TMF Group - Building bridges to china: part 2

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Building Bridges to

China

28 September 2012 - Chester Beatty Library

Building Bridges to

China

Jochum S. Haakma

Global Director of Business Development, TMF Group

PART 2

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Building Bridges to

China

Jack Yu

Managing Director UK & Western Europe

Yingke Law Firm

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Building Bridges to

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Corporate Establishment and the Chinese Legal Environment

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Building Bridges to

China

Shenzhen, Southern China 1978

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Building Bridges to

ChinaShenzhen, Southern China

2012

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Building Bridges to

ChinaShanghai Pudong, 1989

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Building Bridges to

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Building Bridges to

ChinaShanghai Pudong, 2011

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Building Bridges to

ChinaGDP Explosion

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Building Bridges to

ChinaGDP Explosion

China is big, but will get bigger … almost a quarter of world output by 2030.

Nominal GDP 2010, USD 62trn(USD trn, % of global)




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Building Bridges to

ChinaThe Whole Country is Growing

Kulja

Karamay

Urumqi

Kashgar

Shiqunhe

Lhasa

Golmud

Yumen

Chengdu

Kunming

Xi'anLanzhou

Yinchuan

Hohhot

TaiyuanShijiazhuang

Beijing Tianjin

Yantai

Zhengzhou

Hefei

Shanghai

Hangzhou

Fuzhou

XiamenGuangzhou

ShenzhenNanning

Guiyang

Changsha

Wuhan

Nanchang

Haikou

Nanjing

Qingdao

Changchun

Shenyang

Qiqihar

Hailar

Harbin

Dalian

Xining

XINJIANG

XIZANG

QINGHAI

YUNNAN

GUIZHOU

GUANGXI

HAINAN

SICHUAN

NINGXIA

SHAANXI

HUBEIANHUI

ZHEJIANG

FUJIAN

JIANGXIHUNAN

GUANGDONG

HENAN

SHANXI

HEBEI

INNER MONGOLIA

HEILONGJIANG

JILIN

LIAONING

SHANDONG

JIANGSUGANSU

CHONGQING

Kulja

Karamay

Urumqi

Kashgar

Shiqunhe

Lhasa

Golmud

Yumen

Chengdu

Kunming

Xi'anLanzhou

Yinchuan

Hohhot

TaiyuanShijiazhuang

Beijing Tianjin

Yantai

Zhengzhou

Hefei

Shanghai

Hangzhou

Fuzhou

XiamenGuangzhou

ShenzhenNanning

Guiyang

Changsha

Wuhan

Nanchang

Haikou

Nanjing

Qingdao

Changchun

Shenyang

Qiqihar

Hailar

Harbin

Dalian

Xining

XINJIANG

XIZANG

QINGHAI

YUNNAN

GUIZHOU

GUANGXI

HAINAN

SICHUAN

NINGXIA

SHAANXI

HUBEIANHUI

ZHEJIANG

FUJIAN

JIANGXIHUNAN

GUANGDONG

HENAN

SHANXI

HEBEI

INNER MONGOLIA

HEILONGJIANG

JILIN

LIAONING

SHANDONG

JIANGSUGANSU

CHONGQING

NorthBeijingTianjinHebeiShandong

SouthGuangdongFujianHainan

CentreShanxiHenanAnhuiHubeiHunanJiangxi

NWShaanxiGansuNingxiaQinghaiInner MongoliaXinjiang

SWSichuanChongqingGuizhouYunnanGuangxiTibet

NELiaoning HeilongjiangJilin

EastShanghaiJiangsuZhejiang

0

200

400

600

800

1,000

1,200

ChinaEast

ChinaNorth

ChinaCentre

ChinaSouth

ChinaSW

ChinaNE

ChinaNW

0%

5%

10%

15%

20%

25%

GDP, 2009, USD bnAverage nominal GDP growth, 2005-09(RHS)

