The Flanders-China Chamber of Commerce is organizing a webinar focused on Financial Incentives for Investing in China, which will take place online on 2 December 2020 from 10:00 am to 11:00 am CET.

The programme is as follows:

10:00 – 10:05: Introduction

Ms. Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce.

10:05 – 10:20: “FPIM’s new investment strategy towards China”

Mr. Koen Van Loo, CEO, Federal Participation and Investment Corporation (SFPI-FPIM)

10:20- 10:30: “Investment support & and co-financing of your investment in China”

Mr André Deltenre, CEO, Belgian Corporation for International Investment (SBI-BMI)

10:40 – 10:50: “In practice: concrete investment cases”

Mr. Paul Van Eynde, Senior Investment Manager, Capricorn Fusion China Fund

10:50 – 11:00: Question and Answer Session

Speakers:

Koen Van Loo
CEO, Federal Participation and Investment Corporation (SFPI-FPIM)

André Deltenre
CEO, Belgian Corporation for International Investment (SBI-BMI)

Paul Van Eynde
Senior Investment Manager, Capricorn Fusion China Fund

Gwenn Sonck
Executive Director, Flanders-China Chamber of Commerce/EU-China Business Association

Practical Information:

Date and time: December 2, 2020, 10:00 AM – 11:00 AM CET

Location: Online (Zoom)

Price for members: Free

SUBSCRIBE HERE

 

 

 

 

 

 

 

The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized an information session on November 19 focused on managing international assignments in the context of the Covid crisis and profound changes of the working patterns due to the pandemic.

Ms Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce and the EU-China Business Association welcomed the participants to the annual webinar with Deloitte, which is also a Structural Partner of the Chamber. Today, the biggest challenge for companies doing business with China is the fact that they can’t go to China as no visas are issued to Belgian travelers due to the high number of Covid-19 infections in our country. Of course, this is temporary. China has almost no new infections anymore. A few weeks ago there were six asymptomatic infections in Qingdao and immediately strict action was taken, with quarantine, efficient contact tracing and mass testing of nine million people in ten days. The speed and efficiency with which China is tackling Covid-19 is really impressive and innovative. Meanwhile, China is booming again and life is almost back to normal. Economists believe that China will be the only country that will have positive growth this year. According to the IMF, China’s growth will be 8.2% in 2021, which will be the highest in 10 years. Before giving the floor to the speakers, Ms Sonck briefly introduced the FCCC and the EUCBA.

Ms Rimma Abadjan, Assistant Manager, said that the webinar would start with an introduction on the Covid-19 situation on the Belgian and European side, followed by a look at the changing working patterns that Covid-19 has caused. The Covid-crisis was really unprecedented and unexpected and had consequences for the way we deal with migration and global mobility. The very core of all international employment – the movement of people – has been impacted by Covid-19. Governments had to react very quickly to the changes and we have seen abrupt changes at short notice. So there were a lot of challenges that had to be tackled in a quick and not always efficient way. A number of existing programs could not be managed in the same way and companies had to find new ways to deal with reality and to quickly adjust their own policies, which also increased the risks of non-compliance. Business travel was one of the areas that was largely impacted. A number of existing visa programs have been put on hold and Europe is still largely unavailable for business travel. There is a need for flexibility from the companies that translated in a number of new working patterns. Remote work is part of our life now. The impact of Covid goes beyond the immigration aspect.

Ms Abadjan asked participants to answer the following questions: Business have had to adapt internal mobility and immigration policies they use to run their program. Will your new/amended internal business immigration policy continue in a post Covid-19 world? Most companies expect the changes that they have implemented due to the crisis to remain to a certain degree in future due to the changing working patterns and the fact that we discovered that certain things do work despite our skepticism. The second question is: As we continue to navigate through the pandemic, what will be your main challenge in relation to the future of work from an immigration perspective? Most participants answered that managing short term business travel was the most challenging.

