China’sLawsRules&Regulations中国法律法规

China’sLaws,Rules&RegulationsDiscussionQuestions•WhatarethekeyaspectsofChina’spoliticalandlegalenvironment?WhatoptionsareavailableforforeigninvestorsinpreparingtheirbusinessentrytotheChinamarket?•HowhasChina’saccessiontotheWTOmembershipcreatednewopportunitiesandchallengesforbothChineseandforeignenterprises?•Whatarethelegal,politicalandinvestmentrisksinvolvedindoingbusinessinChina?Whatarethepossiblesolutions?•WhydidChinaestablishtheShanghaiFreeTradeZonein2013?WhatopportunitiesandchallengeswilltheShanghaiFreeTradeZoneprovideforforeigninvestors?China’sPoliticalandLegalEnvironment1.Thepoliticalsystemisstable.But,althoughthestatelookspowerfulfromtheoutside,itlookslesssofromwithin2.Thecommunistparty(CCP)isintransition.Theynowallowsbusinesspeople,or“capitalists”,tobecomemembers.ButiftheCCPwanttokeeppower,itisgoingtohavetosacrificeMarxismandcommunism.3.ThelegalsystemissubordinatetotheCCPRulebymannotrulebyLaw.Judgesareappointedandpromotedbythelocalpartycommitteeandgovernmentelite,notbytheMinistryofJustice.TenGoldenBusinessRulesforChina•Assembletherightteam,trainlocals•Knowthemarketandoperatingenvironment•Chinaisnotonebuteightdistinctlydifferentmarkets•Lookformultiplepointsofentry•Observemarketdevelopmentsandchanges•“Seektruthfromfact”(Businessrecords,statistics,statementsetc)•Knowhowtobenefitfromtheinformationnetworkanddevelopallies•Becreativeandpragmatic-likedrivingacarinChina.“Gropeone’sway,stonebystone,acrosstheriver”•Havepatienceandkeepoptionsopen-finaloffersarethefirststageofnegotiations•Remember:YouareinChinatomakemoney!**Conflictofinterest:+ChinaManagersstriveforoperationalsuccess(eg.sales)+HeadOfficeexpectsReturnonInvestmentForeignInvestmentOptions-JointVentures-WhollyForeignOwned(WFOE)-MergerandAcquisitionTrendsEquityJointVenture(EJV)Co-operativeJointVenture(CJV)WhollyForeignOwnedEnterprise(WFOE)LegalFormLegalentitywithLimitedLiabilityMaybesetupasalegalentityorasanenterprisehavingnoseparatelegalpersonstatusLegalentitywithLimitedLiabilityForeignPartner’sEquityNormallycannotbelessthan25%Nostrictrequirement.Dependsoncontract100%ContractRequiredRequiredNotRequiredArticlesofAssociationRequiredRequiredRequiredStandardsforInvestmentBenefitstotheChinanationaleconomy,Export-orientedorutilizeAdvancedtechnologiesExport-orientedorutilizeAdvancedtechnologiesBenefitstotheChinanationaleconomyMOFTECApprovalRequiredRequiredRequiredProjectProposalRequiredRequiredRequiredFeasibilityStudyRequiredRequiredRequiredSAICregistrationRequiredRequirediftherearechangesinthestatutoryitems(industrial/commercialandtaxregistrations)RequiredCapitalContributionCash,Capitalgoods,IndustrialPropertyrightsCash,materialobjects,land-userights,industrialpropertyrights,unpatentedtechnologyandotherpropertyrightsCash,capitalgoods,industrialpropertyrights,know-how,landuserightsForeign:AdvancedtechnologyandequipmentsmusttrulysuitedtotheneedsofChinaChinese:LanduserightBoardofDirectorsRequired.DecidedundercontractEitheraBoardofDirectororaJointManagementCommitteeisneededNotnecessaryExportrequirementNominimumexportrequiredNominimumexportrequiredNominimumexportrequiredAccountingAccountingasseparateentityrequired.AccountbookmustbekeptinChinaAccountbookmustbeestablishedandkeptinChinaAccountingasseparateentityrequired.AccountbookmustbekeptinChinaProfit/LossDistributionProfitandlosssharedaccordingtotheratioinregisteredcapitalProfitandlosssharedaccordingtocontracttermsAfterdeductionofnecessaryfeesandtax,profitcanberepatriatedoverseasTaxCorporateIncomeTaxCorporateIncomeTaxCorporateIncomeTaxInvestmentTermDependsonindustry;usuallydecidedbycontractSpecifiedinthecontractSubmitattimeofregistrationEarlyTerminationPermittedPermittedPermittedGoverningLawPRCLawPRCLawPRCLaw©Fiducia2002E.&O.E.PRODUCTIONINCHINA–AVAILABLEALTERNATIVESForcesthatShapetheChinaMarket1)MonitorandunderstandWTOinducedrestructuring2)ExploitopportunitiesresultingfromWTO,especiallydomestictrading,distributionandopeningbranchoffices3)Exploitgrowingdisposableincome4)Monitorinlanddevelopmentsandopportunities5)Concentrateondevelopingandmaintainingcompetitivestrategies(competitionfromdomesticcompaniesisincreasing)6)CultureofChinesecompanieschanging7)Improvebrandingandimagebuilding8)Howtodealwithskillshortage?(e.g.insurancesector)9)Attractandkeephigh-caliberlocalmanagersasthecompetitionforthemheatsupfromnewcomersanddomesticcompaniesMarketswithdevelopmentpotentialare:Telecom,Chemicals,Machinery,FastMovingConsumerGoods(FMCG),ITandServices.LegalOpportunitiesofRepresentationsagreementsoftenancy(businessandliving-room)residentspermitsforforeignemployeesshowingcompanylogousingofbusiness-cardsopeningbankaccountsindirectemploymentofChinesestaff(aboutaserviceagencylicensedbynationaladministration)TheTasksofRepresentationsRepresentationsarenotallowedtosetupbusinessactivities,i.d.theyarenotallowedtoissueinvoicesinChina.MainTasks:observationofthemarket,contacting,maintainingcontacts,strengtheningthetiestoclients,After-salesServicepromotionandsupportofthecompany'snameorbrand,marketstudy.WhollyForeignOwnedEnter