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Repatriation Strategies – How can a SME get their profits out of China?

Repatriation Strategies – How can a SME get their profits out of China?

>> Article Views: 2311      Date: 2013-12-09

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In today’s environment, with China as an increasing consumer market, many companies have a respectable part of the total value chain in China. Quite often this results in having money “trapped’ in China. Through the appropriate business model, foreign investors can create solutions and structures to remit cash back to the shareholder or any other related company.

 

Profit repatriation is a delicate subject under China’s foreign direct investment regime. Various regulatory, formality and tax factors surrounding the issue make it worthwhile for investors to define carefully their repatriation strategies, so as to entail tax and profit outcome that they should be legally entitled to. These strategies may not necessarily be complex or costly, while their effects could be substantial.

Value-Added Tax (VAT) Reform in China

Value-Added Tax (VAT) Reform in China

>> Article Views: 2321      Date: 2013-11-20

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For many years, China has operated a dual system of indirect taxes, with VAT applicable to the domestic purchase and sale of goods as well as the importation of goods, typically at a rate of 17%. By contrast, most services have been subject to Business Tax (BT) at rates of either 3% or 5%. These reforms are taking place because BT is an inefficient turnover tax. It effectively taxes each stage of a supply chain, irrespective of the profit or “value-added” by each business in that supply chain. By contrast, VAT is a tax collected by businesses, but effectively borne by the end consumer.

 

Taxpayers should actively communicate with customers and suppliers and re-evaluate their business models, including but not limited to pricing, invoice issuance, previous arrangements for the purpose of avoiding repeated BT tax levy etc., to effectively reduce their VAT liabilities and optimize the cost savings benefits. Most importantly companies should meet with their direct tax officers to discuss the tax liabilities imposed upon them for various “services” in order to have a full understanding of the new VAT principles.

 

Intellectual Property Rights (IPR) - Best Practices in China.

Intellectual Property Rights (IPR) - Best Practices in China.

>> Article Views: 2314      Date: 2013-09-03

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"If you can make it, they can fake it!” – A common phrase used in China. Intellectual property (IP) protection is one of the major concerns that western companies have while deciding whether to collaborate with Chinese companies or even enter the China market. The IP protection history in China is very short. For centuries, the Chinese people had not had any sense of protecting their own inventions or respecting the inventions of others. Not until 1984, when the Chinese government established its first patent law. The Chinese government has realized that creating a positive IP protection environment is not only important to protect the rights of foreign companies collaborating with their Chinese partners, but also critical to foster a creative environment for technology advancement of Chinese companies.

 

There are numerous internal and business policies that companies can undertake to reduce the exposure of IP misuse in the first place, including internal IP control; non-disclosure of trade secrets and know-how; careful selection and monitoring of business partners in China, including distributors and licensees; or avoidance of business partners. Although this may make market penetration more difficult, it will protect a company’s vital assets from being exploited. It is advisable for companies to seek advice on IP issues before entering the market.

 

Analysis of the competition strategy for MVNOs

Analysis of the competition strategy for MVNOs

>> Article Views: 2321      Date: 2013-08-23

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In May 2013, the Ministry of Industry and Information Technology issued the Notice for the Launch of the MVNO (Mobile Virtual Network Operator) Pilot Program in China, allowing private enterprises to enter into the MVNO business. In a short period of time, we will start seeing MVNOs operating in China's telecom market.  Which types of enterprises have advantages in the MVNO area? When different types of enterprises enter the MNVO market, should they adopt different strategies? What are the potential opportunities and threats in the MVNO market?

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