost.

 

 

9. Baidu Cloud

Baidu is not just a Google search competitor but also the Cloud. You can choose to host in Beijing, Guangzhou, Suzhou and Hong Kong.

Similar go to GCP, Baidu Cloud has many IaaS products like compute, networking, storage, database, big data, AI, etc.

 

 

10. UCloud

Ucloud has served more than 50,000 enterprise customers and got 21 global data center including 5 in China.

 

It has a function rich control panel to manage cloud services and recently container services. You can also use their pricing calculator to estimate the cost of required cloud services.

 

 

China How To: Applying for a Patent

China How To: Applying for a Patent

Whether you’re a full-time inventor or just someone with a really good idea, don’t wait around to patent your inventions and designs – because if you do, you risk having it stolen away from you, with no way to get it back.

 

 

You can register your patent within China through the State Intellectual Property Office. And because China is one of the 176 member countries of the Paris Convention on the Protection of Industrial Property, patents registered in China enjoy a “priority right” when being registered in other countries. This means that within 12 months (for invention patents) or six months (for patents based on exterior design appearance) of applying in China, the owner can apply for patents in other member countries within Paris Convention at the same time, with each country’s registration date for the foreign patents being backdated to when it was first given within China. 

 

 

Alternatively, if you want to get an internationally effective patent from the beginning, you can choose to apply for the PCT patent protocol. This is supervised by the World Intellectual Property Organization, of which China is a member country. This option (as an alternative to just registering in China) will be given to you during the registration process. If you choose to follow the PCT protocol then your patent will be automatically registered in all member countries, including China. However, this method costs more money and means a longer wait for the patent to be granted.

 

 

Step-by-step guide

  1. If you want to register a patent you should make sure that nobody else has had the same idea. To do that you’ll need to search the State Intellectual Property Office’s database of patents that have already been registered – you can check that out by clicking here.
  2. After making sure that your patent is still available for registration, you have to prepare two copies of each of the following documents: 
            •    A patent statement describing what it is you’re patenting and how it works/looks

            •    Abstract and accompanying diagram (if applicable) 

            •    Specification and accompanying diagram (if applicable)

            •    The rights you wish to claim for the patent (who owns it, whether the rights are to be transferred, who receives profits on the patent etc)

 

 

  1. After preparing all files needed, you can post all files to the State Intellectual Property Office (the postal address is listed at the bottom of this article), or hand-deliver to reception offices in some cities in China.
  2. The application fee can be paid at one of the offices when hand-delivering files, through a bank transfer, or through a postal transfer. If you post the application documents, a fee should be paid after the applicant receiving notice of acceptance from the office.

 

 

Postal address of State Intellectual Property Office

State Intellectual Property Office, No. 6, Xitucheng lu, Jimen qiao, Haidian district, Beijing.

北京市海淀区蓟门桥西土城路6号国家知识产权局专利局受理处

Post code: 100088

Contact: 010-6208-5588 / 6208-5599 / 6235-6655

www.http://english.sipo.gov.cn

www.http://www.sipo.gov.cn

 

 

Navigating China domain registration...

Navigating China domain registration and hosting.

By Saurav Bhattacharyya for China Brain

 

 

When it comes to appearing to a Chinese audience on the internet, there are multiple factors about your website you need to consider: your host servers location and domain suffix being two of the most important.

 

 

For businesses and websites wanting to reach a Chinese audience within Mainland China, the preferable option is to host within Mainland China. The reason for this relates not so much on geo-targeting, as it does in the majority of western countries, but more about control. When the servers are within China, through approved Chinese hosting providers, using approved Chinese ISPs (all government run) this makes monitoring of the sites content a lot more manageable. This is a main reason why Google is more or less a redundant search engine within China. However in order to run a website within China to a Chinese audience, you are required to submit an application to the Chinese Ministry of Industry and Information Technology for an ICP license (Internet Content Provider). This application needs to be approved and the ICP number displayed on your website: most commonly you can find this number in the footer of a websites. This ICP can be obtained from http://www.miibeian.gov.cn

 

 

China Domain names

Similar to how location based search works in the western world, a country code top level domain (ccTLD) is a still a very beneficial element in ranking with in China. Ensuring you have a .cn domain will go a long way to ranking well organically in China.