Covid-19 had a huge impact on our options of moving. Europe has tried to present a coherent approach at the external borders of the EU based on common criteria. There has been a list of safe countries to allow travel from outside the EU and exemptions to the travel ban for highly skilled workers. The EU has also tried to implement a coherent approach within its internal borders, based on common color codes. There is no reintroduction of border controls as we have seen in the first lockdown in March-April-May. Each member state is still allowed the necessary measures to secure public health within their territories. We have seen quite some variations in terms of quarantine and testing.

Belgium is following the European approach in the management of the external borders. Residents of Australia, Japan, New Zealand, Rwanda, Singapore, Thailand and South Korea can come to Belgium for business travel without testing and quarantine, unless they have symptoms. China is on the list of safe countries as well, but the EU is requiring a reciprocal approach and China has not allowed residents from safe European countries to travel to China. Within the EU, Belgium is allowing all travel but there is a potential quarantine requirement for 10 days, plus 4 days in case of symptoms. To be able to trace contacts, all passengers crossing the border are required to fill out a passenger locator form. In terms of travel there are now more possibilities than in the beginning of the crisis, but they are still limited and subject to certain rules. We have seen no interruption in the processing of work permit applications and there is even a decrease in processing times due to a lower work load. In terms of in-country processes we have seen a move to digitalization and on-line applications. But we have also seen potential delays due to the unavailability of appointments and overload of municipal administrations. In terms of social security, we didn’t see a huge impact because of the authorities’ flexibility towards the rules and the understanding that certain working patterns have changed.

Joke Braam, Senior Manager, mentioned that in June 2018 Deloitte published a study on Intra-Corporate Transfer (ICT) permits and an update of the study will be published soon. The European ICT permit allows foreign companies to employ their non-EU employees in different EU member states. In these uncertain times, it is very difficult for companies to navigate through the complex immigration rules and the ICT permit will allow some further flexibility for working across borders in the EU. In 2014 the European Council adopted the proposal of the Intra-Corporate Transfer Directive on the conditions of entry and residence of third-country nationals in the framework of intra-corporate transfers. The 25 participating member states had two years time – till November 2016 – to implement the directive in their national legislation. The UK, Ireland and Denmark opted out of this directive. All 25 countries have meanwhile included the directive into their legislation. In Belgium it will enter into force in January 2021. ICTs can be non-EU nationals assigned from an entity of a multinational company outside the EU to another entity within the same group within the EU. It covers executives, specialists and trainees. For example it would cover a Chinese manager working with Deloitte in China who would be assigned to Deloitte in Belgium. The main benefit of this directive would be for international companies to allow for intra-corporate transferees to be able to enter, stay and work also in other EU member states without the need to apply for additional work authorization in that country. This is allowed for a period of up to 90 days. Belgium has not introduced a quota on the number of ICTs that can be assigned. There are certain conditions that need to be fulfilled to be eligible for this service. In Belgium they differ according to the region where the employee will be working. A minimum wage requirement must be respected, the employee must hold a bachelor degree, and most countries have applied a certain level of seniority. In the Flanders and Walloon regions, prior employment of at least three months within the same group is required before you can apply for an ICT permit, while in the Brussels region the transferee needs six months of seniority. The ICT permit can be issued for a maximum validity of one year for trainees and three years for executives and specialists. The ICT period can be renewed but there is a cooling off period of three months, when the transferee is required to be outside EU member states.

What are the advantages of the ICT permit? It is a single permit for work and residence. It increases the mobility of staff of global companies across the EU. It offers the possibility of short term mobility of up to 90 days without the need to apply for another local permit. The ICT short-term mobility is more flexible than the current Schengen rule, which is limited to 90 days in any 180-day period in all EU member states, while for the ICT it is per member state. The ICT permit also offers some advantages to partners and spouses in view of access to the labor market. The ICT permit has also some disadvantages. The disadvantage in Belgium is that today it will not yet be issued. After the validity period, the permit is not immediately renewable, meaning that the employee will have to leave the territory of the member states for three months. In order to be eligible for an ICT permit, the employee will need an employment contract with the home country, so it is not applicable to local hires. The ICT permit entails only temporary migration, as the transferee will not build up any rights for permanent residence in the host member state. Transferees also should be employed within the same group for at least three months prior to their transfer.

