Building Bridges to China: China's Economic Growth and Opportunities for Foreign Investment

Building
Bridges to
China

PART 2 Jochum S. Haakma

Global Director of Business
Development, TMF Group

1 28 September 2012 - Chester Beatty Library

Building
Bridges to
China

Jack Yu

Managing Director
UK & Western Europe
Yingke Law Firm


Building
Bridges to
China

Corporate Establishment and the
Chinese Legal Environment


Shenzhen, Southern China Building
Bridges to
1978 China


Building
Shenzhen, Southern China Bridges to
China
2012


Building
Bridges to
Shanghai Pudong, 1989 China


Building
Bridges to
Shanghai Pudong, 2011 China


Building
Bridges to
GDP Explosion China

GDP Per Capita (USD, 1978-2010)


Building
Bridges to
GDP Explosion China

China is big, but will get bigger … almost a quarter of world output by 2030.

Nominal GDP 2010, USD 62trn Nominal GDP 2030, USD 309trn
(USD trn, % of global) (USD trn, % of global)

ROW China
10%
India Asia ex CIJ Japan ROW
Japan 6% 3% 5%
6% 3% China
10%
EU-27 23%
SSA 14%
2%

MENA
3%
Latam
US India
EU-27 6%
12% 10%
27%
CIS
3% CIS
5% Asia ex CIJ
Latam 8%
US MENA SSA
9% 5%
24% 6%


Building
Bridges to
The Whole Country is Growing China

NE
Liaoning
Heilongjiang 1,200 25%
Jilin

NW
Shaanxi
Gansu North 1,000
Ningxia
Qinghai
Beijing
Hailar 20%
Tianjin HEILONGJIANG
Inner Mongolia Hebei Qiqihar
Xinjiang Shandong Harbin
Karamay Changchun
Kulja JILIN
800
Urumqi Shenyang
INNER MONGOLIA
15%
HEBEI LIAONING
Kashgar XINJIANG
Hohhot Beijin
Yumen g Dalian
Tianjin
Yinchuan TaiyuanShijiazhuang Yantai 600
Golmud Qingdao East
NINGXIA SHANXI
Xining
SHANDONG Shanghai
QINGHAI
Lanzhou Xi'an Zhengzhou JIANGSU
Jiangsu 10%
Shiqunhe GANSU Zhejiang
SHAANXI HENAN Hefei Nanjing
XIZANG Shanghai
400
SICHUAN Wuhan ANHUI
HUBEI Hangzhou
Lhasa Chengdu
CHONGQING ZHEJIANG
Changsha Nanchang

Guiya HUNAN JIANGXI Fuzhou 5%
SW ng
GUIZHOU
FUJIAN
Xiamen
200
Sichuan Kunming
Guangzhou
Chongqing GUANGXI
YUNNAN GUANGDONG
Guizhou Shenzhen South
Nanning
Yunnan Guangdong
Guangxi Fujian
Tibet Haikou
Hainan
0 0%
HAINAN
China China China China China China China
Centre
Shanxi East North Centre South SW NE NW
Henan
Anhui GDP, 2009, USD bn
Hubei
Hunan Average nominal GDP growth, 2005-09(RHS)
Jiangxi


Building
Bridges to
Market Access China

Investment Catalogue: Four Categories
 Encouraged
 Restricted
 Forbidden
 Permitted

Regional policies: Central & Western Regions
 Tendency: From Coast Towards the West
 Preferential Policies


Building
Law and Compliance - Regulatory Approvals Bridges to
China

 Ministry of Commerce (MOCOM)
 State Administration of Industry and Commerce (SAIC)
 State Administration of Foreign Exchange (SAFE)
 National Development and Reform Commission (NDRC)
 State Administration of Taxation (SAT)
 The Ministry of Land and Resources (MLR)
 China Securities Regulatory Commission (CSRC)
 State-owned Assets Supervision and Administration
Commission (SASAC)
 Ministry of Environmental Protection
 Other departmental authorities (eg. MIIT governing telecom
industries)


