Produced in association with Dezan Shira & Associates

Doing Business in China

CHINA BRIEFINGThe Practical Application of China Business

China’s Business TaxesDemographic and Geographic Overview of ChinaDevelopment Zones in China

Setting Up in ChinaEstablishing ROs, WFOEs, FICEs and JVsHong Kong Incorporation for Mainland China Businesses

An Introduction to ChinaKey Facts and FiguresA Brief History of China

Doing Businessin China

Golmud

Hami

Hotan

Karamay

KashiKorla

QiemoYumen Dalian

Qingdao

ShenzhenZhongshan

Beijing

Nanning

Macau

Haikou

Taipei

Kunming

Fuzhou

Guiyang

ChangshaNanchang

Lhasa Hangzhou

Hefei

WuhanChengdu

NanjingXian

Zhengzhou

Lanzhou

Yinchuan

Xining

JinanTaiyuan

Hohhot

Shijiazhuang

Shenyang

Urumqi Changchung

Harbin

Yangtze

Huang

C H I N A

GuangdongYunnan

Sichuan

Shaanxi

ShandongShanxiNingxia

Inner Mongolia

Liaoning

Guizhou

Guangxi

Gansu

Tibet

Xinjiang

Hubei

Hunan

Hebei

Henan

Heilongjiang

Fujian

Qinghai

Jilin

Jiangsu

Jiangxi

Zhejiang

Anhui

Hong Kong

Taiwan

Hainan

Chongqing

Tianjin

Shanghai

Guangzhou

Doing Business in China | 3

Golmud

Hami

Hotan

Karamay

Kashi

Korla

QiemoYumen

Dalian

Qingdao

Shenzhen

Zhongshan

Beijing

Nanning

Macau

Haikou

Taipei

Kunming

Fuzhou

Guiyang

ChangshaNanchang

LhasaHangzhou

Hefei

WuhanChengdu

Nanjing

XianZhengzhou

Lanzhou

Yinchuan

Xining

JinanTaiyuan

Hohhot

Shijiazhuang

Shenyang

Urumqi Changchung

Harbin

Yangtze

Huang

C H I N A

Guangdong

Yunnan

Sichuan

Shaanxi

ShandongShanxiNingxia

Inner Mongolia

Liaoning

Guizhou

Guangxi

Gansu

Tibet

Xinjiang

Hubei

Hunan

Hebei

Henan

Heilongjiang

Fujian

Qinghai

Jilin

Jiangsu

Jiangxi

Zhejiang

Anhui

Hong Kong

Taiwan

Hainan

Chongqing

Tianjin

Shanghai

Guangzhou

Published by Asia Briefing Ltd.

All rights reserved. No part of this book may be reproduced, stored in retrieval systems or transmitted in any forms or means, electronic, mechanical, photocopying or otherwise without prior written permission of the publisher. Although our editors, analysts, researchers and other contributors try to make the information as accurate as possible, we accept no responsibility for any financial loss or inconvenience sustained by anyone using this guidebook. The information contained herein, including any expression of opinion, analysis, charting or tables, and statistics has been obtained from or is based upon sources believed to be reliable but is not guaranteed as to accuracy or completeness.

© 2010 Asia Briefing Ltd. Unit 1618, 16/F Miramar Tower132 Nathan Road, Tsimshatsui Kowloon HONG KONG

ISBN: 978-988-18370-4-2

China Briefing: www.china-briefing.com

“China Briefing” and logo are registered trademarks of Asia Briefing Ltd.

Asia Briefing Ltd is a Dezan Shira Group company.

Dezan Shira & Associates: www.dezshira.com

Doing Business in China

Doing Business in China | 5

CONTENTSCHAPTER 1..................................... 8An Introduction to ChinaKey facts and figuresWhere China is going

CHAPTER 2................................... 12Brief History of ChinaThe Imperial ageThe Republican eraThe People’s Republic of ChinaOpening up and reform

CHAPTER 3...................................16China and Asia ComparedIndividual and corporate taxesDemographics and trade statistics

CHAPTER 4................................... 20Setting Up in ChinaChoosing a structureRepresentative officesWholly foreign-owned enterprisesForeign-invested commercial enterprisesJoint ventures

CHAPTER 5................................... 28Hong Kong Incorporations for Mainland China BusinessesRequirementsTax and financeDouble tax agreementsCloser Economic Partnership Agreement

CHAPTER 6................................... 35China’s Business TaxesCorporate income taxWithholding taxValue-added taxAuditsProfits repatriation