 

 

Recently the registration of China .cn and com.cn domains opened up to both individuals and businesses outside of China. Registration is now possible by providing the following documentation:

 

 

Businesses outside of China must provide the following:

  • Business registration number
  • A scanned copy of the registrant’s business certificate
  • A scanned copy of the registrant's proof of identity
  • A scanned copy of a signed Letter of Commitment

 

 

Individuals only need to provide two of these items:

  • A scanned copy of their proof of identity
  • A scanned copy of a signed Letter of Commitment

 

 

The .com or .cn question

Generally non Chinese businesses should always register both the .com and .cn domains to specify that they are both international and well as operating in China. Additionally .com domains are often seen as more trustworthy in the eyes of Chinese consumers. Shorter domains are always better since they are easier to remember. If you use several English words in your domain: placing hyphens in between words will make it easier for Chinese Internet users to remember as well as providing good keyword definition for search engines.

 

 

Hosting in Hong Kong

If you are unable to get your site hosted on the mainland, Hong Kong is both a viable and effective option, which also has the added benefit of allowing your site be fast for International users. Having a website hosted on a Hong Kong server would not require and ICP number and is generally as fast as a Mainland server. Unfortunately this method would slightly reduce a sites organic search engine ranking on Chinese search engines such as Baidu (site performance is a major component in their ranking algorithm. So provided the site loads well and quickly for Chinese users, this is not a major issue).

 

 

Finally there are a few points to take up with your web developer whilst designing a site for the China market:

 

  • Do not utilise western platform functionality i.e: Google Maps, Google API, YouTube video, Facebook or Disqus plugins

 

  • Limit or completely eliminate the use of externally pointing social functionality i.e: Facebook, Google Plus, Twitter

 

  • Limit your external linking to other non-Chinese sites, especially to sites with potentially banned content

 

  • Avoid shared hosting: if someone with the same IP address as your site is blocked, then your website will also be blocked. Use a dedicated server or VPS with a unique IP.

 

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Saurav Bhattacharyya is the Managing Director of China Web Designers, a Beijing based web design and development company.

 

English Heritage China

Tax Evasion in China. The Trillion Yuan...

Tax Evasion in China. The Trillion Yuan Heist
"In any market, especially one as competitive the Chinese market, the % margin spent on tax makes an enormous difference to a company's bottom line, and therefore to their ability to grow and invest"
 

By Andy Clayton.

 

The Chinese market is not only famous for being “bigger that you can understand", but also "more competitive than you can imagine".

 

 

Competition in China is cut throat and can often seem rigged in favour of the local companies in China. Some advantages of Chinese companies, such as better customer understanding, or stronger abilities at cultivating relationships, are hard to learn quickly. But there is one area of 'advantage' that is not hard to throw open the door on: gaming the tax system in China. In any market, especially one as competitive the Chinese market, the % margin spent on tax makes an enormous difference to a company's bottom line, and therefore to their ability to grow, invest, attract investment, and ultimately enrich shareholders.  Local companies in China are past masters at the tricks used to gain a margin advantage over less flexible foreign competitors in China.

 

 

Here, we throw the door open on the world that many local Chinese companies operate in. In the heart of the system sits something that needs to be fully understood: Fapiao.

 

 

1. The Worlds most significant, yet least understood traded paper

Not many outside of China realise this, but there is a paper currency - a commodity - that forms a core part of transactions in an economy that still accounts for more than a third of global economic growth. It involves transaction of paper in exchange for payment; is actively traded on both grey and black markets; and by individuals and companies. They are called ‘fapiao'. They are printed VAT Invoices, though comparisons can be misleading, so we will simply call them what they are - fapiao.

 

 

2. What is a 'Fapiao'?

Every company in China, when registering with the Chinese Tax Bureau, must purchase a special printing machine. This machine connects to the Tax Bureau in China, and every time that a company receives a payment, they are supposed to print fapiao from this machine. This ensures that the Tax Bureau is aware of the full income of every company in China. 