Building
Bridges to
1. Forms of Establishment China

 Wholly Foreign Owned Enterprise (WFOE)
 Joint Venture
 Representative Office


Building
Bridges to
General Procedures for WFOE Establishment China

1. Company name pre-approval

2. Approval of the Ministry of Commerce or its local branches

3. Registration with local Administration for Industry and Commerce and issuance of
business license

4. Post- establishment registration
 Registration with the local Technology Supervision Bureau for an Organisation
Code

 Registration with local Public Security Bureau and chop carving

 Tax Registration

 Registration with the local bureau of foreign exchange

 Registration with local Bureau of Finance

 Registration with local Bureau of Statistics

 Customs Registration (if needed)


Building
Establishment of a WFOE Bridges to
China

Documents Required:

 Incorporation certificate of the parent company

 Good standing letter regarding the parent company issued by its
bank

 Board resolution of the parent company

 Articles of associations of the WFOE

 Director Appointment Letter issued by the parent company

 Project feasibility study report

 Lease agreement in connection with the premise of the WFOE

 Completed application letter/ forms

 Other documents to be required by the approval authority on a
case by case basis


Building
Bridges to
JVC China

Letter of Intention

Environmental Impact
Assessment

Pre-approval of JVC’s Name Approval for Initiating the JV Project
Apply for Uniform
Institutional Code and I/E
Enterprise Code
Open Account for Capital Examination and Approval
Contribution

Verifying Capital Contribution Issuing Approval Certificate of JV
Company

Registration of Establishment of
JVC
Prepare Corporate Seal Registration with Foreign
Exchange Control Authority
Registration with Statistics
Open Current/Capital Account
Authority
with Bank
Registration with Financial
Authority Registration with Taxation
Authority
Registration with Labor &
Social Insurance Authority Registration with Customs


Building
Bridges to
WFOE, CJV or EJV? China

WFOE CJV EJV
Formation LLC LLC LLC
Approval Time 90 days 45 days 90 days
with MOFCOM
Profit sharing N/A As agreed Same as the
contribution
sharing

Management Board of Flexible measures Board of Directors
Directors and GM
Transferability of N/A Subject to other parties’ approval.
Shares


Building
General Procedures for Rep Office Establishment Bridges to
China

Step 1: Application for the special administrative approval (if applicable)
Step 2: Application for the Registration Certificate & Representative Certificate
with local Administration of Industry and Commerce
Step 3: Registration with local Public Security Bureau and chop carving
Step 4: Application for organisation code with the local Technology Supervision
Bureau
Step 5: Registration with local Bureau of Statistics
Step 6: Application for tax registration (including registration with State
Administration of Taxation and with local Taxation Bureau)
Step 7: Foreign exchange registration & opening bank account
Step 8: Application for importing and exporting rights with the customs
(if needed)


Building
Bridges to
Rep Office Establishment China

Documents required:
 Application forms

 Authorisation letter from the Chief Representative in assigning one employee applying for the
Registration Certificate

 Application letter in setting up a Representative Office

 Articles of incorporation or organisation agreement of the company (i.e. the headquarters)

 The domicile certification and certification on legitimate operation for more than two years'
continual existence of the company (i.e. the headquarters) – new

 Notarisation of the Certificate of Incorporation of the company (i.e. the headquarters)

 Bank letter stating the financial and credit standing of the company (i.e. the headquarters)

 Appointment Letter from the headquarter with the board resolution in assigning the Chief
Representative

 Resume of the Chief Representative and other Representatives

 Documents identifying the registered address of the rep office (certificate of ownership or
rental agreement)


Building
Bridges to
M&As China

 Approval: Ministry of Commerce or its Local Branches
 Transaction Agreement
 Amended Articles of Association
 Valuation Report
 The Certificate of Incorporation of Buyer
 The Appointment Letter of New Directors
 The Reference Letter issued by the Buyer‟s bank
 Completed Forms
 Application Letter

 Registration: The Bureau of Industry and Commerce

 Post-Transfer Registration: Tax, Foreign Exchange, etc.


