Nov. 9 2008
4 trillion yuan stimulus package
Jan. 14 2009
Support for steel and auto sectors
Jan. 21 2009
850 bln yuan in 3 year in medicare reform
Feb. 4 2009
Support for machinery and textile industries
Feb. 11 2009
Support for shipbuilding industry
Feb. 18 2009
Support for electronics & informational industries
Feb.19 2009
Support for light & petrochemical industries
Related Article: On American and Chinese Economic Stimulus Plan
China‘s Ministry of Commerce (MOC) Thursday denied its refusal to approve Coca-Cola’s acquisition of Huiyuan Juice Group was protectionist.
MOC spokesman Yao Jian said the decision would have no effect on China’s policy in accepting foreign investment.
Yao said the ministry made the decision based “on sufficient investigation and research, on the basis of facts, and strictly inline with the country’s anti-monopoly law.”
He said countries worldwide commonly reviewed acquisitions under anti-monopoly laws, and China was no exception.
“The purpose of the examination is to maintain market competition, protect consumers and safeguard the public interest,” he said.Foreign Ministry spokesman Qin Gang echoed Yao’s comments, saying the rejection of the bid was in no way protectionism.
The government would continue to accept foreign investment, enhance opening up and provide foreign investors with a good investment environment.
“Products of the Coca-Cola company are available anywhere in China’s market. The country’s market is fully open to foreign companies,” said Qin.
Mei Xinyu, a trade expert with the MOC, said the rejection didn’t indicate that the country had closed the door to foreign investment, neither did it equal protectionism.
Coca-Cola offered to buy Huiyuan, the nation’s largest juice maker, for 17.92 billion Kong Kong dollars (2.3 billion U.S. dollars) in cash on Sept. 3. The MOC announced on Wednesday that the bid failed to meet requirements set out in the anti-monopoly law.
Hours after the decision was announced, Coca-Cola Company and Huiyuan said that they respected the decision.
Galaxy Securities analyst Zuo Xiaolei said the failed acquisition would not have any “substantial effect” on Huiyuan, because the company’s domestic market had not changed.
Wang Zhile, a researcher with the MOC, said the failed bid might have a short-term negative effect on Huiyuan but the company would still play an important role in the country’s pure juice market.
“However, the company should reconsider its development in the domestic market, so that it will grow better in the long run,” he said.
Source:Xinhua
(An article by an Australian about how to set up business in China—from Alibaba)
More and more Australian companies are setting up their own presence in China in order to source products/services directly from China or enter the Chinese market. However, given the alien nature of local regulations and business environment in China, it is critical to be proactive and fully prepared before you take the strategic move to set up your own presence in China.
Here are some “must-knows” before you set up the business in China:
1.You have more than one option for a local presence in China. Your China presence may be in the form of a wholly owned foreign enterprise, a contractual joint venture, an equity joint venture, a representative office or a local representation by a third party (local secretary/representation service companies).
2.Carefully define your business scope for the China presence. China National Development and Reform Commission may prohibit, restrict, permit or encourage your business set-up based on your business categorization and scope. Hence it is critical to carefully define your business scope so as to be permitted or encouraged to set up the presence.
3.Select the right location for your China operation. China abandoned its preferential tax rate for investments of foreign companies from January 1st 2008. However, some areas still offer local preferential policies for foreign investors in terms of land leasing/procurement, staff recruitment and management, local tax etc.
4.Confirm the minimum registered capital for your China operation. The Chinese government requires certain minimum registered capital for various types of businesses. However, local Industry and Commerce Administrations may decide on your minimum registered capital based on their judgement of your business scope and operation scale. You need to confirm with local government agencies the minimum registered capital through local contacts before taking any other actions in case they require an amount far above your financial resources available for the China operation.
5.Integrate commercial clauses in the Articles of Association to maximise profit repatriation into Australia. You may have commercial arrangements between your Head Office in Australia and the subsidiary in China in order to guarantee maximum profit repatriation. However, some arrangements must be included as part of the Articles of Association to be valid. The Articles of Association is to be submitted to local government agencies for approval and filing during business license registration. Hence, you must incorporate necessary clauses in the Articles of Association in the first instance.
6.Fully understand employers’ responsibilities and liabilities in China. China issued the new Law of Labour in 2007 which specified issues on employment contract, redundancy, etc. Without preliminary knowledge of this law, you may end up spending a huge amount of time and money terminating the contract with under performing employees, as the structure of the contract was wrong. You also need to be aware of the mandatory employee welfare and benefits so as to include such cost in the budget.