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Building Bridges to

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Building Bridges to

ChinaMarket Access

Investment Catalogue: Four Categories Encouraged

Restricted

Forbidden

Permitted

Regional policies: Central & Western Regions Tendency: From Coast Towards the West

Preferential Policies

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Building Bridges to

ChinaLaw and Compliance - Regulatory Approvals

Ministry of Commerce (MOCOM) State Administration of Industry and Commerce (SAIC) State Administration of Foreign Exchange (SAFE) National Development and Reform Commission (NDRC) State Administration of Taxation (SAT) The Ministry of Land and Resources (MLR) China Securities Regulatory Commission (CSRC) State-owned Assets Supervision and Administration

Commission (SASAC) Ministry of Environmental Protection Other departmental authorities (eg. MIIT governing telecom

industries)

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Building Bridges to

China1. Forms of Establishment

Wholly Foreign Owned Enterprise (WFOE)

Joint Venture

Representative Office

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Building Bridges to

ChinaGeneral Procedures for WFOE Establishment

1.Company name pre-approval

2.Approval of the Ministry of Commerce or its local branches

3.Registration with local Administration for Industry and Commerce and issuance of

business license

4.Post- establishment registration

1. Registration with the local Technology Supervision Bureau for an Organisation

Code

2. Registration with local Public Security Bureau and chop carving

3. Tax Registration

4. Registration with the local bureau of foreign exchange

5. Registration with local Bureau of Finance

6. Registration with local Bureau of Statistics

7. Customs Registration (if needed)

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Building Bridges to

ChinaEstablishment of a WFOE

Documents Required:

Incorporation certificate of the parent company

Good standing letter regarding the parent company issued by its

bank

Board resolution of the parent company

Articles of associations of the WFOE

Director Appointment Letter issued by the parent company

Project feasibility study report

Lease agreement in connection with the premise of the WFOE

Completed application letter/ forms

Other documents to be required by the approval authority on a

case by case basis

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Building Bridges to

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Approval for Initiating the JV Project

Environmental Impact Assessment

Examination and Approval

Issuing Approval Certificate of JV Company

Registration of Establishment of JVC

Pre-approval of JVC’s Name

Open Account for Capital Contribution

Prepare Corporate Seal Registration with Foreign Exchange Control Authority

Registration with Financial Authority

Open Current/Capital Account with Bank

Registration with Labor & Social Insurance Authority

Registration with Taxation Authority

Verifying Capital Contribution

Registration with Customs

Apply for Uniform Institutional Code and I/E

Enterprise Code

Registration with Statistics Authority

Letter of Intention

JVC

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Building Bridges to

ChinaWFOE, CJV or EJV?

WFOE CJV EJV

Formation LLC LLC LLC

Approval Time with MOFCOM

90 days 45 days 90 days

Profit sharing N/A As agreed Same as the contribution sharing

Management Board of Directors

Flexible measures Board of Directors and GM

Transferability of Shares

N/A Subject to other parties’ approval.

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General Procedures for Rep Office Establishment

Step 1: Application for the special administrative approval (if applicable)

Step 2: Application for the Registration Certificate & Representative Certificate

with local Administration of Industry and Commerce

Step 3: Registration with local Public Security Bureau and chop carving

Step 4: Application for organisation code with the local Technology Supervision

Bureau

Step 5: Registration with local Bureau of Statistics

Step 6: Application for tax registration (including registration with State

Administration of Taxation and with local Taxation Bureau)

Step 7: Foreign exchange registration & opening bank account

Step 8: Application for importing and exporting rights with the customs

(if needed)

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Building Bridges to

ChinaRep Office Establishment Documents required:

Application forms

Authorisation letter from the Chief Representative in assigning one employee applying for the

Registration Certificate

Application letter in setting up a Representative Office

Articles of incorporation or organisation agreement of the company (i.e. the headquarters)