Building
M&A Due Diligence in China – Typical Findings Bridges to
China

 Target company often inexperienced with international
transactions

 Language barriers and cultural differences

 Insufficient reporting

 Many documents not available; information needs to be obtained
by management interviews and own research

 Financial information and contracts often not up to international
standards

 Ownership structures often complex and not transparent

 Soft factors: local practice and „guanxi‟

Building
Bridges to
2. Legal Issues in Daily Operations China

 Employment

 Tax

 Intellectual property (patent, trademark, copyright)

 Real estate


Building
Bridges to
Employment China

Labour Contract Law 2008 (Interpretation 2009)
 No temporary employment

 Representative office: FESCO

 Confidentiality clause

 Non-competition clause


Building
Bridges to
Tax China

 Authorities: state level and local level

 Primary types of taxes: VAT (17%), business tax (3-20%), enterprise
income tax (25%), consumption tax

 Foreign businesses and individuals: resident v non-resident

 Preferential treatment on FIE: tax return


Building
Bridges to
Intellectual Property China

 Patent: invention, utility model, industrial design
 Trademark
 Copyright
 Trade secret
 Trade name


Building

“Copycat Culture” Bridges to
China


Building
Bridges to
IPR Enforcement China

 Civil: economic compensation
 Criminal: sentence of 3-7 years plus fines
 Administrative: fines, seizure of products or illegal
income, revocation of licence, suspension of business, etc.


Building
Bridges to
Real Estate China

 Land ownership
− State-owned (urban area) and collectively-owned (rural area)
− Individuals: leasehold only

 Eligible foreigners to purchase real estate for own use?
− Subsidiaries or representative offices of foreign institutions, or
foreign individuals who have been in China for over one year

 Investing in real estate development
− Restricted sector, only joint venture


Building
Bridges to
Legal Environment China

 Vague legal provisions

 Conflicts: by-laws made by different authorities

 Government authorities act as law interpreters

 Confucianism / rule of law?


Building
Thank you Bridges to
China


Building
Bridges to
China

Enwright de Sales

Managing Director | AP ICE |
Ireland Tax Services
Deloitte AP ICE


Building
Bridges to
China

Tax Considerations for
Businesses Setting up in China


Building
Bridges to
Agenda China

 China Tax Trends
 Overview of China’s Current Tax System
 Tax Administration

 Legal Entity Structuring Considerations and Anti-Abuse
Measures

 Evolving strategies
 Business Model Optimization

 Transfer Pricing

 VAT reform


Building
China Tax Trends Bridges to
China
Overview of China‟s Current Tax System

Description
Income Tax system Tax on worldwide income of a Chinese legal entity or entity that is “managed
& controlled” in China
Company Income Tax 25% (or lower from 0% - 15% per tax incentives)
Individual Income Tax Up to 45% based on earning level
Dividend WHT 10% or lower treaty rate (5%)
Interest WHT 10% or lower treaty rate
Royalty WHT 10% or lower treaty rate
Capital gains 10% WHT or exemption under a few treaties
Customs duty Varying depending on tariff codes (and country of origin for imported goods)

VAT Standard VAT rate 17% (other rates apply on the specified categories of
entities/ industries);
0% VAT on exports; export VAT refund rates varying depending on tariff
codes
BT 3% - 20% depending on the different service sectors
Local surcharges 6% - 14% (depending on different locations in China) based on the VAT and
(CCMT, ES, LES, etc.) BT payable


Building
China
Overview of China‟s Current Tax System (Cont‟d)

Description
Loss carry forward period 5 years
Consolidation Not available
Thin Capitalization Yes
Special reorganization Yes, but limited applicability thus far
rules
Filing requirements Corporate returns due within five months after the end of
tax year (May 31)
Transfer pricing  Similar to OECD principles and guidelines
 Formal contemporaneous TP documentation rules
 Advance Pricing Agreement is available
General Anti-Avoidance Similar to OECD principles and aggressive
Rules (GAAR) implementations
Treaties 95 Income tax treaties, 12 FTAs


