Termination Terms under the Chinese Labor Contract Law

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on Wednesday, 23 November 2016
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There are several forms needed to end a labor contract in China and each one of them has its own set of terms and rules; how the employer can end the contact, how the employee may quit, and how the severance payment should be calculated. These are some of the issues we have included in this brief guide to help you assess the termination terms in Chinese employment contracts.

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WFOE SET-UP IN CHINA

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on Wednesday, 23 November 2016
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CHANGES IN REGULATION

Doing business in China is becoming easier and more appealing for foreign companies now that the WFOE set-up process has been simplified.

In early September a new set of rules were released to ease the burden on the business environment within China by reducing bureaucracy and increasing transparency. The rules specifically support Foreign Invested Enterprises (FIEs) and took effect from October 1st 2016. Among the amendments in the law, it was decreed that Ministry of Commerce (MOFCOM) approval will no longer be required; instead only online filing will be needed. However it is important to note that this will only apply to those businesses not listed on the negative list.

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Cybersecurity Law in China

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In July 2015 the National People’s Congress (NPC) proposed the first draft of a so called Cybersecurity Law. This year, on November 7th the law was submitted and takes effect in June 2017. Many global companies, especially those operating in the technology sector, are concerned about the passing of this law because they believe it will limit their operational powers within China. One reason, certain business operators say, is that with this law coming into force, the Chinese government would have greater powers to monitor and block any online content they perceive to be a threat. In addition to this, those concerned about the law are worried about the government, as well as various other parties, gaining more insight into foreign business’s data. The reason is that the new law requires companies to give the government investigators full access to their data if wrong-doing is suspected.

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Which class do you belong to?

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China is testing a new work permit system that ranks foreigners

On November 1st of 2016, the Chinese government introduced a new work permit system that categorizes foreigners into “classes”. Under this system the “Alien Employment Permit” and “Foreign Expert Certificate” are combined to create a “Foreigner`s Work Permit” (FWP), which looks a lot like the Chinese ID card. The work permit will display an identification number, a photo and the name of the individual effectively replacing the passport for tasks such as purchasing train tickets. The FWP is currently being tested in nine cities or provinces, including Beijing, Tianjin and Shanghai with the plan being to roll out the new work permit policy nationwide by April 2017.

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Hiring foreigners in Shanghai has become easier

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on Thursday, 29 September 2016
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From November 1, foreigners will only have to apply for a unified work permit as the two types of work permits for ordinary foreign employees and foreign experts will be streamlined into one.  The pilot scheme of unified work permit for expatriates is launched in nine provinces and cities, including Shanghai. The trial ends next April.

The application process will also be simplified, which means some materials will no longer be needed, such as a personal resume.

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How can you benefit from the VAT reform in China?

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on Friday, 23 September 2016
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China has been paving their way to a fiscal reform that will help them achieve the economic and social goals set in previous years. China’s first step towards their fiscal transformation was the VAT reform that was implemented in Shanghai in 2012. This initiative was expanded to pilot sectors across the country on August 1st 2012 due to its remarkable success and its bolster the slowing economic growth. On May 1st 2016 the reform was officially implemented throughout all China. The reform program seeks to replace business tax with a value-added tax to avoid duplicated taxation and to lower the tax burden.

The trial program launched in 2012 was originally applied to service sectors, telecommunications, and postal services among others. Now, taxes in construction, property and finance are also bound to the tax initiative. The manufacturing industry, which already operated under a VAT structure, will benefit from this reform as they will obtain tax breaks on research and development to incentivize innovation.

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Do You Need an Operational Audit for Your Chinese Office?

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on Friday, 23 September 2016
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When would you need to conduct an operation audit?

When we meet managers from international companies’ headquarters they often tell us their concerns about their Chinese activities: after a few years they have the feeling that the situation is not under their control anymore, or at least they feel they don’t know the details of what’s happening in their Chinese office.

Other times, we meet companies that, after spending some time in China, have the need to grow or downsize their local activities.

Whichever might be the case, this is the right time to assess your business so you can gain back full control of your Chinese branch, or understand how to better proceed with changes you’d like to make in your business. This is the right time to conduct an operational audit.