 

 

3. Why do Fapiao's exist?

Fapiao are the Chinese Tax Bureau's main instrument of control over tax collection. In the UK and other Western markets, companies issue their own commercial invoices, then declare their books at the end of the year, on pain of a thorough audit. In China it happens the other way round - control at the point of transaction is tight, due to the physical issuance of the paper invoices ('fapiao'), whereas the year end audit is closer to a rubber stamping exercise. As long as company headline figures, particularly around profit and corporation tax, look acceptable, local Chinese companies are not held to much scrutiny on the details (although supervision at this stage of the process is gradually tightening up). 

 

 

The consequences of this system are multifarious, and it often leads to confusion amongst foreign companies in China as many Chinese counterparts get involved in the following practices:

 

 

  • 2 Prices: with Fapiao and without 

Particularly when dealing with smaller Chinese companies, there are often two prices available for the purchase of goods or services - one including fapiao, and a lower one without. To British ears this sounds suspicious, but given the constraints of the tax system in China then you can start to understand the logic behind this practice. 

 

 

In many cases, such as dealing with freelancers or small companies with limited fapiao, there may be no fapiao on offer at all, as only a company can be tax registered. This creates a significant headache. Not only does it reduce VAT that can be reclaimed on issuing sales fapiao, but it also increases the profitability of the company (because of the missing cost fapiao), leading to a ruinous corporation tax bill.  

 

 

  • Paying into Company Accounts and Personal Accounts

For companies that cannot or do not issue fapiao, the question then arises of how they receive money for the sale of goods or services in China. Fapiao are not the only point of control for the Chinese Tax Bureaus. The company's bank account is of course open to scrutiny, and all transactions therein are by default taken to be company revenue or cost transactions.

 

 

Many local companies in China therefore require alternative accounts to receive funds for which fapiao have not been issued. Personal accounts are commonly used for this purpose. General Managers of Foreign Companies in China are usually highly uncomfortable with this kind of arrangement, but in China it is still common to have to make payments to personal accounts.

 

 

  • Running 2 Sets of Books 

" the audited books are the sum total of sales fapiao issued, minus the total of all the cost fapiao they have been able to collect, regardless of provenance, and bear little relation to the true profitability of the company. " 

With multiple streams of income and cost, both 'on book' and 'off book', this makes company accounting irreconcilable. The only way these companies in China can square this circle is to run multiple sets of books - the 'real' management accounts, and the accounts presented for audit at year end. 

 

 

Managers of companies worldwide are familiar with the concept of 'getting the books ready for year-end', which typically involves tying up loose ends, confirming the nature of transactions, and allocating costs and income to the correct accounts. This requires a degree of skill wherever you are operating. However, nothing compares to the fiction that are the audited books of many Chinese companies.

 

 

Simply put, the audited books are the sum total of sales fapiao issued, minus the total of all the cost fapiao they have been able to collect, regardless of provenance, and bear little relation to the true profitability of the company. Hence, the rush to bring in fapiao for costs (and sometimes at any cost - see final point on fake fapiao below) 

 

 

  • Stretching the Directors Loan Book

There is a means of moving money between company and personal accounts, which is an important conduit in the structure outlined above, and that is the director's loan account.

 

 

If you check the balance sheet of any company in China, one oddity you may notice is wild swings in the Directors Loan account. This is because it is used as the means for getting money on and off the books. At any given time, many companies in China are either busy finding ways to repay loans to the Directors account, if they are able to obtain a surplus of cost fapiao; or paying money back in from the account, in the event that they have off-books income.

 

 

Many bosses of Chinese SMEs have a keen eye for this number, and will select deals in part based on whether it helps them with their Directors Loan balance issue.

 

 

  • Split Compensation Structures for Employees 

It is common practice amongst many Chinese SMEs to set up employee compensation structures as a mix of 'base' and 'reimbursement' pay. The purpose of this is to minimise the declared salary of the employee for both social security and income tax purposes. Ultimately, the cost to the company is reduced, thereby giving them a significant advantage, enabling them to undercut those who are fully compliant when quoting for a job. The argument to employees is that it increases their take home pay, which is compelling when there is often little value seen in payments to social security service.