Building
China
Tax Administration

The China tax authorities have increased its scrutiny and compliance
requirement with respect to non-resident taxation and cross border
transactions:

 Service contracts between Chinese taxpayers and foreign companies;
 PE registration and filing requirement;
 Activities undertaken by foreign companies through their own or affiliates‟
representative offices in China;
 Tax treaty benefit application;
 Indirect share transfer; and
 Import/ export transactions (especially with the overseas related parties)

The Chinese tax authorities have increased the use of anti-avoidance
rules and intensified tax audits


Building
New Tax Challenges Faced by MNCs China

Managing
effective
tax rate

Dealing Optimization
with tax audit/ of investment
tax disputes Your Chinese holding structure
Operation

Transfer pricing
Indirect tax and
policy and risk
customs risk
management
management
on RPTs


Building
Bridges to
China

Legal Entity Structuring Considerations


Building
Legal Entity Structuring Considerations and Anti-Abuse Measures Bridges to
Comparison of Popular China Treaties China

China’s China- China-
China- China- China- China- China- China- U.K.
domestic Hong
Barbados Ireland Luxembourg Mauritius Netherlands Singapore
rate Kong (New)

Dividends 10% 5/10% 5/10% 5/10% 5/10% 5% 10% 5/10% 5/10%

Interest 10% 7% 10% 10% 10% 10% 10% 10% 10%

Royalties 10% 7% 10% 6/10% 6/10% 10% 10% 6/10% 6/10%

Capital
10% 0/10% 0/10% 0/10% 0/10% 0/10% 10% 0/10% 0/10%
Gains

Domestic
GAAR N/A Yes Yes No No No No Yes Yes
Override


Building
Legal Entity Structuring Considerations and Anti-Abuse Measures
Bridges to
Various Rules China

Payments offshore: increased reporting and scrutiny
 Threshold for tax clearance lowered: US$30,000
 Tax treaty benefits (Circular 124)
– Pre-approval required
 Dividends
 Interest
 Royalties
 Capital gains
 Increased reporting

Continuing focus on strategies perceived as abusive
 Anti-treaty shopping
 Circular 601 (“beneficial ownership”)
 Circular 698 (transfers of shares in Chinese companies by non-resident companies)


Building
Case Study China

 A Group, a Chinese based group established
A Group BVI Co, which owns HK Co, which in turn owns
A Group’s Chinese operations.

 The local tax authority deemed HK Co a Chinese
M Co
BVI Co tax resident.
Luxembourg
-Guoshuifa [2009] 82 & Bulletin [2011] 45

25%+  M Co, a Luxembourg company, purchased 25%
One Share plus one share of the HK Co, applied for 5%
HK Co withholding tax rate on dividend distribution
from HK Co under China-Luxembourg treaty.

China  The tax authority denied the treaty benefit
A Group because M Co did not own at least 25% during
the 12-month period preceding the share
transfer.

 Is ―12-month‖ period a condition for treaty relief
under China-Luxembourg treaty?


Building
Legal Entity Structuring Considerations and Anti-Abuse Measures
Bridges to
“Beneficial Ownership” Rules China

 Circular 601 generally in line with
Parent OECD commentary
− Generally, engaged in substantive
business activities
Super Holdco − Has the full privilege/control over the
HK income received

 What substance at Holdco level is
sufficient? Must have other operating
Holdco 1 Holdco 2
HK HK activities?

