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A project funded by the European Union
WELCOME TO THE EU SME CENTRE WEBINAR SERIES
www.eusmecentre.org.cn [email protected]
Please continue to submit your text questions and comments using the Questions Panel
Purpose
• The EU SME Centre in Beijing is a project funded by the European Union
• To assist European SMEs to export to China and establish, develop and maintain commercial activities in the Chinese market
• Free, confidential information and advice, and practical support services
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BD
S&C
HR & Training
Legal
Information and advice • Enquiries
• Publications
• Training
• Webinars
• Databases
Support services • Hot desks
• Briefings
• Matchmaking and networking
Services
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Some Key Figures Comparing Cities
GDP Growth Year by Year 2009 - 2013
Regional Cities in China: Opportunities for EU SMEs in Shanghai
Huilin Zhao / Anthea Wong, April 8 2014
A project funded by the European Union
Speaker Biography
• President Zhao spearheads the International Technology Transfer Department and Information Department at Shanghai Technology Transfer & Exchange (STTE).
• President Zhao has been with STTE since 2003. Before joining STTE, he spent 8 years with the Shanghai Science & Technology Investment Co., Ltd as Deputy Manager of the Investment Division, which provided him with solid experience in management and investment.
• He received his Masters Degree in Computer and Information Sciences from Shanghai Jiaotong University.
Huilin Zhao Vice President Shanghai Technology Transfer & Exchange (STTE) Tel: +86 21 54065199 E-mail: [email protected]
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History • the FIRST national permanent technomart,1993
• the FIRST national tech transfer demonstration organization, 2008
• Shanghai United International Technology Transfer Center, 2013
Mission To create an integrated innovation-supporting platform via
• technology services tailored for SMEs
• tech transfer guided by innovation demands
• cooperative innovation promoted through a network of partners
Shanghai Technology Transfer & Exchange
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Core Services
Information service R&D service Industrialisation service Tech trade service International tech-transfer
service
S&T Project information
Industry-study-research cooperation
Market analysis Due Diligence Policy consulting
Industry policies Tech-problem solving Feasibility research Tech- assessment Tech-research
Industry trends Talent introduction Value assessment Negotiation assistance Promote communication
IPR service Tech-promotion Contract assistance Negotiation assistance
Contract assistance
Shanghai Technology Transfer & Exchange
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EEN East China Consortium
• Established by signing a contract with EACI in May 2012
• Coordinator: Shanghai Technology Transfer & Exchange (STTE)
• Partner 1: Shanghai Promotion Association of Tech-Transfer (SPAT)
• Partner 2: Shanghai Chamber of Commerce for Import and Export (SCCIE)
• Partner 3: Jiangsu Technology Property Exchange (JSTPE)
• Geographical coverage: Yangtze River Delta
Shanghai, Nanjing, Suzhou, Wuxi, Changzhou, Yangzhou, Zhenjiang, Nantong, Taizhou, Hangzhou, Ningbo, Huzhou, Jiaxing, Jinhua, Wenzhou, Shaoxing, Zhoushan, Taizhou etc.
Enterprise Europe Network in East China
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Key words: EEN activities and individual services
Enterprise Europe Network in East China
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Mexico
•STTE
Ottawa
Houston
••Los Angeles
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•San JoseSan Francisco
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••Chicago
New York
Lahti
LondonCambridge •San Peterburg
Moscow
ZagrebTel Aviv •
TehranEsfahan
NovosibirskUlaan Baatar
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SeoulDeajon
TokyoKyoto
Kytakyushu
ManilaHanoi
Ho Chi Minh
PretoriaSydney
Yakarta
SingaporeKuala Lumpur
ColomboDhaka
KathmanduNew Delhi
Islamabad
Hamburg Prague
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2013.04 Shanghai China-Turkey Horticulture Technology Matchmaking Conference
2013.05 Shanghai China-EU Tech-transfer Forum
2013.05 Shanghai EEN Good Practice Workshop
2013.05 Beijing Asia- EU SMEs Matchmaking Conference
2013.05 Denmark Energy Industry Exhibition- China-EU Company Matchmaking Conference
2013.05 Shanghai USA Life-science Company Mission to China
2013.07 Beijing EU Mission for Green Growth- China-EU Matchmaking Conference
2013.09 Shanghai China-UK New Materials Industry Matchmaking Conference
2013.09 Austria, Hungary
China Delegation for EEN practice to Austria & Hungary
2013.10 USA, Canada China Technology Transfer Delegation to USA & Canada
2013.10 Shanghai Lombardi Company Mission of Intelligent Manufacture, Communication & Transportation
2013.11 Shanghai EEN Technology Projects Matchmaking Event at 2013 China International Industry Fair
2013.11 Shanghai China-Malaysia Life-science & ICT matchmaking conference
2013.12 Hong Kong EEN Belgium-EEN East China Innovation Design Enterprise Matchmaking Event
2014.03 Suzhou China-UK New Agriculture Technology Matchmaking Event
More activities are expected in the near future.
