Page 64 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
minerals and agricultural products. According to Stratfor, an and companies with local and global IT expertise can
American geopolitical intelligence platform and publisher, expect to be in demand.
Chinese companies have over US$300 billion in Eastern
Europe over the past decade. Like the Marshall Plan before it, Trade and investment
the BRI will require a tremendous amount of commodities, Good news for foreign exporters to China is that Beijing
metals and fuel (Holmes). has reduced VAT in the manufacturing, transportation,
construction, telecommunications, and agricultural
Hong Kong has positioned itself wisely as a service sectors. Accessing Chinese consumers has long been the
center for mainland Chinese companies looking to expand holy grail of China focused businesses, and new trade
overseas, and provides a substantial platform to allow routes are opening up to develop this. The Belt and Road
them to do so. What isn’t quite so well defined in Hong trade trend is not just up, it’s positively bullish.
Kong is how foreign, non-Chinese companies can become
involved. According to Dezan Shira & Associates, there are Basically, this means that nearly everyone on the
five key areas in which foreign companies can participate planet, for the first time, has the ability to sell to China
in China’s Belt and Road Initiative, and use Hong Kong (or (Devonshire-Ellis, Five Opportunities).
other locations) to do so:
Free Trade Zone
Cultural exchange
Many of participating countries are small nations, yet China is seizing the opportunity to claim leadership
with very specific cultural identities. Services provided of the global economy. With the US seemingly in a
can take the shape of everything from translations, local protectionist crouch, China had become, despite all its
market intelligence, and promoting people-to-people problems, indispensable. World Economic Forum founder
bonds and co-operation. Klaus Schwab said in 2017 in Davos, Switzerland, “In a
world marked by great uncertainty and volatility, the
Financial integration international community is looking to China”(Mishra). One
This is very much something Hong Kong can and way that they are achieving this is through FreeTrade Zones
does provide, and does well, but there are other financial (FTZ). FTZs in China are a specific class of special economic
centers and countries, such as Singapore, which also zones; an area where goods may be landed, handled,
provide regional hubs. Others are sure to follow. Getting manufactured and re-exported without intervention
such financing in place, however, requires a great deal of of the customs authority. China’s first Free Trade Zone
due diligence and local research. Meanwhile, Beijing and opened in Shanghai in 2013 and was seen as a milestone in
London have been coordinating over the establishment of doing business in China. It replaced the previous “low-cost
a Belt and Road Development Fund, and again, others of land policy” of the more traditional industrial zones and is
this type can be expected to follow. used to try and explore policies for modernizing Chinese
businesses. Benefits of a FTZs include:
Policy coordination
Beijing has been very open and receptive to this joint 1. Choosing a virtual office instead of a real one;
coordination. Money always follows government policy, 2. Procedures registering in a FTZ are much quicker
and again studying the development policy of any of the and easier;
71 countries involved and matching that to China’s Belt 3. Less – or no – (import/export) taxes;
and Road ambitions is a smart move. Wherever they are 4. Easier conversion from RMB to foreign currencies;
overlaps, there will be money and there will be opportunity. 5. Special customs monitoring system:
Facilities and connectivity - Detailed customs clearance is only needed in a
Noteveryone is uptospeed as concerns the connectivity later stage;
issues along the Belt and Road, and there remains much - Faster custom clearances of goods;
to be done. Some of the connectivity issues are big ticket 6. No import tax when imported into the FTZ;
items which will significantly improve communications 7. Bonded warehouses;
along the entire Eurasian landmass. Others, though, just 8. Broadening of investment horizons.
require vision, and technical skills. Connectivity is a key
growth area in the Belt and Road routes, and individuals The FTZ should be seen as a blueprint of further
reform throughout China. Unlike other types of Special
64
minerals and agricultural products. According to Stratfor, an and companies with local and global IT expertise can
American geopolitical intelligence platform and publisher, expect to be in demand.
Chinese companies have over US$300 billion in Eastern
Europe over the past decade. Like the Marshall Plan before it, Trade and investment
the BRI will require a tremendous amount of commodities, Good news for foreign exporters to China is that Beijing
metals and fuel (Holmes). has reduced VAT in the manufacturing, transportation,
construction, telecommunications, and agricultural
Hong Kong has positioned itself wisely as a service sectors. Accessing Chinese consumers has long been the
center for mainland Chinese companies looking to expand holy grail of China focused businesses, and new trade
overseas, and provides a substantial platform to allow routes are opening up to develop this. The Belt and Road
them to do so. What isn’t quite so well defined in Hong trade trend is not just up, it’s positively bullish.
Kong is how foreign, non-Chinese companies can become
involved. According to Dezan Shira & Associates, there are Basically, this means that nearly everyone on the
five key areas in which foreign companies can participate planet, for the first time, has the ability to sell to China
in China’s Belt and Road Initiative, and use Hong Kong (or (Devonshire-Ellis, Five Opportunities).
other locations) to do so:
Free Trade Zone
Cultural exchange
Many of participating countries are small nations, yet China is seizing the opportunity to claim leadership
with very specific cultural identities. Services provided of the global economy. With the US seemingly in a
can take the shape of everything from translations, local protectionist crouch, China had become, despite all its
market intelligence, and promoting people-to-people problems, indispensable. World Economic Forum founder
bonds and co-operation. Klaus Schwab said in 2017 in Davos, Switzerland, “In a
world marked by great uncertainty and volatility, the
Financial integration international community is looking to China”(Mishra). One
This is very much something Hong Kong can and way that they are achieving this is through FreeTrade Zones
does provide, and does well, but there are other financial (FTZ). FTZs in China are a specific class of special economic
centers and countries, such as Singapore, which also zones; an area where goods may be landed, handled,
provide regional hubs. Others are sure to follow. Getting manufactured and re-exported without intervention
such financing in place, however, requires a great deal of of the customs authority. China’s first Free Trade Zone
due diligence and local research. Meanwhile, Beijing and opened in Shanghai in 2013 and was seen as a milestone in
London have been coordinating over the establishment of doing business in China. It replaced the previous “low-cost
a Belt and Road Development Fund, and again, others of land policy” of the more traditional industrial zones and is
this type can be expected to follow. used to try and explore policies for modernizing Chinese
businesses. Benefits of a FTZs include:
Policy coordination
Beijing has been very open and receptive to this joint 1. Choosing a virtual office instead of a real one;
coordination. Money always follows government policy, 2. Procedures registering in a FTZ are much quicker
and again studying the development policy of any of the and easier;
71 countries involved and matching that to China’s Belt 3. Less – or no – (import/export) taxes;
and Road ambitions is a smart move. Wherever they are 4. Easier conversion from RMB to foreign currencies;
overlaps, there will be money and there will be opportunity. 5. Special customs monitoring system:
Facilities and connectivity - Detailed customs clearance is only needed in a
Noteveryone is uptospeed as concerns the connectivity later stage;
issues along the Belt and Road, and there remains much - Faster custom clearances of goods;
to be done. Some of the connectivity issues are big ticket 6. No import tax when imported into the FTZ;
items which will significantly improve communications 7. Bonded warehouses;
along the entire Eurasian landmass. Others, though, just 8. Broadening of investment horizons.
require vision, and technical skills. Connectivity is a key
growth area in the Belt and Road routes, and individuals The FTZ should be seen as a blueprint of further
reform throughout China. Unlike other types of Special
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