 Can substance in Super-Holdco be
attributed to intermediate Holdcos?
WFOE1 WFOE2
 Practice in obtaining approval from
the Chinese tax authorities


Building
Indirect Share Transfer (Circular 698) China

 Reporting requirement for indirect share
transfer which satisfies either of the following
conditions:
− The actual tax burden on gain arising from
transfer of intermediate holding company
in the offshore jurisdiction is less than
12.5%; or
− The jurisdiction in which the offshore
intermediary holding company resides
provides an income tax exemption for
capital gain

 Reporting deadline: 30 days after the signing
of the share transfer agreement


Building
Indirect Share Transfer (Circular 698) (Cont‟d) China

 Information required to be disclosed:

− Share transfer agreement. Where the sale is part of a
group sale, the group sales agreement is required. A
separate price allocation for China Co is required
− Relationship between the seller and the offshore
holdco, and the offshore holdco and China Co, with
respect to finance, personnel and buy-sell
transactions, etc.
− Offshore holdco’s production, business operations,
finance, HR, assets, etc.
− Business purpose for setting up the offshore holdco
− Other documents required by the tax authority
− Chinese language requirement

 The non-resident seller’s tax liability is not described in
detail in Circular 698 – instead, focus is on information
disclosure
 However, it is clear that the tax authorities will study the
information to determine whether GAAR should be
applied to impose a tax liability on the non-resident seller
 Any safe harbor rule?


Building
Evolving Strategies Bridges to
China Repatriation Strategy China

China‟s regulatory regime, in particular its foreign exchange rules, continues to inhibit many tax base
erosion techniques that multinational companies have been able to use in other jurisdictions.
PRC Tax
Alternatives Remarks
Implications
BT – 3-5%  If there is no PE, there will be no EIT.
Onshore EIT – 25%  The ranges of deemed profit rates are set out for various categories of activities,
Service Fees *(in case of PE) normally from 15% to 50%
BT- 3-5%  Tax authority may request supporting documents to prove the services are genuine and
Offshore No EIT all rendered outside China
Service Fees  It could be practically difficult to satisfy the PRC tax bureaus that all services are
rendered outside China.
No BT  Dividends cannot be declared and remitted until the company has made up its losses.
Dividends WHT – 10%-  Only the qualified beneficial owner could be eligible to enjoy the reduced WHT rate as
provided in the tax treaties.
Royalty (General) BT – 5%  The BT payable should not be deductible for WHT purpose.
WHT – 10%
Royalty WHT – 10%  Technology transfer may be exempt from BT
Technology
Tansfer
Royalty Software WHT – 10%  Software licensing may be exempt from BT
Licensing
BT-5%  The amount of shareholder’s loan would be subject to the approved total investment
Interest WHT – 10% /registered capital ratio of the company.
 Interest deduction for related-party borrowing is subject to the thin capitalization rules
for EIT purpose.
Import Value Duty  The applicable duty rates vary depending on tariff codes and country of origin.
Adjustment VAT – 17%
Duty  Export duty is due on a limited number of categories of goods which are restricted from
Export Value VAT – 0% export. The applicable duty rates vary depending on tariff codes.
Adjustment Export VAT refund  The applicable export VAT refund rates vary depending on tariff codes.


Building
Why Business Model Optimization (BMO)? China

Corporate Tax
Limited availability
of incentives and
application of WHT

VAT & Customs
FOREX/Regulatory
Export VAT refund
Issues restrict
costs; trading
restrictions for Business flexibility on tax
planning in China
foreign principals Model
Optimization

Transfer Pricing Business Tax
More aggressive Multiple layers
application of arm’s of BT increase
length standard overall costs