The domicile certification and certification on legitimate operation for more than two years'

continual existence of the company (i.e. the headquarters) – new

Notarisation of the Certificate of Incorporation of the company (i.e. the headquarters)

Bank letter stating the financial and credit standing of the company (i.e. the headquarters)

Appointment Letter from the headquarter with the board resolution in assigning the Chief

Representative

Resume of the Chief Representative and other Representatives

Documents identifying the registered address of the rep office (certificate of ownership or rental

agreement)

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Building Bridges to

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Approval: Ministry of Commerce or its Local Branches Transaction Agreement

Amended Articles of Association

Valuation Report

The Certificate of Incorporation of Buyer

The Appointment Letter of New Directors

The Reference Letter issued by the Buyer’s bank

Completed Forms

Application Letter

Registration: The Bureau of Industry and Commerce

Post-Transfer Registration: Tax, Foreign Exchange, etc.

M&As

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Building Bridges to

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Target company often inexperienced with international transactions

Language barriers and cultural differences

Insufficient reporting

Many documents not available; information needs to be obtained

by management interviews and own research

Financial information and contracts often not up to international

standards

Ownership structures often complex and not transparent

Soft factors: local practice and ‘guanxi’

M&A Due Diligence in China – Typical Findings

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Building Bridges to

China2. Legal Issues in Daily Operations

Employment

Tax

Intellectual property (patent, trademark, copyright)

Real estate

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Building Bridges to

ChinaEmployment

Labour Contract Law 2008 (Interpretation 2009)

No temporary employment

Representative office: FESCO

Confidentiality clause

Non-competition clause

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Building Bridges to

ChinaTax

Authorities: state level and local level

Primary types of taxes: VAT (17%), business tax (3-20%), enterprise

income tax (25%), consumption tax

Foreign businesses and individuals: resident v non-resident

Preferential treatment on FIE: tax return

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Building Bridges to

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Patent: invention, utility model, industrial design Trademark Copyright Trade secret Trade name

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Building Bridges to

China“Copycat Culture”

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Building Bridges to

ChinaIPR Enforcement

Civil: economic compensation Criminal: sentence of 3-7 years plus fines Administrative: fines, seizure of products or illegal income,

revocation of licence, suspension of business, etc.

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Building Bridges to

ChinaReal Estate

Land ownership− State-owned (urban area) and collectively-owned (rural area)− Individuals: leasehold only

Eligible foreigners to purchase real estate for own use?− Subsidiaries or representative offices of foreign institutions, or

foreign individuals who have been in China for over one year

Investing in real estate development− Restricted sector, only joint venture

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Building Bridges to

ChinaLegal Environment

Vague legal provisions

Conflicts: by-laws made by different authorities

Government authorities act as law interpreters

Confucianism / rule of law?

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Building Bridges to

ChinaThank you

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Building Bridges to

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Enwright de Sales

Managing Director | AP ICE | Ireland Tax ServicesDeloitte AP ICE

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Building Bridges to

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Tax Considerations for Businesses Setting up in China

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Building Bridges to

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China Tax Trends Overview of China’s Current Tax System Tax Administration

Legal Entity Structuring Considerations and Anti-Abuse Measures

Evolving strategies Business Model Optimization

Transfer Pricing

VAT reform

Agenda

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Building Bridges to

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Description

Income Tax system Tax on worldwide income of a Chinese legal entity or entity that is “managed & controlled” in China

Company Income Tax 25% (or lower from 0% - 15% per tax incentives)

Individual Income Tax Up to 45% based on earning level

Dividend WHT 10% or lower treaty rate (5%)

Interest WHT 10% or lower treaty rate

Royalty WHT 10% or lower treaty rate

Capital gains 10% WHT or exemption under a few treaties

Customs duty Varying depending on tariff codes (and country of origin for imported goods)

VAT Standard VAT rate 17% (other rates apply on the specified categories of entities/ industries);0% VAT on exports; export VAT refund rates varying depending on tariff codes

BT 3% - 20% depending on the different service sectors

Local surcharges (CCMT, ES, LES, etc.)

