China has restricted its overseas transaction regulations

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on Wednesday, 08 March 2017
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Since the beginning of 2015 the value of the yuan against the dollar has weakened, devaluating more than 6% in 2016. Meanwhile, a large amount of capital left China, which led Bloomberg to 

estimate that China has suffered more than $1.7 trillion in capital outflow since 2015. A big percentage of this outflowing capital was used for overseas real estate investment by individuals and groups, some of which also involved money laundering. To slow down this outflow and combat money laundering the State Administration of Foreign Exchange (SAFE) is introducing restrictive measures that will be implemented from July 1 2017. After the implementation of the new measures, individuals are still allowed to transfer up to 50,000 USD yearly overseas, however the money transferred is not allowed to be used for real estate investment purposes, only for medical or travel services. If individuals want to transfer a higher amount they have to disclose their reasons and wait for regulators to evaluate their case. In addition to this, financial institutions will have to document all transactions, and since January 1 2017, the Bank of Shanghai and China Merchants Bank are required to have their customers complete a form if they want to exchange RMB to foreign currencies through mobile bank apps.

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New Regulations for Third-Party Payment Services

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The past few years have shown that payment through third-party services has become more and more popular among the Chinese population, and this popularity is only set to increase. Today many shops, retailers and restaurants accept third-party mobile payments such as Ant Financials’ Alipay or Tencent Holding’s WeChat Pay. On one hand it is convenient for customers to use third-party payment, but on the other hand it has a higher risk of money laundering and there is less transparency with these companies.

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2017 Chinese/Jewish Holidays Calendar

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on Tuesday, 13 December 2016
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China's New Transfer Pricing Rules

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Written by Zachi Lichtblau at Bonnard Lawson International Law Firm

On the 13th of July 2016 China's State Administration of Taxation (‘SAT’) released Bulletin 42 that contains the new transfer pricing documentation rules. Since it will have a far-reaching impact on taxpayers, it is of great importance to be aware of the content and effects of these (partly) new rules. In principle, all multinational companies engaged in cross-border, related-party transaction can expect to be significantly affected by the transfer pricing documentation requirements in Bulletin 42. An exception has been made for multinational companies that are engaged in purely domestic related-party transactions.

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HR Management Can Be Tricky in China

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Interview with PTL Group HR & Admin Manager--Jasper Zhang

Jasper Zhang, a professional HR and Admin expert, joined PTL Group in 2011. Jasper has intensive experience in recruitment, HR management, payroll, KPI evaluation and various admin and mass layoff projects.

Q: What do newcomers and foreign companies coming to China need to learn before they start to hire employees here?

A: I think that there are two things foreign companies need to learn before they start to recruit their local employees: the Chinese Labor Contract Law and the C&B (Compensation & Benefit) system. For the C&B system in China, foreign employers should keep in mind that, conventionally, Chinese employees will always ask for something more than gross salary, e.g. a transportation allowance. So when checking with a Chinese candidate what their current income is remember to also ask about the salary package on top of the gross salary. In addition, you also need to understand the social benefits and housing system in China. By doing so, you will understand the total employer cost to you to hire this candidate.

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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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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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on Wednesday, 01 June 2016
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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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