Building
BMO Options in China China

Item Option I Option II Option III
Toll manufacturer Contract manufacturer Licensed manufacturer
Profit Level Lowest Median Highest
Government Approval Required Required, easier than option 1 Not required
Domestic Sourcing Less flexibility of direct local Domestic sourcing is also No restriction in direct local
sourcing, generally majority of the permitted as long as the product sourcing
raw materials shall be imported (i.e., using the bonded RM is exported
either direct import or use a bonded
logistics park (―BLP‖) for local raw
materials)
Domestic sales Restricted in direct domestic sales Less restricted in direct sales then No restriction in direct domestic
option 1 sales
VAT Cost Non-recoverable VAT cost = Non-recoverable VAT cost = Non-recoverable VAT cost =
Input VAT of domestic sourced (Export sales – Purchase of bonded Export sales * (VAT rate 17% – VAT
materials and utility imported materials) * (VAT rate 17% refund rate)
– VAT refund rate)
Benefits  Very limited functions and risks in  Reduced functions and risks in
China China
 Profits outside of China not  Profits outside of China not
subject to foreign currency subject to foreign currency
exchange controls exchange controls
 Eliminates any BT on royalty or  Eliminates any BT on royalty or
services services
Considerations  Regulatory limitations on China  Transfer pricing  BT at 5% on royalties/ services if
Co entering a toll agreement  Dual business models for export not exempt
 Exemption from VAT on tolling and domestic markets  Transfer pricing
fee  Migration and implementation
 Transfer pricing costs
 Dual business models for export
and domestic markets


Transfer Pricing

48 © 2012 Deloitte AP ICE Limited

Building
P.R.C. Specific TP Requirements Bridges to
China

 P.R.C. TP regulations generally follow the OECD Guidelines in terms of the arm’s length
principle, TP methods, comparability analysis etc. Some specific requirements are as
follows:
 Detailed annual filing requirements of tax payer‟s related party transaction;

 Starting from 2008, all enterprises are required to prepare and maintain with the following
exemptions:

 Annual related party buy/sell transactions < RMB 200 million (toll processing amount
calculated based on declared import and export value to Customs) and other related
party transactions < RMB 40 million;

 Foreign shareholding < 50% and only transact with domestic associated enterprises;

 Transactions covered under an APA

 Contemporaneous documentation must be prepared by May 31 of the following year and
must be submitted within 20 days upon tax bureau’s request. Documentation must be in
Chinese and must be maintained for 10 years.


Building
P.R.C. Specific TP Requirements (continued) Bridges to
China

 Capital Intensity adjustments are not allowed “in principle”;

 Tax authority can use public or non-public information to analyze whether
related-party transactions conform to the arm‟s length principle;

 Enterprises with single production or distribution or contract R&D function and
limited risks are not allowed to incur losses;

 Offsetting transactions need to be evaluated separately;

 If the profitability of the audited enterprise is lower than the median (even within
the interquartile range), in principle adjustments to median of interquartile range
will be made during an audit; and

 The statute of limitation for transfer pricing audits is effectively ten years.
 TP audits often start with the most recent three years


Building
Recent Developments in TP Audit Bridges to
China

 Audit transactions extended from tangible property buy/sell transactions to
services, IP and share transfer

 In 2011, TP audit was extended to financial, trading, and service companies

 The SAT will form an economist group for strengthen the TP compliance
enforcement

 SAT has started investigations on Thin Capitalization, as well as General
Anti-avoidance

 SAT has paid more attentions to location saving, marketing intangible recently


Building
What Can You Do to Mitigate TP Risks in China? Bridges to
China

TP Planning
 TP risks can be mitigated if the taxpayers in China can plan their TP policy ahead. You are
expected to integrate TP issues with other tax considerations and current trends to make sure
strategies in one area do not counteract other effects.

TP Documentation Preparation
 TP documentation must demonstrate that the taxpayer's policies are in line with the arm's
length standard by applying regulatory requirements for appropriate methodologies. You should
ensure that the company's documentation requirements are addressed in an efficient and
effective manner, represent sound economic analysis, and that your transactions are
documented in a consistent, integrated and systematic manner.

Advance Pricing Arrangement
 An APA helps taxpayers plan for future tax liabilities, reduce the risk of non-compliance, and
minimize the time and cost of compliance on a yearly basis.