Some other things need to be taken into account when deciding to use or not to use an ICT permit. For example, a Chinese employee assigned to Belgium may also work in other EU member states which may result in a “simultaneous employment” situation under EU socials security rules, entailing that local social security contributions become due. From a labor law point of view there is the risk of forbidden chain-secondment and forbidden “putting at disposal” of employees and the need for vigilance to comply with local labor law. Compliance is also required with the European Posted Workers Enforcement Directive (PWED). Last but not least, corporate tax rules may entail creation of taxable “permanent establishment” due to the presence in a third country. One should not be blinded by the advantages of the ICT permit but be advised on all aspects, such as social security, labor law and taxation. Deloitte has all the expertise to guide your company to the right set-up.

Dieter Kuipers, Senior Manager, explained that we are all facing remote work on a daily basis. The way in which we work has been evolving over many years. Over the past 20 to 30 years, long- and short-term assignments have evolved and been replaced by other types of mobility. Remote work is not originating from Covid, but has accelerated. We all have been working partly from home during lockdown periods. Technology supports individuals to work from home, virtual teams became a reality and businesses were able to continue working during the pandemic. Over 75% of the individuals who have been working from home due to the pandemic also want to continue to work remotely in the future. Around 47% of employees indicated that their employer provided the equipment needed to work from home. But there were also some challenges as 27% of workers felt isolated while working during the pandemic. From the employers’ point of view, 38% have increased remote work opportunities and 41% of workers are predicted to work remotely at least some of the time post-pandemic. We are at an important moment in time to think about this because, due to the lockdown, traditional working patterns changed overnight. Now that a vaccine is coming we are looking at how to go forward and how to embed working from home in the organization. How does working from home look like? The domestic remote worker is an existing employee wishing to work from another part of the same country. The number of international remote workers is also increasing. Those are individuals who have their family in one country and moved to another country and now want to work more from the country where their family is located. Also, new hires may want to work from another country. Being able to work remotely provides opportunities. The work force will become more diverse. As location becomes less relevant, companies can focus on hiring the right skillset, not a person in the right location. Physical presence is becoming less of a key component for remote work.

Steven Trippaers, Manager, talked about the challenges of remote work. From a tax point of view, many aspects are to be taken into account. From a corporate tax point of view, there is the risk of establishing permanent establishment from an employee working remotely. There are also the issues of transfer pricing, indirect tax and withholding tax exposure, and where intellectual property is located and employees creating this IP. There are also compliance issues regarding the employment and immigration laws, and filing of annual individual income tax returns. Remote work is a cross-functional effort, requiring attention from a lot of different functions to successfully enable remote work. It will be crucial to work out a long-term approach to remote working to ensure its success. It is important to embrace the change and fit it into your business strategy.

Vaccine developers Pfizer and BioNTech plan to roll out the first doses of their Covid-19 vaccine within weeks, once they receive emergency use permissions from regulators. They expect to have 1.3 billion doses ready next year. Pfizer and BioNTech could secure emergency U.S. and European authorization for using their Covid-19 vaccine next month. Of the 170 volunteers who contracted Covid-19 in Pfizer’s trial involving over 43,000 people, 162 had received a placebo and not the vaccine, meaning the vaccine was 95% effective. Conditional approval in the European Union could be secured in the second half of December, while deliveries could start before Christmas. AstraZeneca and Oxford University’s potential Covid-19 vaccine produced a strong immune response in older adults, data showed, with researchers expecting to release late-stage trial results by Christmas.