EEN-East China Activities
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China-EU Tech-Transfer Forum, May 9 2013
• Topic: Open and Collaborative Innovation
• Objective: Investigate effective international technological innovation cooperation systems
Example 1: EEN-East China Activities
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EEN Technology Projects Matchmaking Event at 2013 CIIF, November 6 2013
• Participants: companies from China, Denmark and the UK in the field of clean energy, intelligent energy management, life science etc.
• Objective: promote China-EU companies cooperation under the framework of EEN
• Included project presentations and face-to-face negotiations
Example 2: EEN-East China Activities
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Demand from clients & partners
Individual services from EEN-EC
• Focus sectors • Environmental protection technology • Green energy (e.g. biomass) • Life-science (e.g. medical device,
health care) • New materials (e.g. bio-materials) • Agriculture (e.g. bio-fertiliser) • Others
• Possible cooperation mode for TT • Collaborative R&D • Tech-licence • Joint venture • Manufacture • Others
• Provide services • Partner matching • Information analysis • Market research • Due diligence • Policy consultation • IPR protection • Financing support • Face-to-face meetings • Negotiation support • Contract consultation • Conference/forums/fairs • Others
EEN-East China Individual Services
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Projects Demand Party Supply Party
Gas flow control technology and services
Betone Technology (Shanghai) Co., Ltd MKPRECISION Co., Ltd.
Introduction of technology in high-density energy storage materials (R&D
cooperation)
Pilot plant of Shanghai Institute of Ceramics and Materials Science
Queen Mary University of London
Introduction of technology in sludge incinerator filtration system
Zhejiang Huanxing Machinery Co., Ltd. Filcon A/S
To establish overseas offices for high-tech new energy projects
Beijing Zhongnuo Jiaxin High-tech Co., Ltd.
Agro Business Park (ABP)
R&D cooperation in technology and equipment of biogas production from
agricultural waste
KaiRui Agricultural Development Co., Ltd. AEM Engineering
To establish a sludge incineration joint venture
Zhejiang Huanxing Machinery Co., Ltd. Filcon A/S
R&D cooperation in the second generation of bioethanol
Liaoning Institute of Energy Resources Scale Biofuel, ApS
A cross-border M&A involving a technology company
Shanghai Upper Bio-tech Pharma Co., Ltd.
MTM Capital Partners Limited
Introduction of infectious disease detection technology
Wuhan Dechuang Medical Investment Co., Ltd.
Honeywell International Inc.
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Partnership Agreements Achieved by EEN-East China
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PA concerning solid lubricant technology (May - Sep 2012)
Example 1: Partnership Agreement
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Allergen Detection Tech-Transfer (2011-2013)
(06/2011/) Licensing agreement between A (UK) and B (China) ↓ (09/2012) Further cooperation - Capital increase ↓ (12/2012/) Service upgrades - Transnational due diligence ↓ (08/2013) New partnership - Equity financing agreement
Example 2: Partnership Agreement
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Thank You!
In case of questions, please contact:
Cathy Zheng Shanghai Technology Transfer & Exchange Department of International Technology Transfer Add: No100 Qinzhou Rd., Shanghai Tel: +86-21-54065235 E-mail: [email protected]
Contact Information
Part 2: Shanghai Pilot Free Trade Zone: What are the Breakthroughs?
