Briefly…Top Ten Tweets (From Market Access & Level Playing Fields, To R&D, SOEs & Taxes)

Related entries: Business Issues, Consumer Market, Corporate News, Economy, General, Investment, News, Research, Risk & Law

This week’s review of last week’s news follows below:

We continue to listen to all the bulls and bears on the China circuit (but less to the latter) and to monitor growth prospects and inflationary risks. The latest estimates suggest a slowing of GDP growth to around 8% in the fourth quarter of the year (vs. 11.9% in Q1), while CPI could peak at around 4% in Q3 or 4 according to an official from the State Development Centre.

We have also covered the growth of the “business environment” issue many times in these posts, and will do so again…this time it is the European Union (via China Post) whose “position paper said uneven enforcement of laws and unfair restrictions on foreign investment were deterring overseas companies from expanding their operations in China”. More political pressure can be expected, but businesses will have to continue to adapt to conditions (while not holding their collective breath for change).

The Wall Street Journal notes how increased perception of risks are having an impact on corporate operations: “[companies] are definitely much more careful, and they are not just willy-nilly going and making partnerships in China,” says Mark Gottfredson, a senior partner at Bain & Co. “From our advising clients perspective, the whole thing has changed. It’s no longer about getting into China, it’s about how you do China”. How are you doing?.

One of the common political gripes remains the RMB, and associated trade imbalances. The currency’s value constantly under pressure, and recent moves to de-peg from the dollar were a step towards more flexibility. Another development has been the introduction of a trade settlement programme, which may have wider implications. China Real Time Report notes: “wider use of the renminbi in foreign trade and investment can help importers and exporters control costs and reduce exchange-rate risks.” It goes on to say that “it allows China to say that the yuan is an international currency and is helping reduce the world’s reliance on the U.S. dollar” but also that the end game could be much bigger: “as a way to push forward a wider agenda of financial and economic reform”. Chinese policies are often layered like onions, with eye-watering implications.

Chinese companies have been busy investing overseas and, according to Business China: “China’s overseas direct investment outflow is expected to reach $100 billion in 2013, Fan Chunyong, vice chairman and secretary-general of the China Industrial Overseas Development and Planning Association, said…”. The report also quoted Lu Jinyong, the director of the Research Center for Foreign Direct Investment at the University of International Business and Economics as saying Chinese ODI “would exceed $200 billion by the end of the 12th Five-Year Plan (2016)…Lu said China is now focused on investing in natural resources, technology and market access”. While state companies have taken the lead, private companies have also become more active.

The state and the private sector have been in the news a lot recently – with Forbes China Tracker pointing out that the internet “May Be Largest Industry In China Not Dominated By State-Owned Firms” (though the state is making some efforts in this area). Another post highlights the impact of the stimulus spending, as well as a new “catch-phrase among Chinese entrepreneurs: “guo jin, min tui” (国进民退), or “the state advances, the private sector retreats.” (The rough ambiguity of the characters could also suggest “the nation advances, but the people fall behind”). More balance is needed, and (the state) China Daily has already headlined the private sector’s importance: “China’s top 500 private companies have surpassed State-owned enterprises in many indicators, especially tax payments and employment creation”. However the big SOEs remain firmly on top of the pile.

Chinese firms of all sorts have been pushed to “innovatise” and increase R&D and IP. The latest figures (reported in Economic Times) show: “China’s top 500 research and development firms have got 169,000 patents for their innovations in 2010, up 13.3 per cent from last year, the China Enterprise Confederation (CEC) has said… In 2009, China filed 7,946 international patents, up 29.7 per cent from 2008, and ranked fifth in the world”. As to the value of all that IP, see more comment here, from China Hearsay.

From R&D to tax…People’s Daily reports “ China plans to reform its taxation system by improving the value-added tax and sales tax systems, expanding the scope of the value-added tax, giving overall consideration to the tax burden on companies, carrying out the reform in resource taxes and promoting the reform of the property tax and personal income tax”. Time for some tax planning.

And for what the tax man does not take, there is always the marketing man. Deloitte’s recent survey of consumers found that “With increasing wealth, Chinese consumers are becoming more sophisticated with value-for-money and quality replacing brand as the key factors in deciding retail purchases, but appetite for international brands is high with 70% saying they were interested in trying new premium brands with 20% saying they were very likely to try”. But change is constant – as is the need for monitoring.

Some practical advice from China Law Blog on setting up Wholly Foreign-Owned Companies (WFOEs), including the need for preparation: success is “based in large measure on how we work with the appropriate authorities before our clients get locked into something that may lead to a rejection of their WFOE application”. Follow the link below for the full post.

For the news links, see below. For more real-time news and views, see our ChinaBlogTweets Twitter stream, or subscribe to the rss feed.

1. Economy: RT @21cbhchinanews: GDP Growth May Fall back to 8% in Q4 – Official (see also: PMI up to 51.7 RT @live_china: Data Show China Growth Merely Moderating – New York Times

2. Business Environment: RT @TweetChina: European firms in China call for more level playing field – China Post (see also: RT @TweetChina: China, EU open fifth strategic dialogue

3. Risks RT @lonniehodge: RT @Jess_Huang: In China, western firms keep secrets close (…changing the way they do business…)

4. RMB & a broader agenda RT @JingDaily: Why Settling Trade In Yuan Matters (WSJ) $ 元

5. ODI: Resources, technology & market access RT @21cbhchinanews: Chinese Firms Boosting Overseas Investments (see also: ODI, competition RT @BullishChina: China digs for ways to stymie BHP’s Potash Corp bid –

6. State / Private Sector RT @gadyepstein 2 new posts abt SOEs v privates on Forbes China Tracker by @niubi & @prchovanec. & (see also: SOEs lead RT @fonstuinstra: Wahaha most profitable private firm in China – (h/t @niubi); RT @ChinaDailyUSA: Private companies play vital role

7. IP for top 500 R&D firms RT @raykwong: Chinese firms score 169,000 patents in 2010.

8. RT @ChinaPrime China to conduct large-scale taxation system reform, may also introduce an environmental tax and social security tax…

9. RT @GCBRANDS: Deloitte survey: ‘Winning the Wallet of Today’s Chinese Consumers’

10. RT @BlawgTweets: New @DanHarris: What It Takes To Get A WFOE/WOFE Registered In China. (see more here on Shutting Down A China WFOE. The Potential Repercussions).

One Response to “Briefly…Top Ten Tweets (From Market Access & Level Playing Fields, To R&D, SOEs & Taxes)”

  1. Tweets that mention Archive » Briefly…Top Ten Tweets (From Market Access & Level Playing Fields, To R&D, SOEs & Taxes) | China Business Blog -- Says:

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