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Finance Management is Critical in Operating Your Business in China

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on Monday, 29 August 2016
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Interview with PTL Group CFO--Shirley Xia

Shirley Xia has over 10 years of experience as a financial controller and manager. She has successively worked in large state-owned manufacturing, trading, software and international freight companies, with extensive experience in financial management and tax planning. Joined PTL Group in June 2010, Shirley has overseen many projects in business auditing, WFOE set-up and operation and tax planning, etc.  

Q: Among the Auditing and Business Recovery projects you have carried out, which project did you manage to deliver satisfactory results for despite its challenging nature?  

A: My first project at PTL was to manage a turn-around project for an Italian manufacturing company. The company suffered from very tight cash flow and had many management issues. The company’s headquarter was hesitating whether to continue operating in China after having done so for several years yet without healthy revenue.  They asked the PTL team to audit and screen the company’s entire financial and HR situation, as well as the logistics and manufacturing work flows.

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KOL: Key Opinion Leaders

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on Wednesday, 01 June 2016
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A new way of communicating with your costumers in China has emerged. Is your company already using this outstanding marketing tool?

Since 2013 KOL’s have been positioning themselves as a reliable and trustworthy way to reach your target audience, however, we must say that KOL’s have reached their maximum success this year turning into a million dollar industry in 2016. With agencies, schools and sponsors surrounding the KOL’s it has become each time harder and more expensive to identify and  get a hold of  a brand advocate, so in an attempt to understand a little bit more this industry, we have come up with a series of questions, that can unveil the myth that surrounds this marketing trend.

 

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Cosmetic Industry In China

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Trends, Opportunities And How To Import Your Cosmetic Product To China

In a time driven by the selfie generation and governed by social media; with consumers in constant pursuit of societies’ definition of “beauty” and deep-rooted upward aspirations for both beauty and health, it comes as no surprise that the beauty and personal care industry continues to accelerate. Even throughout conditions of economic downturn, the beauty market has proven both its ability to achieve stable and continuous growth as well as its capacity for resilience. The plethora of published statistics, certainly affirm this pattern.

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Does your sales man in China have an Official Company Wechat account?

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on Wednesday, 01 June 2016
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If the first question that comes to your mind when you read the above sentence is: ”What on earth is Wechat?”  or “What is Official Wechat account?” you are in trouble with your knowledge about China.

If your question is “Why would my sales man need an Official WeChat account?” you are in a better position but not up to date with marketing strategy in China.

As may you already know, many of the marketing tools as well as social media are different in China. Google, YouTube, Facebook and Tweeter do not work in China so you need to adopt the Chinese tools.

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Pallets from China can pose risks to supply chains

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on Tuesday, 29 March 2016
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Many U.S. importers regard procurement cost and pallet vendor selection as the shippers' burden, but this is risky and exposes an importer to severe supply chain disruptions should their pallets not be compliant with local requirements and face rejection by border officials. In addition, U.S. importers are missing an easy opportunity to improve their supply chain and their costs. Here is an outline of what is available in the market and their respective benefits and drawbacks.

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Dangerous Goods Supply Chains – After Tianjin

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The accident in Tianjin has had multiple repercussions for hazardous goods supply chains inside China, as well as into and out of China. The main impacts are as follow:

CONTINUING CLOSURE OF TIANJIN PORT TO IMPORTS AND EXPORTS OF DANGEROUS GOODS

At this moment, Tianjin harbor remains closed to all imports and exports of goods with ”UN Number” hazard identification; regardless of whether these cargoes are liquids or solids. As the key portal for exports of chemicals from the industrial heartlands of Hebei Province and further afield, the idea that the harbor would simply close seemed very unlikely, but this is exactly what has happened. For chemical enterprises based within the catchment area of Tianjin harbor, the extra cost of diverting their cargoes via Qingdao or Dalian ports is ruinous, adding many thousands of RMB per container in cost. This comes as a serious and threatening extra burden to enterprises that are already operating on razor-thin profit margins and it can surely not be too long before this eventually forces them out of business. Handling fees inside Qingdao harbor are approximately double that of all the other harbors in China, as a result of its highly complex and careful storage requirements (themselves arising from a fire which took place in the harbor several years ago). So, the cost burden is amplified for those forced to export via Qingdao.

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New Container Weight Verification Rule – Perspectives from China

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In less than 6 months, the new container weight verification rule will take effect; however, in checking with my relevant China-based supply chain contacts (export manufacturers, freight forwarders and shipping lines) no one expects much to change, and there’s only a moderate awareness of what SOLAS even means.