The taxpayers are encouraged to seek professional assistance on the above mentioned points to
mitigate their TP risks in China


VAT Reform in China

© 2012 Deloitte AP ICE Limited

Building
VAT Reform Bridges to
Introduction China

 China VAT reform pilot commenced on 1 January 2012 in Shanghai, applicable to transportation
and certain modern service sectors, with the intention that the pilots would eventually be expanded
nationwide.
 VAT Reform aims to resolve the double/multiple taxation under China‟s current indirect tax system.
 China‟s State Council has announced the timeline of VAT Reform pilot rollout to the following:
Cities Date of launch

Beijing 1 September 2012

Jiangsu, Anhui 1 October 2012

Fujian, Guangdong 1 November 2012

Tianjin, Zhejiang, Hubei 1 December 2012

Service Sector VAT rate
Leasing of tangible movable property 17%
Transportation services 11%
Information technology (IT) services 6%
Cultural and creative services 6%
Research and development (R&D) and technical services 6%
Logistics and ancillary services 6%
Certification and consulting services 6%


Building
VAT Reform Bridges to
Impact China


VAT Reform Building
Bridges to
Important Issues to be Considered China


Building
Bridges to
China

Important notice

This document has been prepared by Deloitte AP ICE, Limited for the sole purpose of providing a proposal to the parties to whom it is
addressed in order that they may evaluate the capabilities of Deloitte AP ICE, Limited to supply the proposed services.

The information contained in this document has been compiled by Deloitte AP ICE, Limited and includes material which may have been
obtained from information provided by various sources and discussions with management but has not been verified or audited. This
document also contains confidential material proprietary to Deloitte AP ICE, Limited. Except in the general context of evaluating our
capabilities, no reliance may be placed for any purposes whatsoever on the contents of this document or on its completeness. No
representation or warranty, express or implied, is given and no responsibility or liability is or will be accepted by or on behalf of Deloitte AP
ICE, Limited or by any of its directors, members, employees, agents or any other person as to the accuracy, completeness or correctness of
the information contained in this document or any other oral information made available and any such liability is expressly disclaimed.

This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person in whole or in part without our prior written consent.

This document is not an offer and is not intended to be contractually binding. Should this proposal be acceptable to you, and following the
conclusion of our internal acceptance procedures, we would be pleased to discuss terms and conditions with you prior to our appointment.

In this document, Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its
network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed
description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities
(collectively the ―Deloitte Network‖) is by means of this publication, rendering professional advice or services. Before making any decision
or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the
Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

© 2012 Deloitte AP ICE, Limited


Building
Bridges to
China
Contact
Enwright De Sales

Managing Director | AP ICE | Ireland Tax Services
Deloitte AP ICE, Limited
35/F One Pacific Place, 88 Queensway, Hong Kong
Direct: +852 2852 1078
e-mail: ejdesales@deloitte.com


Building
Bridges to
China

Kevin Sherry

Head of International Sales and
Partnering, Enterprise Ireland


Building
Bridges to
China

―Doing Business in China‖

Kevin Sherry
Enterprise Ireland
28th September 2012


Building
Enterprise Ireland Mission Bridges to
China


Building
Its all about Exports and Jobs Bridges to
China


Building

Highlights 2011… Bridges to
China


Building
Bridges to
China

Enterprise Ireland International Offices

North America & South America Southern Northern Europe Germany, Central & Asia Pacific
Canada Sao Paulo Europe, Middle East London Eastern Beijing Singapore
Boston & Africa Paris Europe, Russia Shanghai Delhi
New York Milan Amsterdam Düsseldorf Hong Kong Sydney
Silicon Valley Madrid Brussels Prague Tokyo
Toronto Dubai Stockholm Budapest Seoul
Riyadh Warsaw
Johannesburg Moscow


Building
Bridges to
Map of China and EI offices China

Beijing

Shanghai

Hong Kong


Building
Bridges to
Irish Trade with China (€ 000’s) China

2008 2009 2010 2011 2012
(Jan - July)
Exports 2,549 2,668 2,579 2,531 1,409
to China

Imports 4,811 3,159 2,919 2,893 1,716
from China
7,360 5,827 5,498 5,424 3,125

Source: CSO


Building
Ireland and Greater China Region Bridges to
China

 240 + Irish Co’s actively exporting to China, 140 with a full time presence

 Irish company exports to Greater China grew by 29% in 2011

 Sectors of Opportunity;
– Internationally traded services (inc Education)
– Aviation Services
– Food / Drink
– Agricultual Machinery and Technologies
– Financial Software and Services
– Mobile Telecommunications Software
– E- learning
– Information Security
– Environment / Cleantech
– Equine
– Lifesciences / Medical Devices