But despite these two announcements, Chinese vaccine makers said that China’s development of Covid-19 vaccines remains in the lead. China’s leading vaccine producer Sinopharm told the Global Times that it has reported the phase-III clinical data to China’s relevant regulators. The vaccine maker, claiming it is in the final stage before marketing, stressed that it is not under pressure to reveal its vaccine data and will do so in a more scientific and controlled way. Another leading inactivated vaccine producer, Sinovac, said that it will not release the relevant data until it is assured to obtain sufficient Covid-19 cases in its double-blind, placebo-controlled trials to certify vaccine effectiveness. The release is expected by the end of November. Five Chinese vaccine candidates are under clinical phase-III trials in countries including the UAE, Brazil, Pakistan and Peru, and phase-I and II clinical trials of other candidates have been accelerated. Sinopharm’s two inactivated vaccines have been administered to nearly one million people for emergency use and no serious adverse reactions have been reported. Nearly 60,000 volunteers have participated in the phase-III clinical trials in more than 10 countries.

How to ensure transportation of Covid-19 vaccines has become a hot topic for the global cargo industry. The International Air Transport Association (IATA) said that delivering billions of doses of a vaccine that must be transported and stored in a deep-frozen state to the entire world efficiently will involve hugely complex logistical challenges across the supply chain. Market watchers believe that the prospect of vaccine transportation may stimulate the recovery of the aviation market, especially the cargo industry. Cai Guoxian, regional head of North Asia with the IATA, said at an industry forum held in Zhengzhou, Henan province, that assuming one dose per person in the world, billions of doses of vaccine would need to be transported, requiring 8,000 Boeing 747 freighters, which will lend strong support to the cargo industry.

Small local outbreaks are emerging in several Chinese cities. Shanghai reported five new confirmed locally transmitted Covid-19 cases and three communities in the Pudong New Area where the patients live have been designated as medium-risk areas. A cargo security inspector at Pudong International Airport and his wife, a nurse at Pudong Hospital, were confirmed as two new locally transmitted Covid-19 cases and three people were found infected during the follow-up contact tracing. Shanghai Pudong Hospital has suspended its daily outpatient and emergency services. A total of 4,015 medical staff, workers and patients have been quarantined in the hospital. People in the medium-risk areas are not allowed to leave Shanghai unless in an emergency. The first of Shanghai’s latest coronavirus infections emerged in two airport cargo handlers who cleaned a container that arrived on a flight from North America. The container was damp inside and sealed off. Airport officials have tested 17,719 employees at Pudong airport’s cargo handling area. A tests turned out negative, but a FedEx (China) employee was confirmed as a new Covid-19 cases on November 23. Since November 9, six freight transport workers at the airport have been confirmed positive for Covid-19. The wives of two of the staffers are also confirmed as infected. The confirmed cases have only been found at the airport’s cargo handling area, and the airport’s passenger area is unaffected.

Five new locally transmitted cases were also confirmed in Tianjin. Authorities started conducting nucleic acid tests for 2.24 million residents in the Binhai New Area, to be completed in two to three days. Two cold-chain storage workers were among the infected, as the country shifts focus to contaminated imports after a number of outbreaks linked to frozen food. Around 1,900 residents are under centralized quarantine. As of November 20, Tianjin had reported seven confirmed cases of Covid-19 and five asymptomatic cases. Two cities in Fujian province said they found traces of the virus in shipments of pomfret fish from India and beef from Argentina. Three new locally transmitted cases were reported in Manzhouli, a city in Inner Mongolia bordering Russia’s Far East. All 300,000 residents of the city have been tested.

In Wuhan, authorities said earlier they had detected the virus on frozen beef from Brazil, while several other cities reported positive test results on samples from imported food, including Argentinian pork and Indian cuttlefish. Customs officials have temporarily suspended imports from some suppliers. Mass-testing campaigns have been rolled out after reports of coronavirus traces on imported food and packaging, with state TV showing workers disinfecting transport trucks and inspecting packages of frozen salmon. Wu Zunyou, Chief Epidemiologist at the Chinese Center for Disease Control and Prevention, told the Global Times that low temperatures in winter make the international freight environment similar to a cold chain, creating a “cold chain” effect on all imported goods.