CHAPTER 7................................... 47Demographic and Geographic Overview of ChinaCity, province and autonomous Region overviews

Beijing ...............................................................48Shanghai ............................................................51Tianjin ...............................................................54Chongqing.........................................................57Guangzhou ........................................................60Shenzhen ...........................................................63Anhui ................................................................66Fujian ................................................................68Gansu ................................................................70Guizhou.............................................................72Guangdong ........................................................74Guangxi .............................................................76Hainan ..............................................................79Hebei .................................................................82Heilongjiang ......................................................85Henan................................................................87Hubei ................................................................89Hunan ...............................................................92Inner Mongolia ..................................................94Jiangsu ...............................................................96Jiangxi................................................................99Jilin ..................................................................102Liaoning ..........................................................105Ningxia ............................................................108Qinghai ...........................................................111Shaanxi ............................................................113Shandong.........................................................115Shanxi ..............................................................118Sichuan ............................................................121Tibet ................................................................124Xinjiang ...........................................................126Yunnan ............................................................128Zhejiang ..........................................................130

CHAPTER 8...................................133Development Zones in ChinaNorth ChinaThe Yangtze River DeltaThe Greater Pearl River DeltaCentral ChinaWest China

Directory..................................................... 153Further Reading.......................................... 155

6 | Doing Business in China

ABOUT ASIA BRIEFING’S CHINA BUSINESS GUIDE

Thank you for buying this book. Asia Briefing’s publications are designed to fill a niche in the provision of information about business laws and taxes in Asia. Produced by the foreign direct investment practice Dezan Shira & Associates, we started this series of guides several years ago with the knowledge that much of the intelligence regarding Asia was expensive, or contradictory. Much also did not adequately address the real on the

ground issues faced by multinational businessmen – the practical knowledge that must be part of the armory of any business operating in emerging markets.

China Briefing is designed to deal with this gap and is aimed at providing both the regulatory background as well as detailed information concerning Asia business with a firm eye on the practicalities of turning a profit and remaining in compliance on the mainland. Accordingly, we have tried to make this guide informative, easy to read and inexpensive. We have drawn on the experience and practical knowledge of Dezan Shira & Associates, Asia’s largest independent business and tax consultancy with offices in China, Hong Kong, India and Vietnam.

This book is a window into one of the fastest growing economies in the world, providing a thorough and in-depth analysis of China, its history, key demographics and overviews of the cities, provinces and autonomous regions highlighting business opportunities and infrastructure in place in each region. A comprehensive guide to investing in China is also included with information on FDI trends, business establishment procedures, economic zone information and labor and tax considerations as well as an analysis of Chinese business etiquette and culture.

This book aims to supply the most accurate and up-to-date legal and tax regulations, information and statistics, however, China is developing fast and this information can sometimes be unreliable or difficult to obtain. GDP figures are sometimes falsified, provincial statistics often differ from national ones, and added value from new services tends to be overestimated. We have gathered statistics primarily from Chinese government sources including web sites, the official media, and other publications. While some of the individual figures may be a bit doubtful, the overall trends are pretty clear.

Contributors to this guide include: Chris Devonshire-Ellis, Joe Drury, Christian Fleming, Amanda Gan, Ronin Lin, Shirley Liu, Jennifer Lu, Joyce Roque, and Candice Zeng. The book was designed and laid out by Chris Wei and edited by Andy Scott.

At China Briefing, our motto is “The practical application of India business,” we hope that you feel we have accomplished this within these pages.

With best regards,

Andy Scott Managing Editor Asia Briefing Publications

Doing Business in China

The China Briefing Business Guide to Doing Business in China is the definitive guide to one of the fastest growing economies in the world, providing a thorough and in-depth analysis of China, its history, key demographics and overviews of the major cities, provinces and autonomous regions highlighting business opportunities and infrastructure in place in each region. A comprehensive guide to investing in China is also included with information on FDI trends, business establishment procedures, economic zone information and labor and tax considerations as well as an analysis of Indian business etiquette and culture.

China Briefing's guides are leaders in their field, providing practical and pragmatic legal and tax information to foreign investors in China. They will interest all business people, lawyers, accountants and academics working in the field.

Published by Asia Briefing Ltd

All rights reserved.

© 2010 Asia Briefing Ltd. Unit 1618, 16/F Miramar Tower132 Nathan Road, Tsimshatsui Kowloon HONG KONG ISBN: 978-988-18370-4-2

China Briefing: www.china-briefing.com

"China Briefing" and logo are registered trademarks of Asia Briefing Ltd.

Asia Briefing Ltd is a Dezan Shira Group company.