Anthea Wong
A project funded by the European Union
Speaker Biography
Partner of Tax and China Business Advisory
Tel: +86 10 6533 3352 Fax: +86 10 6533 8800 Email: [email protected]
• Anthea joined the China practice of PricewaterhouseCoopers in 1993. She leads a national team that specialises in providing China regulatory advisory and implementation services, ranging from market entry solutions, PRC structure set-up, cash repatriation strategies to restructuring solutions, such as equity transfer, M&A, liquidation, etc.
• She is familiar with China’s foreign investment environment and regulatory framework. She has hands-on experience in assisting clients, especially those from the retail and consumer sector, to structure their operations in China and penetrate the market.
• Over the years, Anthea has established close contacts with China’s approval and registration authorities as well as major industry bureaux at both central and local levels. She has worked with many clients on enhancing communication and fostering relationships with the Chinese government authorities. She is also a frequent speaker in conferences and seminars and a regular contributor to magazines and professional journals on various topics of doing business in China.
Anthea Wong, PwC Beijing
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Agenda
• Overview • Key features of the Shanghai Pilot Free Trade Zone
(SH PFTZ) • How you may benefit from the SH PFTZ • Challenges and what to expect next
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Chapter 1: Overview
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SH PFTZ
• Location
• Covering 28.78 km2, includes:
• Waigaoqiao Bonded Logistics Park (1.03 km2)
• Waigaoqiao Bonded Zone(10 km2 )
• Pudong Airport Free Trade Zone (3.59 km2)
• Yangshan Port Free Trade Zone (14.16 km2)
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Regulatory Development
3 July 2013
29 September 2013
End of 2013
End of March 2014
The Overall Plan for SH PFTZ approved by the State Council
Release of the policies
Legislation to enact the program
Official launch of the SH PFTZ and release some of the major regulations 30 August 2013
Certain administrative approvals items under several laws are suspended
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What’s the Big Picture?
National strategy to reform the economy
Global Competition
China remains the number 1 target for investment. But other leading economies are pushing it hard.
Internal Needs Transform from “government oriented” to “market oriented” environment.
Rmb internationalization While China has been the 2nd largest economy in the world, Rmb only ranks 9th of active currencies in the global foreign exchange markets
Testing ground SH PFTZ is a testing ground for reforms. Target to duplicate the same reform model to other locations in 2-3 years.
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• Relaxation of financial sector and forex control
• Simplified investment administration
• Increase in incentives
• Further opening up to inbound investments
• Simplified approval procedures
Policy Highlights
• Optimised customs and trade supervision
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Current Status (up to mid-Feb 2014)
80k (up to 16 Feb 2014)
1.8 million per day
6,105 (7,000 more under application
procedure)
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Website hits
Visitors
Newly established entities
Foreign and domestic banks
There was a total of 13,000 entities in the 4 areas before the SH PFTZ was set up.
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Chapter 2: Key Features of the SH PFTZ
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Reduce Approvals and
Ease Foreign/Outbound Direct Investment
“Simplified approval process”
• Record filing mechanism • One-stop “Commercial Registration” • Simplified outbound approvals
“Negative List”
• Reducing the approvals • Renewed on regular basis
“Further open up the service sector”
• Relaxation in shareholding limit • Relaxation in eligibility requirement • Less constraints in business scope
• National treatment • Quicker response to market
“Negative List” may change the way of doing business in China.
Widening the scope of FTZ from from trading of goods to trade in services
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Reduce Approvals and
Ease Foreign/Outbound Direct Investments
Foreign direct investment
Investment application
Approval period for new set-ups (except for special pre-approvals)
Capital verification report
Capital contribution
Minimum registered capital requirement
In SH PFTZ
Only record filing is required (except for entities in Negative List )
Around 10 working days
No need
Should be contributed within the business operation period.
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Company A
Investment: securities, stocks and
funds
Equity investment in Company C
Company A
Domestic SH PFTZ Overseas Outbound direct investment: Apply to all entities registered in SH PFTZ
Equity investment (M&A)
Investment market
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Advantages: 1.Simplified outbound payment procedure 2. Only record filing is required for investment under USD300m (will be raised to USD1billion in near future ) 3. Only 5 working days are required for approval
Financial Reform
It can be related to all industries.