6% - 14% (depending on different locations in China) based on the VAT and BT payable

China Tax TrendsOverview of China’s Current Tax System

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Description

Loss carry forward period 5 years

Consolidation Not available

Thin Capitalization Yes

Special reorganization rules

Yes, but limited applicability thus far

Filing requirements Corporate returns due within five months after the end of tax year (May 31)

Transfer pricing Similar to OECD principles and guidelines Formal contemporaneous TP documentation rules Advance Pricing Agreement is available

General Anti-Avoidance Rules (GAAR)

Similar to OECD principles and aggressive implementations

Treaties 95 Income tax treaties, 12 FTAs

China Tax TrendsOverview of China’s Current Tax System (Cont’d)

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The China tax authorities have increased its scrutiny and compliance requirement with respect to non-resident taxation and cross border transactions:

Service contracts between Chinese taxpayers and foreign companies; PE registration and filing requirement; Activities undertaken by foreign companies through their own or affiliates’

representative offices in China; Tax treaty benefit application; Indirect share transfer; and Import/ export transactions (especially with the overseas related parties)

The Chinese tax authorities have increased the use of anti-avoidance rules and intensified tax audits

China Tax TrendsTax Administration

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Building Bridges to

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Your Chinese Operation

Your Chinese Operation

Dealingwith tax audit/tax disputes

Dealingwith tax audit/tax disputes

Optimizationof investment holding structure

Optimizationof investment holding structure

Transfer pricing policy and risk managementon RPTs

Transfer pricing policy and risk managementon RPTs

Indirect tax and customs risk management

Indirect tax and customs risk management

Managingeffectivetax rate

Managingeffectivetax rate

China Tax TrendsNew Tax Challenges Faced by MNCs

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Legal Entity Structuring Considerations

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China’s domestic

rate

China-Hong Kong

China-Barbados

China- Ireland

China- Luxembourg

China-Mauritius

China-Netherlands

China-Singapore

China-U.K.

(New)

Dividends 10% 5/10% 5/10% 5/10% 5/10% 5% 10% 5/10% 5/10%

Interest 10% 7% 10% 10% 10% 10% 10% 10% 10%

Royalties 10% 7% 10% 6/10% 6/10% 10% 10% 6/10% 6/10%

Capital Gains

10% 0/10% 0/10% 0/10% 0/10% 0/10% 10% 0/10% 0/10%

Domestic GAAR Override

N/A Yes Yes No No No No Yes Yes

Legal Entity Structuring Considerations and Anti-Abuse Measures Comparison of Popular China Treaties

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Payments offshore: increased reporting and scrutiny

Threshold for tax clearance lowered: US$30,000

Tax treaty benefits (Circular 124)

– Pre-approval required

Dividends Interest Royalties Capital gains Increased reporting

Continuing focus on strategies perceived as abusive Anti-treaty shopping

Circular 601 (“beneficial ownership”)

Circular 698 (transfers of shares in Chinese companies by non-resident companies)

Legal Entity Structuring Considerations and Anti-Abuse MeasuresVarious Rules

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A Group, a Chinese based group established BVI Co, which owns HK Co, which in turn owns A Group’s Chinese operations.

The local tax authority deemed HK Co a Chinese tax resident.

-Guoshuifa [2009] 82 & Bulletin [2011] 45

M Co, a Luxembourg company, purchased 25% plus one share of the HK Co, applied for 5% withholding tax rate on dividend distribution from HK Co under China-Luxembourg treaty.

The tax authority denied the treaty benefit because M Co did not own at least 25% during the 12-month period preceding the share transfer.

Is “12-month” period a condition for treaty relief under China-Luxembourg treaty?