 

 

This then puts the employee (or the Company, if they have agreed to cover it) in the position of having to 'procure' fapiao. Staff in China often obsessively hoard taxi bills, restaurant bills, even getting VAT invoices from the weekly shop, all to hand in as the 'cost' portion of their salary.

 

 

  • Applying for an Increase of Fapiao

The fapiao blank stock - the 'empties' to be printed on - have to be purchased from the local Chinese Tax Bureau. Incredibly, this requires a special application purchase, especially to increase the value of the fapiao allowed to be issued. This situation can lead to companies not being able to issue fapiao, therefore take payment, and therefore pay tax, because the Chinese Tax Bureau refuses to issue more stock!

 

 

So, Chinese finance managers up and down the country carefully manage their fapiao stock, and have to be fully aware of upcoming surges in income and prepare accordingly. 

 

 

  • Negotiating over Fapiao

" Few companies in China would make a payment until a fapiao (or at least scanned copy thereof) has been received"

The China business environment tends to have a lower level of trust than the UK, US or European economies. Actual exchange of payment for fapiao is a source of much negotiation and choreography. Few companies in China would make a payment until a fapiao (or at least scanned copy thereof) has been received. As Chinese VAT is paid monthly, and corporation tax in China quarterly, the cost of insufficient fapiao can quickly rack up.

 

 

Larger companies will often insist on painful payment terms, sometimes requiring several months after receipt of fapiao before making payment. This can be incredibly challenging for the supplier in China, as the income of the transaction is already declared to the Chinese Tax Bureau, regardless of whether funds have been received or not.

 

 

  • Chasing Fapiao

It is astonishing the time and effort bosses of Chinese companies have to put in to the chasing and acquisition of fapiao. Given the margins involved, these are often negotiations at the highest level. Many meetings and dinners between Chinese CEOs revolve around this topic. Many Chinese companies will have suppliers they regularly use as much because of the ability to issue extra fapiao, as because of their product or price.

 

 

This creates an elaborate supply chain of connections. Certain industries, such as restaurants, take large volumes of cash, and therefore can end up with surplus sales fapiao, and then may sit at the bottom of a complex fapiao food chain. 

 

 

  • Fake Fapiao

A level below this, there is a huge black market for the supply of fapiao. Many street corners in China are adorned with name cards for the vendors of fapiao. A large proportion of the spam SMSs received around China are for this purpose too. This is an area trodden with great caution. Many of these fapiao are issued by 'suitcase companies' set up hastily and shut down equally fast, existing briefly only for the purpose of maximum fapiao production. Fapiao are traceable, so when the suitcase company gets shut down, the Tax Bureau in China follows the trail to all the companies found using them, which leads to big trouble. 

 

 

In the past fake fapiao were used much more commonly, so the practice is still ingrained with many Chinese finance managers as acceptable. We have come across numerous foreign companies in China where, unbeknownst to them, their internal finance team were procuring fake fapiao, with initial un-benign consequences, which came back to haunt them later on. 

 

 

The distinction of 'fake' fapiao is quite blurred though. For example, paying an existing supplier a few extra % for surplus fapiao often happens, but would not be considered 'fake', even though that would not happen in the UK. These days, as a general rule, companies would generally only obtain fapiao from companies with whom they could prove some kind of trading relationship.

 

 

 4. Countless Shades of Grey 

A friend of ours, a local Chinese, recently completed a phd on the Chinese tax system. His comprehensive study attempted to catalogue the full range of taxes companies operating in China are bound to pay. His astonishing result showed that, if a Company operating in China were to pay all taxes legally due, these would total 112% of revenue. That's right, for every RMB 100 of sales a company makes, they technically owe The State RMB 112, (so why bother starting?).

 

 

In reality, only a proportion of these taxes are actually collected, but the fact is no-one in China is fully compliant. This explains a lot of the local practices described in this article. Like it or not, there are often only countless shades of grey.

