New Rules to Consummate the Supervisory and Control System over Central State-Owned Enterprises’ Outbound Investment

In the recent years, the central state-owned enterprises (SOE) in China have played a significant role in many high profile outbound investment cases.  According to statistics, the aggregate turnover attributable to foreign investments by Central SOEs between January and November 2011 reached RMB 3.4 trillion yuan.  The State-Owned Asset Supervision and Administration Commission of the State Council (SASAC) has lately issued a series of measures to set forth a framework of a supervisory and control regime to regulate outbound investment projects made by Central SOEs.  For further information about the measures or the regime, please follow the link below.  Headquartered in Beijing,  Jun He Law Offices is one of the best firms in China.

http://www.junhe.com/marketing/201205/Corporate&Investment_20120504.pdf

China Allows RMB Trade Settlement

On February 3, 2012 the People’s Bank of China (“PBC”), Ministry of Finance, Ministry of Commerce, General Administration of Customs, State Administration of Taxation, and Banking Regulatory Commission jointly issued the Circular on Issues Concerning the Administration of Enterprises Settling Goods Export in RMB (yinfa[2012] No. 23).  This notice eliminated previous restrictions requiring domestic exporters to obtain PBC designations before conducting RMB trade settlement.  Under the new rule, all Chinese companies with import and export qualifications are allowed to settle their goods exports in RMB.  This is considered a giant step the Chinese government has taken recently to internationalize its yuan currency.  Prior to this new rule, only those companies who received desginations from PBC may settle export of goods in RMB.  Read More ›

China Is Expanding VAT Reform

To avoid double taxation, China started replacing its Business Tax to VAT in the transport sector and some service sectors in Shanghai from January 1 this year under the VAT reform pilot program.  Business Tax refers to a tax on the gross revenue of a business, while VAT means a tax levied on the difference between a commodity’s price before taxes and its cost of production.  Following the circulars replacing Business Tax to VAT in Shanghai, the Ministry of Finance and the State Administration of Taxation jointly released another Circular to clarify issues regarding the application of zero VAT rate and VAT exemption in Shanghai.  According to the Circular, companies in the following service sectors will enjoy zero VAT rate:

• international transport services (including cross-border and overseas transport of both passengers and cargo);
• research and development services provided to overseas entities;;
• design services provided to overseas entities (excluding design services provided in respect of domestic immovable property).

Four-Part Series of In-Depth Discussions of China, Opportunities, and Challenges.

In the past few months,  we worked together with Long Stanton Asia to present a four-part series explaining the current realities of doing business in China, the change coming in the next five years, what it means to US businesses and we invited local companies to share their first-hand experiences doing business in China.  Read More ›

Foreign-funded Investment Companies Allowed to Use its RMB Income to Directly Invest in Other Companies

On December 8, 2011, the Ministry of Commerce (“MofCom”) and the State Administration of Foreign Exchange (“SAFE”) jointly issued the Notice on Further Improving the Administrative Measurers for FICs (Decree No. 1078 [2011]).  The purpose of this Notice is to simply the procedures for foreign-funded investment companies in domestic reinvestment. Read More ›

Understanding “Representative Office” and “Wholly Foreign Owned Company” - Which is the Right Form for You?

A “Representative Office” (RO), as it name suggests, is the China representative of the foreign company.   It is not an independent entity; instead, it is considered to be part of the foreign company.  On the other hand, a “wholly foreign owned company” (WFOE) is a limited liability company organized under the laws of China and is a legal entity separate from its parent company back home.  Read More ›

A Snapshot of Typical Structures for Private Equity Market in China

Despite the dire economy in the western world, Asian private equity had a vibrant year in 2010 and has kept its momentum.  It is largely attributed to funds denominated in RMB according to a study by professional researchers.  RSM Nelson Wheeler, a prominent accounting and consulting firm based in Hong Kong recently issued its November newsletter where it explored the typical structures and related tax issues for private equity activities in three of the most active markets in Asia including Hong Kong, mainland China and Singapore.  The newsletter summarized, among other things, the most common three PE structures used by U.S. persons, including: Read More ›

China’s CPI fell to 4.2% in November – lowest reading since September 2010

China’s consumer pricing index (CPI) eased to 4.2% in November from 5.5% in October, according to the National Bureau of Statistics.  The CPI hit a three-year high of 6.5% in July this year and has been gradually weakening since then.   The November’s lower than expected inflation rate was marked a 13-month low.  Taking the first 11 months together, the CPI rose 5.5% year-on-year in January-November, well above the government's full-year inflation control target of 4%. Read More ›

Food Safety Crisis in China –What Does It Mean to Western Brands?

After a series of recalls of frozen food products, including dumplings, because they contained traces of staphylococcus aureus bacterium, the China Ministry of Health announced a new rule on November 24 allowing a small amount of the potentially lethal bacterium in frozen food.  The old rules had zero tolerance.  The bacterium, sometimes called golden staph, can cause a range of mild to severe infections (and may even cause deaths in some cases) if it enters the body. This new rule received massive criticism from the media and internet users in China.  Read More ›

French Wine “Castel” Mark – An Interesting Case to Decipher

A recent move by a local court in Wenzhou, China may well indicate that in the future a lawsuit against a foreign brand owner in China could cause the foreign defendant to lose its valuable trademarks if it loses the case.  Earlier this year a local Chinese merchant sued a famous French wine producer in the Wenzhou Intermediate People’s Court and successfully secured an “ex-parte” relief, by which, the defendant’s valuable trademark would be subject to freeze until the case is decided.    Defendant in this case is Castel Group, which is the owner of the “Castel” trademark in China.  However, the Chinese plaintiff had managed to register the Chinese “Ka Si Te (卡斯特)” mark first in China, a phonetic translation of the famous “Castel” mark.  It sued Castel Group in the Wenzhou local court on three accounts of infringement and requested damages up to US$31 million.  Read More ›