A Group

M CoLuxembourg BVI Co

HK Co

A Group

25%+ One Share

China

Legal Entity Structuring Considerations and Anti-Abuse Measures Case Study

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Building Bridges to

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Circular 601 generally in line with OECD commentary

− Generally, engaged in substantive business activities

− Has the full privilege/control over the income received

What substance at Holdco level is sufficient? Must have other operating activities?

Can substance in Super-Holdco be attributed to intermediate Holdcos?

Practice in obtaining approval from the Chinese tax authorities

Parent

Holdco 1HK

Super HoldcoHK

Holdco 2 HK

WFOE1 WFOE2

Legal Entity Structuring Considerations and Anti-Abuse Measures“Beneficial Ownership” Rules

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Reporting requirement for indirect share transfer which satisfies either of the following conditions:

− The actual tax burden on gain arising from transfer of intermediate holding company in the offshore jurisdiction is less than 12.5%; or

− The jurisdiction in which the offshore intermediary holding company resides provides an income tax exemption for capital gain

Reporting deadline: 30 days after the signing of the share transfer agreement

Legal Entity Structuring Considerations and Anti-Abuse Measures Indirect Share Transfer (Circular 698)

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Information required to be disclosed:

− Share transfer agreement. Where the sale is part of a group sale, the group sales agreement is required. A separate price allocation for China Co is required

− Relationship between the seller and the offshore holdco, and the offshore holdco and China Co, with respect to finance, personnel and buy-sell transactions, etc.

− Offshore holdco’s production, business operations, finance, HR, assets, etc.

− Business purpose for setting up the offshore holdco − Other documents required by the tax authority − Chinese language requirement

The non-resident seller’s tax liability is not described in detail in Circular 698 – instead, focus is on information disclosure

However, it is clear that the tax authorities will study the information to determine whether GAAR should be applied to impose a tax liability on the non-resident seller

Any safe harbor rule?

Legal Entity Structuring Considerations and Anti-Abuse Measures Indirect Share Transfer (Circular 698) (Cont’d)

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China’s regulatory regime, in particular its foreign exchange rules, continues to inhibit many tax base erosion techniques that multinational companies have been able to use in other jurisdictions.

AlternativesPRC Tax

ImplicationsRemarks

Onshore Service Fees

BT – 3-5%EIT – 25%

*(in case of PE)

If there is no PE, there will be no EIT. The ranges of deemed profit rates are set out for various categories of activities,

normally from 15% to 50%

Offshore Service Fees

BT- 3-5%No EIT

Tax authority may request supporting documents to prove the services are genuine and all rendered outside China

It could be practically difficult to satisfy the PRC tax bureaus that all services are rendered outside China.

DividendsNo BT

WHT – 10%- Dividends cannot be declared and remitted until the company has made up its losses. Only the qualified beneficial owner could be eligible to enjoy the reduced WHT rate as

provided in the tax treaties.

Royalty (General) BT – 5%WHT – 10%

The BT payable should not be deductible for WHT purpose.

Royalty Technology Tansfer

WHT – 10% Technology transfer may be exempt from BT

Royalty Software Licensing

WHT – 10% Software licensing may be exempt from BT

InterestBT-5%

WHT – 10% The amount of shareholder’s loan would be subject to the approved total investment

/registered capital ratio of the company. Interest deduction for related-party borrowing is subject to the thin capitalization rules

for EIT purpose.Import Value Adjustment

DutyVAT – 17%

The applicable duty rates vary depending on tariff codes and country of origin.

Export Value Adjustment

DutyVAT – 0%

Export VAT refund

Export duty is due on a limited number of categories of goods which are restricted from export. The applicable duty rates vary depending on tariff codes.

The applicable export VAT refund rates vary depending on tariff codes.