7.Conduct thorough due diligence and credit check on your joint venture partners. Your partners may not be what they claim to be. China has the business culture to show their wealth and status by driving luxurious cars, wearing prestigious watches and owning an impressive factory. Hence your Chinese business partners may look financially viable and well connected but, as a matter of fact, live on bank loans and personal debts.
8.Develop a comprehensive local employee management system. It is a hard job to recruit the right staff in a foreign country. It is even harder to effectively manage the local staff in a foreign country. A sound and robust employee management system will encourage the engagement and commitment of local staff and avoid potential risks. You may include reporting and communication policies, staff training, performance assessment, remuneration, career management and employee management manual in the system.
Business set-up in China is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls.
According News from Xinhua, US President Barack Obama signed a mammoth stimulus package into law Tuesday and readied a $50 billion rescue plan for Wednesday announcement to help legions of homeowners who are facing foreclosure.
“Obama focused on the $787 billion stimulus plan, an ambitious package of federal spending and tax cuts designed to revive the economy and save millions of jobs. Most wage-earners will soon see the first paycheck evidence of tax breaks that will total $400 for individuals and $800 for couples.”
Comparing with the amount of $ 787, China plans $586 billion economic stimulus. As a developing country, China seems to make its every effort to reverse the country’s economic spiral. This largest stimulus plan in China’s history calls for new housing, roads, railways and airports, plus rebuilding areas devastated by the May 12 earthquake.
It is also said the new stimulus measures are aimed to help China’s countryside, where two-thirds of the nation’s 1.3 billion people live.
No wonder recently Manufacturers Pin Hopes On Rural Families.
Although the stimulus plans whether in America or in China are good news for ordinary people, I still concern the implementation of the plan in China.
Firstly, where will the money actually go? As we read, Obama signed the stimulus package into law on Tuesday and in the future the Congress will make special acts to allocate the money among different sectors. But in China, I don’t think there would be any legislative procedures for using the money. The fact is, at the end of last year, local governments officials swarmed around National Development and Reform Commission to apply for new projects. But how would the local government take advantage of the funds? Would more corrupts occur? No one knows. I just don’t want to witness any “Great Leap Forward of Infrastructure” and more destruction and reconstruction. We should deeply thought about the supervision of the use of the money.
Secondly, I totally support the policies of investment in rural areas. Chinese peasants have been suffering a lot. It is high time to improve their life. As a part of stimulus of consumption policy, the governments persuade them to buy TVs, washers and fridges and so on. But once these honest peasants spend out most of their savings, who will take the responsibility to take care of their lives? As the economy situation goes down, hardly the peasants workers could find the jobs in the cities, nor do they have the basic society security from the nation. At that time, they will just suffer more.
China’s first anti-monopoly law finally came into effect yesterday. It takes too long for it to come into birth(15 years) and since China is still in the change into the market economy, this law attracts a lot of attention, espcially from some foreign investors.
The new law includes eight chapters and fifty-eight articles, including General Principles, Monopoly Agreement, Abuse of Dominant Market Position, Concentration of businesses, Eliminating and Restricting Compitition by Abuse of Administritive Power, Investigation of the Suspected Monoploly Conducts, Legal libilities and Supplymentary Articles.
Someone said, “The new anti-monopoly law establishes a basic framework to build a fair, uniform and national competition law system that benefits consumers by recognising and preserving incentives to compete”. Since there exist a lot of state-owned enterprises and state monoply in China, it is high time for it to influence on such industries as petroleum, telecommunication.
For foreign investors, the decision-making process will become more easy because this law would help to reduce risks in investment. As reads in the law that “As well as anti-monopoly checks stipulated by this law, foreign mergers with, or acquisitions of, domestic companies or foreign capital investing in domestic companies’ operations in other forms should go through national security checks according to relevant laws and regulations”, when foreign investors plan to aquire major State-owned enterprises or companies with famous brands, they shall firstly go through the anti-monoply check provided here.
In Chapter Five, the law also stipulates that “government departments should not take advantage of their power to curb competition”, and prohibits governments from appointing producers or suppliers for unit or individual procurement. I like this part very much, because it expressly prohibits the local protection in government procrement. And that also means more opportunities for multinationals.
One big concern for myself is that the law does not stipulate a definite enforcement party. It only mentions an anti-monopoly committee directly under the state council but did not say who would enforce it. According to CCTV, three government bodies–the Ministry of Commerce, the National Development and Reform Commission and the State Administration for Industry and Commerce–will enforce the law. But for any case of monopoly, it must be important and complex. If there is no a professional law enforcement body, I am afraid the period of hearing and judgement would be prolonged and delayed for the reasons of shifting responsibilites or contending powers.