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The Hidden Costs Of Sourcing From Inland China

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As costs continue to rise in Eastern China (namely, Zhejiang and Jiangsu provinces), the procurement manager may feel compelled to comparison-shop from alternate vendors in other parts of China or Southeast Asia.  However, it is often a mistake to simply compare the price quote based on the per unit ex-works price.  There are many hidden costs and variables which should be taken in to account when comparing a price quote for what appears to be the same widget from, say, Changzhou, Jiangsu versus that of Fuling, Chongqing.  This short essay is intended to educate and forewarn you of some of those potential increased costs and risks to your procurement program. 

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PTL Group bringing the Chinese social media tips to Tel Aviv Google Campus

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on Thursday, 28 January 2016
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Many Israeli companies for some time now have worked within the BAT kingdom, and realized it has big challenges when it comes to branding. In China the censorship of information has built an ecosystem that today we call the Chinese Digital Media ground, and to that mix we include Baidu as the most used search engine tool. How we perceive messages and execute projects is different than in the west, and the only way on how to master the use of these channels to reach the Chinese audience starts with opening your company accounts and crafting messages in Mandarin simplified characters.

It is a fascinating world that reaches a large audience, and when done properly, can expose your Brand to thousands of prospects. So let us start with a few tips on how to accomplish this while sitting from your headquarters in Israel with a team on the ground. These tips were shared in our past Digital Marketing seminars in Tel Aviv.

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Chinese New Year

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on Thursday, 28 January 2016
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We welcome another year in our lives while leaving the Sheep year behind. For those who are unaware, in 2016 we will be celebrating the year of the Monkey. Those born under this particular sign are characterized by their intelligence as well as their versatility. To top that off, they are extremely honest and their gentleness allows them to construct long-lasting business and personal relationships. On the not-so-positive side, monkeys might come off as impulsive with a slight tendency to look down upon others. So if you were born either in 1956, 1968, 1980, 1992, 2004 you might relate to the above description.

 However, what will 2016 bring upon us?

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WeChat turned 5 years old in January, we toast to many years to come!

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on Thursday, 28 January 2016
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WeChat turned 5 years old in January, and in its “short” existence it has reached over 650 million monthly active users. It is estimated that there are 2 billion shares sent per day, and 1.8 billion published on Wechat Moments. There are over 10 million WeChat official accounts and over 150,000 offline stores integrated with WeChat payment’s eWallet. Its rapid evolution and its user friendliness have permeated our daily existence within China’s ecosystem. Our conclusion: WeChat is the tool to consider for developing business in China. Here we list the official account benefits and hope you see the benefits too:

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Is Your WFOE in China Optimized? Find Out Where You’re Exposed

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on Thursday, 28 January 2016
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So you’ve set up a Wholly Foreign-Owned Entity in China and things are humming along fine. Sales are growing, your employees seem happy and eager to come to work, and the relations between your entity and Chinese tax authorities is in its honeymoon phase – you're dotting all the “i”s and crossing your “t”s.  Or so you think.

The more time a company spends operating and conducting business in China, naturally the more comfortable and lax its managers become. What starts with great attention to detail and appreciation for the bureaucracy that is China, often the excitement of acquiring new clients and earning more revenue causes overseas managers to lose control of the WFOE’s optimization.

 

Take Active Steps Now to Reduce Future Risk and Exposure:

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China Supreme Court Determines Pure Non-competition Agreements Do Not Constitute a Security Measure for Trade Secret Protection

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on Monday, 26 October 2015
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Under the PRC Anti-Unfair Competition Law (Article 10), one of prerequisites for the protection of certain technical or business information as a trade secret is whether the owner has taken security measures to maintain its secrecy. In practice, many enterprises may use non-compete agreements signed with employees as a security measure to protect their trade secrets. Such agreements, however, are usually pure competition restriction agreements, which only provide that the employee may not work for competitors or run competing businesses for himself within a certain period after termination or expiration of the employment. In a trade secret infringement case (Shanghai Industrial Co., Ltd. v. Huang Ziyu and Shanghai Safeiya Textile Co., Ltd.) retried by the Supreme People’s Court(“the Supreme Court”), the Supreme Court determines that "pure non-competition agreements” does not constitute a security measure on the grounds that such agreement does not explicitly embody the employer’s intent to keep secret and the scope of the information to be protected as trade secret.

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