Evolving StrategiesChina Repatriation Strategy

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BusinessModel

Optimization

BusinessModel

Optimization

VAT & CustomsExport VAT refund

costs; tradingrestrictions for

foreign principals

VAT & CustomsExport VAT refund

costs; tradingrestrictions for

foreign principals

FOREX/RegulatoryIssues restrict flexibility on tax

planning in China

FOREX/RegulatoryIssues restrict flexibility on tax

planning in China

Transfer PricingMore aggressive

application of arm’slength standard

Transfer PricingMore aggressive

application of arm’slength standard

Business TaxMultiple layersof BT increaseoverall costs

Business TaxMultiple layersof BT increaseoverall costs

Corporate TaxLimited availabilityof incentives and

application of WHT

Corporate TaxLimited availabilityof incentives and

application of WHT

Evolving Strategies Why Business Model Optimization (BMO)?

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Item Option IToll manufacturer

Option IIContract manufacturer

Option IIILicensed manufacturer

Profit Level Lowest Median Highest

Government Approval Required Required, easier than option 1 Not required

Domestic Sourcing Less flexibility of direct local sourcing, generally majority of the raw materials shall be imported (i.e., either direct import or use a bonded logistics park (“BLP”) for local raw materials)

Domestic sourcing is also permitted as long as the product using the bonded RM is exported

No restriction in direct local sourcing

Domestic sales Restricted in direct domestic sales Less restricted in direct sales then option 1

No restriction in direct domestic sales

VAT Cost Non-recoverable VAT cost =Input VAT of domestic sourced materials and utility

Non-recoverable VAT cost =(Export sales – Purchase of bonded imported materials) * (VAT rate 17% – VAT refund rate)

Non-recoverable VAT cost =Export sales * (VAT rate 17% – VAT refund rate)

Benefits Very limited functions and risks in China

Profits outside of China not subject to foreign currency exchange controls

Eliminates any BT on royalty or services

Reduced functions and risks in China

Profits outside of China not subject to foreign currency exchange controls

Eliminates any BT on royalty or services

Considerations Regulatory limitations on China Co entering a toll agreement

Exemption from VAT on tolling fee

Transfer pricing Dual business models for export

and domestic markets

Transfer pricing Dual business models for export

and domestic markets Migration and implementation

costs

BT at 5% on royalties/ services if not exempt

Transfer pricing

Evolving Strategies BMO Options in China

© 2012 Deloitte AP ICE Limited

Transfer Pricing

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P.R.C. TP regulations generally follow the OECD Guidelines in terms of the arm’s length principle, TP methods, comparability analysis etc. Some specific requirements are as follows: Detailed annual filing requirements of tax payer’s related party transaction;

Starting from 2008, all enterprises are required to prepare and maintain with the following exemptions:

Annual related party buy/sell transactions < RMB 200 million (toll processing amount calculated based on declared import and export value to Customs) and other related party transactions < RMB 40 million;

Foreign shareholding < 50% and only transact with domestic associated enterprises;

Transactions covered under an APA

Contemporaneous documentation must be prepared by May 31 of the following year and must be submitted within 20 days upon tax bureau’s request. Documentation must be in Chinese and must be maintained for 10 years.

P.R.C. Specific TP Requirements

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Capital Intensity adjustments are not allowed “in principle”;

Tax authority can use public or non-public information to analyze whether related-party transactions conform to the arm’s length principle;

Enterprises with single production or distribution or contract R&D function and limited risks are not allowed to incur losses;

Offsetting transactions need to be evaluated separately;

If the profitability of the audited enterprise is lower than the median (even within the interquartile range), in principle adjustments to median of interquartile range will be made during an audit; and

The statute of limitation for transfer pricing audits is effectively ten years. TP audits often start with the most recent three years

P.R.C. Specific TP Requirements (continued)

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Building Bridges to

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Building Bridges to

ChinaRecent Developments in TP Audit

Audit transactions extended from tangible property buy/sell transactions to services, IP and share transfer

In 2011, TP audit was extended to financial, trading, and service companies

The SAT will form an economist group for strengthen the TP compliance enforcement

SAT has started investigations on Thin Capitalization, as well as General Anti-avoidance

SAT has paid more attentions to location saving, marketing intangible recently

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Building Bridges to

ChinaWhat Can You Do to Mitigate TP Risks in China?