Air France’s flight from Paris to Shanghai has been suspended by China’s civil aviation regulator for a week from November 23. Flight AF198 was suspended after six passengers on a flight from Paris tested positive for Covid-19 on November 6, the Civil Aviation Administration of China (CAAC) said. The weekly flight was one of the earliest international flights to Shanghai to resume after the coronavirus outbreak.

Addressing the Group of 20 Riyadh Summit via video link, Chinese President Xi Jinping proposed building a “global firewall” against Covid-19, reducing tariffs and barriers as well as tapping into the booming digital economy to battle the pandemic and reboot the world economy. “To contain the virus, stabilize the economy and protect livelihood remains a long and arduous journey for all countries,” Xi said.

This overview is based on reports by The Global Times, China Daily, Shanghai Daily and The Guardian.

Vice Premier Liu He, the top economic adviser of Chinese President Xi Jinping, has stressed that China’s pursuit of self-reliance in key technologies is “imperative” to its new economic strategy, which places an increased emphasis on domestic consumption. “This is a critical juncture for the development of a big country’s economy,” Liu wrote in an official guide to Beijing’s new development plan, and he promised that the capital markets would support the drive for technological innovation. Liu’s responsibilities as Vice Premier include science and technology, a critical area in the contest with the United States. In a speech in Shanghai earlier this month, President Xi told the city’s officials that “science and technology have never had such a deep influence over the country’s future and fate as they do today” and concluded that China “needs to strengthen innovation as its No 1 growth driver more than ever”.

Last month the Communist Party leadership approved a new five-year plan which put scientific and technological innovation at the heart of China’s modernization program to become one of the world’s most advanced countries by 2035. The plan also cemented the role of the so-called “dual circulation” strategy, which places greater emphasis on domestic markets as a driver of growth while also seeking to move beyond cheap manufacturing for exports. Vice Premier Liu acknowledged that geopolitics and the Covid-19 pandemic have had a profound impact on global production and value chains. The key to transforming China’s growth model into a “new development pattern” is to clear any obstruction to economic activity and that, in turn, calls for an improved capacity for innovation, Liu argued. “That requires deepening reforms, expanding the open-door policy, fostering scientific and technological innovations, and upgrading the industrial structure,” he wrote. “Accelerating the push for self-reliance in science and technology is imperative in both promoting domestic market circulation and projecting China to a dominant position in the global economy.” Liu also said it was important that the financial services sector helped to support the real economy and foster innovation.

He also argued that the development model that had fueled China’s phenomenal growth since the 1980s also exposed the country’s vulnerability and dependency on imported resources and export markets. A shift to innovation-driven development would help to overcome these problems, as well as others caused by changes to domestic supply and demand, such as the disconnect between production and consumption and a foreign stranglehold over critical technology.

To achieve its goal of self-reliance, Liu said China would strengthen its R&D capacity, boost international collaboration, and give corporations a greater role in driving innovation. He also discussed other strategies, including a focus on core cities and urban clusters, improving income distribution, expanding the middle class and “quality” development under the Belt and Road Initiative. Li Xuesong, Deputy Director of the Institute of Industrial Economics under the Chinese Academy of Social Sciences, told a briefing in Beijing that China’s current innovation capacity was not yet able to meet the demand for high-quality economic growth, and that market forces could help accelerate the innovation drive, the South China Morning Post reports.

