Ernst & Young (EY) has issued a global tax alert on foreign investments in China.

On 12 January 2017, China’s State Council released Guofa [2017] No. 5 (Circular 5) to provide additional guidance on market access and utilization of foreign capital. Circular 5 contains 20 actions related to active utilization of foreign capital, creation of an excellent business environment and optimization of government services.

Some of the key favorable actions include:
• Opening additional market access to selected service industries (such as financial institutions, telecommunications, internet, and education), manufacturing of rail transit equipment, motor, ethanol fuel and oil processing and mining of unconventional oil-and-gas resources.
• Encouraging foreign investors to invest in infrastructure development, research and development (R&D), high-end manufacturing, intelligent manufacturing, green manufacturing and production support services.
• Allowing local governments to specify supporting policies to attract , e.g., local financial subsidies.
• Revising the current Catalogue of Priority Industries for Foreign Investments in the Midwest region by expanding the scope of encouraged industries in the Midwest and Northeast regions.
• Allowing foreign multinational corporations to carry out centralized foreign exchange fund management function.
• Prioritizing substantial land use by offering lands to encourage foreign investment industrial projects.

Circular 5 serves as official guidance and detailed implementation measures will be released by the government authorities. Circular 5 clearly indicates China’s determination of moving up in the supply chain and its objective of encouraging high value-add services, R&D and high-end manufacturing. Companies in the encouraged industries may consider expanding investments into China. Local incentives may be available since local governments are now authorized to provide their own incentive policy.

The CIEIC is an international innovation competition, which is held by the city government of Shenzhen in cooperation with the Chinese Ministry of Science and Technology. Shenzhen is one of the most innovative and dynamic cities in China and is known as the “Silicon Valley” of the People’s Republic of China. About 180 of the 500 international top companies in China established their head offices in Shenzhen. To promote European economic relationship with China further, the German-Chinese Business Association (DCW) organizes the European preselection of the innovation competition for the city of Shenzhen. The preliminary decision will be held in Munich and worldwide in Bangalore, London, Sidney, Tel Aviv, Toronto, Tokyo and Silicon Valley (USA). The organizers are inviting everyone to enter the competition.

1st China (Shenzhen) Innovation & Entrepreneurship International Competition

European Division Competition – Deadline 28.02.2017

Who can participate in the competition? Individuals, research groups or companies – including start-ups – are invited with an innovative idea or a future-oriented concept for the following sectors:

• Internet and Mobile Internet (including Information Technology)
• Electronic Science and Technology
• Biological and Life Science and Technology
• Advanced Manufacturing
• Material & Energy (including Energy Saving and Environmental Protection)

The top twenty projects (four per industry) will take part in the pre-selection competition in March in Munich. The winners of the preliminary decision are going to participate in the competition finals, which will take place in Shenzhen in April.

Around CNY290,000 (currently approx. €40,200) will be awarded for the pre-selection competition winners in Munich. About CNY6.8 million (currently approx. €940,000) will be granted to the winners of the finals in Shenzhen. If you are interested in establishing a company in Shenzhen, you have the possibility to receive further funding.

The application deadline is 28 February 2017. For more information please visit: www.dcw-ev.de/innovation-competition

Baker McKenzie has issued the following Client Alert:
On December 7, 2016, China’s National Development and Reform Commission (“NDRC”) and Ministry of Commerce (“MOFCOM”) released a draft 2016 version of the “Catalogue for the Guidance of Foreign Investment Industries” (“Catalogue”) for public comment until January 6, 2017.

The draft was issued following the recent reform of the foreign invested enterprise (“FIE”) approval regime. The special administrative measures on access of foreign investments (“Negative List”) section of the Catalogue will be used to determine whether foreign investments in relevant industries will be subject to the approval of MOFCOM or its local branches.

The new draft also promises to open up a significant number of currently restricted and prohibited sectors to foreign investors. Compared to the current version of the Catalogue, which was issued on March 10, 2015, the draft Catalogue reduces the number of restrictive measures (i.e. limitations on ownership of shares, restricted items and prohibited items) from 93 to 62.

The full Client Alert can be consulted here.

Are you having problems doing Business in China or are you planning to expand your company in China?

We are a team of three General Management students looking for an In Company Project (ICP) for the months May and June. During the ICP a team of two/three Vlerick students will put their experience and fresh look into practice to analyse your strategic problem and give recommendations. The project will be closely mentored by an established Vlerick professor. Our team consists of different backgrounds: Chinese language & Business Economics, Law, Pharmacy, but we all share an interest in Asia and Global Change.

Are you interested in our advise, or somewhat curious? Please contact us at mara.vandorst@edu.vlerick.com

A Practical Guide to Help You Makes Sales in China Safely and Smoothly

Price: 50 EUR
Contract compliance and effective enforcement of contract rights concern every company doing business in China. Knowing how to check a Chinese company’s background and what essential elements should be included in your sales contract can help you minimise business risks and avoid making common mistakes in the Chinese market. This Guide identifies the key terms that you should consider when drafting a sales contract for exporting goods to China. It will provide you basic and practical insights into the contractual aspect of Chinese business, and help you evaluate the viability of contract arrangements with your Chinese business partners.

• Key Contents
• Pre-contract Stage: How to Check out Your Potential Business Partner?
• Contract Conclusion: Drafting a Contract with a Chinese Company
• Choice of Law
• Dispute Settlement
• Payment Terms
• Product Name, Description and Quality Requirements
• Terms of Delivery: Packaging, Labelling, Shipment, Acceptance, Inspection,
• Risk of Loss
• Warranties, Liability & Penalties
• Notifications
• Term and Termination
• Confidentiality, IP Rights Protection, Non-Competition
• Language
• Contract Validity and Effectiveness

Authors:
Maarten Roos, Managing Director, R&P Lawyers
Ludmila Hyklova, Legal Advisor, EU SME Centre

Check related content provided by the authors:
Webinar: How to Manage Contract Terms and Reduce Risk in China
Webinar: How to Prevent Common Labour Disputes in China