TP Planning TP risks can be mitigated if the taxpayers in China can plan their TP policy ahead. You are

expected to integrate TP issues with other tax considerations and current trends to make sure strategies in one area do not counteract other effects.

TP Documentation Preparation TP documentation must demonstrate that the taxpayer's policies are in line with the arm's

length standard by applying regulatory requirements for appropriate methodologies. You should ensure that the company's documentation requirements are addressed in an efficient and effective manner, represent sound economic analysis, and that your transactions are documented in a consistent, integrated and systematic manner.

Advance Pricing Arrangement An APA helps taxpayers plan for future tax liabilities, reduce the risk of non-compliance, and

minimize the time and cost of compliance on a yearly basis.

The taxpayers are encouraged to seek professional assistance on the above mentioned points to mitigate their TP risks in China

© 2012 Deloitte AP ICE Limited

VAT Reform in China

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China VAT reform pilot commenced on 1 January 2012 in Shanghai, applicable to transportation and certain modern service sectors, with the intention that the pilots would eventually be expanded nationwide.

VAT Reform aims to resolve the double/multiple taxation under China’s current indirect tax system.

China’s State Council has announced the timeline of VAT Reform pilot rollout to the following:

VAT ReformIntroduction

Cities Date of launch

Beijing 1 September 2012

Jiangsu, Anhui 1 October 2012

Fujian, Guangdong 1 November 2012

Tianjin, Zhejiang, Hubei 1 December 2012

Service Sector VAT rate

Leasing of tangible movable property 17%

Transportation services 11%

Information technology (IT) services 6%

Cultural and creative services 6%

Research and development (R&D) and technical services 6%

Logistics and ancillary services 6%

Certification and consulting services 6%

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VAT ReformImpact

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VAT Reform Important Issues to be Considered

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Contact

Enwright De Sales

Managing Director | AP ICE | Ireland Tax ServicesDeloitte AP ICE, Limited35/F One Pacific Place, 88 Queensway, Hong KongDirect: +852 2852 1078e-mail: [email protected]

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Kevin Sherry

Head of International Sales and Partnering, Enterprise Ireland

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China

“Doing Business in China”

Kevin SherryEnterprise Ireland28th September 2012

61

Building Bridges to

China


Building Bridges to

China Enterprise Ireland Mission

62

Building Bridges to

China


Building Bridges to

ChinaIts all about Exports and Jobs

63

Building Bridges to

China


Building Bridges to

ChinaHighlights 2011…

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Building Bridges to

China


Building Bridges to

China

Enterprise Ireland International Offices

North America & CanadaBostonNew YorkSilicon ValleyToronto

South AmericaSao Paulo

Southern Europe, Middle East & AfricaMilanMadridDubaiRiyadhJohannesburg

Northern EuropeLondonParisAmsterdamBrusselsStockholm

Germany, Central & Eastern Europe, RussiaDüsseldorfPragueBudapestWarsawMoscow

Asia PacificBeijingShanghaiHong KongTokyoSeoul

SingaporeDelhiSydney

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Building Bridges to

China


Building Bridges to

ChinaMap of China and EI offices

Beijing

Shanghai

Hong Kong

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Building Bridges to

China


Building Bridges to

ChinaIrish Trade with China (€ 000’s)

3,1255,4245,4985,8277,360

1,4092,5312,5792,6682,549

2012(Jan - July)

2011201020092008

Imports

from China1,7162,8932,9193,1594,811

Exports

to China

Source: CSO

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Building Bridges to

China


Building Bridges to

ChinaIreland and Greater China Region

240 + Irish Co’s actively exporting to China, 140 with a full time presence

Irish company exports to Greater China grew by 29% in 2011

Sectors of Opportunity;– Internationally traded services (inc Education) – Aviation Services– Food / Drink– Agricultual Machinery and Technologies– Financial Software and Services– Mobile Telecommunications Software – E- learning– Information Security– Environment / Cleantech– Equine– Lifesciences / Medical Devices