Building
Some Leading Exporters to China Bridges to
China

Education, Dairy, Meats, Beverages, Aviation, Construction
Services


Building
Bridges to
Some Leading Exporters to China China

Consumer, Electronics, Diagnostics, Waste Management, Industrial Controls,
Medical Devices, Component Sub Supply, Mobile Internet, Payments, Travel, Healthcare
Informatics


Building
Bridges to
High Level Visits Important China

 H.E. Xi Jinping, Vice President of China – visit to Ireland (Feb 2012)
 MoS Ciaran Cannon, (Dept of E&S) Beijing - Shanghai (17 Institutes)
 Taoiseach + Minister Bruton (HK/Shenzhen/Shanghai/Beijing)
(+ 90 Co’s) - March
 Minister Coveney – Food/Agritech Mission (+ 50 Co’s) - April
 Minister Reilly – Lifesciences / Medical - August
 Minister Hogan - September


Building
Bridges to
China

HE Mr. Xi Jinping, Vice-President of the People’s Republic of China, speaking at the Royal
Hospital Kilmanham for the Ireland-China Trade and Investment Forum. Feb 2012


Building
Bridges to
China

H.E. Mr Xi Jinping , Vice President of the People's
Republic of China with President of Ireland Michael D.
Higgins in Aras An Uachtarain were the two held talks
on the third and final day of a three day visit to Ireland.
Feb 2012


Building
Bridges to
China

Taoiseach and Minister Bruton, Dept of Job, Enterprise and Innovation lead a Trade Mission to China with over 90
Irish companies. The Delegation visited Hongkong, Shenzhen, Shanghai and Beijing. Mar 2012


Building
Bridges to
China

Minister Coveney, Department of Agriculture, Food and Marine lead a Agriculture Trade Mission to China. April
2012.


Building
E.I. in Market Services Bridges to
China

 Market research
 Partner/Distributor identification
 Visit logistics
 Visit itineraries
 Events participation & management
 Translation/Interpreters
 Legal advice/Third party services
 Incubator facilities
 After sales/follow up
EI Country Manager: alan.buckley@enterprise-ireland.com
High Growth Markets Dublin: philip.singleton@enterprise-ireland.com


Building
Establishing a Presence Bridges to
China
Options

 Distributor/Agent
 Representative office (RO)
 Joint venture (JV)
 Wholly Foreign Owned Enterprise (WFOE)
 Foreign Invested Commercial Enterprise (FICE)


Building
Bridges to
Sourcing from China China

 Sourcing
 Supplier Management is key
 The Long Distance Relationship ……..
 You get what you “INSPECT”, not what you “EXPECT”


Building
Bridges to
Usual Risks China

 Political

 Economic

 Financial

 Environmental

 Intellectual Property
 Language
 Cultural
 Bureaucracy


Building
Bridges to
I.P.R. China

 Register your I.P. in China

 IF YOU DON’T SHOW VALUE TO YOUR I.P. WHO ELSE WILL
?


Building

Language Bridges to
China

―Promise-Keeping Enterprise‖
―When old man’s child go up hand ladder
temporary need the family to accompany‖


Building
Doing Business in China Bridges to
China
A Profile For Success

 Leave preconceptions at home
 Do your homework
 Patience
 Focus
 Long-term approach
 Professional advice
 IPR
 Due diligence


Building
Bridges to
China

2012 ACCESS CHINA
—A Guide to doing business
in China

More on www.enterprise-ireland.com


Building Bridges to China: China's Economic Growth and Opportunities for Foreign Investment

Recommended

Recommended

More Related Content

Recently uploaded

Recently uploaded (7)

Building Bridges to China: China's Economic Growth and Opportunities for Foreign Investment