Spazio Lenovo’s concept store in Milan

Chinese companies’ enthusiasm for investing in Europe remains high, despite the coronavirus pandemic’s devastating impact on the global economy, according to industry insiders and analysts. A stable, secure environment in Europe and favorable political conditions are attractive for investors, the experts said. Gina Qiao, Senior Vice President and Chief Strategy and Marketing Officer at Lenovo Group, said the company has been investing in Europe to help drive sales and boost efficiency. “Two recent examples of this are the opening of Spazio Lenovo – our first European flagship store, which launched in Milan, Italy, in September – and our plan to open a new in-house manufacturing facility in Hungary in the spring to increase our production capacity and better serve our European customers,” she said. Lenovo is among the top three companies in terms of personal computer sales in nearly all European countries and the leading vendor in key markets such as Germany and Italy. Qiao said that as working, learning and spending more leisure time at home have become the global norm during the pandemic, the company has seen strong growth in demand for devices and games, along with rising cloud and infrastructure business.

Last year, Chinese investment in Europe rose rapidly, but fell significantly in Latin America, North America and Africa, according to the 2019 Statistical Bulletin of China’s Outward Foreign Direct Investment. The bulletin was recently issued by the Ministry of Commerce (MOFCOM), the National Bureau of Statistics (NBS) and the State Administration of Foreign Exchange (SAFE). China’s overseas direct investment (ODI) in Europe totaled USD10.52 billion last year, a rise of 59.6% year-on-year, with most of it going to the Netherlands, Sweden, Germany and the United Kingdom. By the end of last year, the country had set up more than 3,200 enterprises in the European Union, covering all the trading bloc’s member states and employing more than 260,000 foreign workers. He Yun, Assistant Professor at Hunan University’s School of Public Administration, said Europe offers a stable and legally secure environment for Chinese investment, compared with some developing countries, where there tend to be more risks. In contrast to the United States, relations between China and European countries are generally advantageous for Chinese investment. Moreover, since 2008, the euro exchange and interest rates against the yuan have been relatively low, favorably pricing European assets and reducing costs for Chinese investors. “There is still a lot of enthusiasm among Chinese companies for investing in Europe, but the continent needs to contain Covid-19 first to enable its economies and investment inflows to recover,” He said. She added that foreign investment, including that from China, could be crucial to Europe’s post-pandemic recovery. “The European Union should facilitate the swift conclusion of a bilateral investment agreement to make two-way investment between the EU and China easier,” she added.

Roland Brouwer, the Netherlands Foreign Investment Agency’s Executive Director for China, said that for many years China has been the Netherlands second-largest source of investment. “Most companies see the Netherlands as a springboard into the European market,” he said. Chinese companies are highly active in sectors such as information and communications technology, electronics, high-tech, chemicals, transportation and logistics, agrifood and creative industry. ODI from Chinese tech companies last year nearly doubled compared with five years ago, Brouwer said.

In 1998, BYD, a major Chinese manufacturer of new energy vehicles, established its European subsidiary in Rotterdam, the Netherlands, focusing on providing new energy products and services, including vehicles, rechargeable batteries and solar panels. Isbrand Ho, Managing Director of BYD Europe, said the company’s main development strategy in the European market, where great importance is attached to carbon emissions, has focused on promoting its electric buses. In 2017, BYD established its first electric bus and truck factory in Hungary, with an investment of more than €30 million. The following year, it set up its second factory in France, with an investment of €10 million. “To date, BYD has received orders for more than 1,400 pure electric buses, taking up about 20% of the European market,” Ho said. “Our pure electric bus footprint covers more than 100 cities in 20 countries, including Amsterdam, London, Brussels and Turin, and has provided them with green solutions.” He added that BYD Europe has more than 500 employees, with over 50% of them locals. The company also has a research and development center and a localized R&D team in the Netherlands. Despite the pandemic, BYD has tackled the difficulties and delivered products and services on time, including putting its pure electric buses on the roads in the UK, Spain and Germany. The company is also due to launch its pure electric trucks in the European market, including 7.5-metric-ton light trucks, 19-ton heavy trucks and tractors, and 2.6-ton vans.

Raymond Wang, Partner at global consultancy Roland Berger, said that attract more Chinese investment, the first thing European countries need to do is ensure the Covid-19 outbreak has been fully contained, the China Daily reports.