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Building Bridges to

China


Building Bridges to

ChinaSome Leading Exporters to China

Education, Dairy, Meats, Beverages, Aviation, Construction Services

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Building Bridges to

China


Some Leading Exporters to China

Consumer, Electronics, Diagnostics, Waste Management, Industrial Controls,Medical Devices, Component Sub Supply, Mobile Internet, Payments, Travel, Healthcare Informatics

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Building Bridges to

China


Building Bridges to

ChinaHigh Level Visits Important

H.E. Xi Jinping, Vice President of China – visit to Ireland (Feb 2012)

MoS Ciaran Cannon, (Dept of E&S) Beijing - Shanghai (17 Institutes)

Taoiseach + Minister Bruton (HK/Shenzhen/Shanghai/Beijing)

(+ 90 Co’s) - March

Minister Coveney – Food/Agritech Mission (+ 50 Co’s) - April

Minister Reilly – Lifesciences / Medical - August

Minister Hogan - September

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Building Bridges to

China


Building Bridges to

China

HE Mr. Xi Jinping, Vice-President of the People’s Republic of China, speaking at the Royal Hospital Kilmanham for the Ireland-China Trade and Investment Forum. Feb 2012

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Building Bridges to

China


Building Bridges to

China

H.E. Mr Xi Jinping , Vice President of the People's Republic of China with President of Ireland Michael D. Higgins in Aras An Uachtarain were the two held talks on the third and final day of a three day visit to Ireland. Feb 2012

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Building Bridges to

China


Building Bridges to

China

Taoiseach and Minister Bruton, Dept of Job, Enterprise and Innovation lead a Trade Mission to China with over 90

Irish companies. The Delegation visited Hongkong, Shenzhen, Shanghai and Beijing. Mar 2012

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Building Bridges to

China


Building Bridges to

China

Minister Coveney, Department of Agriculture, Food and Marine lead a Agriculture Trade Mission to China. April 2012.

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Building Bridges to

China


Building Bridges to

ChinaE.I. in Market Services

Market research

Partner/Distributor identification

Visit logistics

Visit itineraries

Events participation & management

Translation/Interpreters

Legal advice/Third party services

Incubator facilities

After sales/follow up

EI Country Manager: [email protected]

High Growth Markets Dublin: [email protected]

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Building Bridges to

China


Building Bridges to

ChinaEstablishing a Presence Options

Distributor/Agent

Representative office (RO)

Joint venture (JV)

Wholly Foreign Owned Enterprise (WFOE)

Foreign Invested Commercial Enterprise (FICE)

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Building Bridges to

China


Building Bridges to

ChinaSourcing from China

Sourcing

Supplier Management is key

The Long Distance Relationship ……..

You get what you “INSPECT”, not what you “EXPECT”

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Building Bridges to

China


Building Bridges to

ChinaUsual Risks

Political

Economic

Financial

Environmental

Intellectual Property

Language

Cultural

Bureaucracy

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Building Bridges to

China


Building Bridges to

ChinaI.P.R.

Register your I.P. in China

IF YOU DON’T SHOW VALUE TO YOUR I.P. WHO ELSE

WILL ?

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Building Bridges to

China


Building Bridges to

China

“When old man’s child go up hand ladder temporary need the family to accompany”

“Promise-Keeping Enterprise”

Language

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Building Bridges to

China


Building Bridges to

ChinaDoing Business in ChinaA Profile For Success

Leave preconceptions at home

Do your homework

Patience

Focus

Long-term approach

Professional advice

IPR

Due diligence

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Building Bridges to

China


Building Bridges to

China

2012 ACCESS CHINA

—A Guide to doing business in China

More on www.enterprise-ireland.com

Investor Relations

TMF Group - Building bridges to china: part 2