EXECUTIVE SUMMARY
Economic reforms in China have led to an unprecedented change in the nature of the business environment and the opportunities available for foreign investors and privately owned companies. However, there remain bureaucratic and operational challenges and this guide presents an introduction to some of the key areas that businesses should be aware of when setting up operations and doing business in China.
Some key issues for foreign investors are as follows:
China joined the World Trade Organization (WTO) in 2001 and market access has been gradually phased in.
Despite considerable bureaucracy, the government is making efforts to promote foreign investment.
Although many industries are largely state-owned, the non-state sector, made of collectively-owned, foreign-owned and private companies, is rapidly gaining importance in the Chinese economy.
China has been proactive in removing tariff and non-tariff barriers for trade in goods through the negotiation and implementation of regional free trade agreements.
Certain foreign exchange restrictions are in place.
Preferential tax treatment such as tax holidays and reduced tax rates for enterprises in Special Economic Zones have been removed with the implementation of a new corporate income law effective from 1 January 2008. Incentives are now available for high-tech businesses.
There are market access and production controls, as well as restrictions on operations.
Distribution and some service sectors are open to foreign investors.
China’s new anti-monopoly law came into effect on 1 August 2008, and China will join other countries with anti-trust laws that regulate competition.
Despite the fact that managers and skilled labour are still in short supply, the situation is getting better with the millions of new fresh university graduates coming into the labour market every year.
Protection of intellectual property is an area of concern.
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