Still a lot of debates. The bottom line is that the risk should be manageable.
• Gradually liberalized interest rate
• Gradual relaxing of RMB conversion in capital account
• Cross-border use of RMB
Financial system innovation
Institutional innovation
Forex control reform
• Exploring the set-up of new types of financial institution and international platform
• Build a forex administration system that is compatible with the SH PFTZ reform
• Facilitate investment and trade process
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Chapter 3: How You May Benefit from the SH PFTZ
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Possible Model I
Transforming Trade in Goods Reduce ‘Red Tape’ and Compete Regionally
Services from Customs and CIQ • Simplified Customs and CIQ procedures
and requirements such as “enter first clear later” for incoming overseas shipments
• Single electronic Customs/CIQ window for document submission
• Classified supervision on the bonded/non-bonded goods with a risk-based approach
• Improved supporting measures such as single office for Customs/CIQ with common working hours and designated areas for physical goods inspection
Beneficiaries
• Logistics hubs
• Regional distribution centres
• Traditional trading companies
• Bonded manufacturers
• New traders (commodities)
• Centralised gateway port
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Investment and Logistics (3PL)
Scenario Potential Change Benefits
Internal service centre
Relaxing the restrictions on cross-border treasury management
Make cross border cash-pooling arrangement easier. Enhance the function of regional treasury centre, regional headquarters
Investment platform
Reducing the approval for inbound and outbound investments
Less administrative hassle to get approvals and funding. Potential tax and local financial support for outbound investments
3PL / Bonded Warehouse / Regional Distribution Centre
• No more Import/Export Registration Forms for entrepot trade
• Lower physical and documentation inspection rates
• Sell-first pay later
• Easier to reconcile the Customs Record with the Warehouse Management System therefore less duty exposure
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Trading and Services Scenario Potential Change Benefits
Trading Company • Lodge Import Registration Form after goods receipt in warehouse with e-Clearance rolled out to most transport modes/goods/companies
• Reduced discrepancies and faster clearance time with lower processing costs
Manufacturing Company
• No more Customs Handbook • ERP system report to Customs
system • No more log-book for duty exempt
capital equipment
• Less administrative effort in ensuring compliance and less risk of additional duty/VAT assessments
Service sector • Expand the allowable activities covering a wide range of industries (e.g. shipping, professional services, media, games, etc.)
• Reduce the market entry restrictions and enable foreign investors to access China more directly.
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Favourable Tax Policy on Investment and Trade
No general preferential tax
policy for all industries
Industry-specific tax incentives are available • VAT refund on financial leasing • Duty exemption on production equipment • Other financial incentives may be available
by industry
Emphasis on avoiding base erosion or profit shifting
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Chapter 4: Challenges and What to Expect
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Potential Challenges for Business
1. What is the relevance to your business?
Managing the uncertainties in the transition period
3. How to align the corporate structure with your existing operations in China?
2. How to seize the opportunities to utilize the benefits from the SH PFTZ to make a real impact?
4. How to make the PFTZ
strategy fit in the company’s long term strategy?
6. How to manage the pricing and duty implications across the SH PFTZ?
5. How to manage the potential uncertain tax treatments?
There is no ‘one-size-fit-all’ solution. Need to review your plan and model to find the right strategy.
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What to Expect? - More Pilot Free Trade Zones to Come?
Tianjin Binhai
Shenzhen Qianhai
Guangzhou Nansha
Zhuhai Hengqin
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Take Away
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1. SH PFTZ can be relevant to you whether you are a new comer or have already had significant presence in China
2. The impact is broad and very industry specific. Need to have tailor-made strategy for your own business
3. Mapping your strategy needs thorough review and planning
4. Actively engage in dialogue with the responsible authorities to increase clarity and reduce uncertainties
5. SH PFTZ will be a precedent for other area. It may be launched in other cities in the near future. It is a signal of broader opening of finance and trade in China.
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www.eusmecentre.org.cn [email protected]