 

-------------------------------------------

 

Andy Clayton is CEO of LNP China. LNP China offer an easy and secure solution for companies from overseas to thrive when doing business in China by managing all back-office operations, which allows firms to operate and trade in China without having to go through the time, cost, and risk of setting up and running their own company. Since 2007, LNP China have supported over £25 million of exports for their clients in China.

 

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.

Top 10 Tips for learning Chinese

Top 10 Tips for learning Chinese

 

The following Article and PDF book are provided by SN Mandarin:  combining a Private school's flexibility & efficiency and University's Student Visa support & academic certification,is a highly recommended Chinese language school for you to learn Chinese. SN Mandaring also have a free E-book availabe for download here
 

 

 

 

By Jane Feng, chief teaching officer at SN Mandarin

‘It took you at least three years to learn your mother tongue so don’t expect to become proficient in Chinese in a few months’

 

1. Don’t be afraid of characters

Beginners, and even people who have lived in Shanghai for four or five years, are often reluctant to learn characters. Characters are important and they’re not that difficult if you learn them in the right way. They are not an obstacle to your learning they are a support that will help you to master Chinese. 

 

2. Use it or lose it

I teach my students to use the language, not to understand the language. At SN Mandarin we use real life teaching materials so students can communicate with local people very easily and have a sense of achievement, and so want to learn more.

 

3. Set goals

Students will get a sense of achievement if they set goals like – learn 300 characters in six months. And then they won’t realise it, but they’ll get to the point where they are the Chinese expert among their friends.

 

4. Get in the lab

In our school we have a language lab where you can read a sentence and the computer tells you if it’s correct or not, and plays it back to you along with the correct way to say it. It’s very important because students can memorise characters themselves, but they can’t learn pronunciation by themselves.

 

5. Be in China
A lot of the ex-pats are in Shanghai, but aren’t really in Shanghai, in China.  They’re life and working environment is all ex-pats. There’s not a lot of difference from their life in London or in Paris or in New York. The restaurants, the apartment, the office are all international - so it’s really had to be motivated to learn Chinese. Even if they think they want to learn. They need to use the language in a real Chinese environment and realise that with Chinese life in Shanghai will be much more convenient.

 

6. Be patient

It took you at least three years to learn your mother tongue so don’t expect to become proficient in Chinese in a few months of lessons. It takes about 40 hours to learn basic street level Chinese and it takes one year to master it if you study two hours a day.

 

7. Drop in on Chinese corner

At our school we have a Chinese language corner every day, Monday to Friday, for an hour and a half. We chose a topic to discuss and a teacher is always there. Usually 10 or 20 students come. It’s good for listening to hear students from other countries speak Chinese. 

 

8. Read the classics

Even for beginners I would recommend reading. There’s a series called Han Yu Feng that is only 15RMB/book with a CD from bookshops on Fuzhou Lu. As soon as students know 300 words they can read the red covers and when they know 500 words then can read the green covers. For intermediates there’s a good series called Book Worms that is actually for Chinese students to learn English. They are more than 40 classic novels re-written in simple English with the Chinese translation on the next page.

  

9. Go internet shopping

Using Chinese characters to search online is a great way to learn. I encourage my students to buy things on Taobao because they have to communicate with the shop boss in Chinese and they can buy stuff at a very good price! 

 

10. Make friends with your Chinese teacher

Chinese teachers are very happy to be friends with their students. And the best teachers get to know their students’ personalities so that they know the way they learn. You have to know Chinese people to know Chinese life and language.

 

Last but not least

 

Don’t watch TV
Some teachers will say watch the CCTV news but at the very beginning meaningless listening is not very useful. It’s much better to listen to simple sentences from your class on your CD.  It may be a little bit boring but it’s really useful for improving your listening. Especially if you follow the pin yin. It helps with pronouciation, listening and writing - so one stone three birds. For intermediate students watching movies in Chinese (no subtitles), listening to songs and watching TV can be helpful.

 

 

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.

 

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