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Corporate Establishment, Tax, Accounting & Payroll roughout Asia

Your Partner To Growth In Asia China Briefing and all other Asia Briefing titles are contributed to by Dezan Shira & Associates, Asia’s premier foreign direct investment practice, with over 20 offices and 180 professionals in the region. Providing business advisory, corporate establishment, tax, accounting, payroll, due diligence and audit services to multinational investors and SMEs in China since 1992.

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Business Guide to the Guangdong Huizhou Greater Pearl River Delta Foshan Nanning Jiangmen Shenzhen (Fourth Edition) Zhuhai Zhongshan

Haikou Hainan

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. Great care has been taken in the preparation of this booklet and the information presented is believed to be reliable, but full cannot be guaranteed.

Information is drawn from government publications, major news sources, interviews and publicly-available third party reports. Please note that 2011 statistics are taken from local government announcements and may not precisely those presented in the 2011 China Statistical Yearbook, released by the National Bureau of Statistics.

© 2011 Asia Briefing Ltd. Unit 1618, 16/F Miramar Tower 132 Nathan Road, Tsimshatsui KONG

ISBN: 978-988-15251-6-1

“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

www.asiabriefingmedia.com The Greater Pearl River Delta 3 About Asia Briefing’s China Business Guides

Thank you for buying this guide. China Briefing’s publications are designed to fill a niche in the provision of information about business in China.

When we decided several years ago to commence this series, we did so with the knowledge that much information about China is scattered, contradictory, expensive or available only in Chinese. This guide is designed to change that and pull together the practical information you need for doing business in China in an accessible and engaging form.

The articles and materials within have been researched and written in China by those familiar with the issues faced by foreign invested enterprises. To compile this guide, we have engaged the assistance of a respected professional services firm: Dezan Shira & Associates. Without this firm’s assistance this book would not have been possible, and we wholeheartedly recommend their services.

Contributors, editors and designers of previous editions of this guide include: Lucy Brady, Edward Boyle, Chua Siew Joo, Robert Deng, Chris Devonshire-Ellis, Rosario Di Maggio, Marco Ferrari, Daniel Hughes, Becky Jian, Charles Racine, Edward Robinson, Joyce Roque, Andy Scott, Graham Thompson, Nazia Vasi, Natalie Wirska, Sam Woollard, Jennifer , Jeffy , Vicky Zhang.

Contributors to the current edition include: Julia Gu, Eunice Ku, Cindy Tse and Shan Qiu. This edition was designed by Chris Wei and edited by Samantha L. Jones.

At China Briefing, our motto is “the practical application of China business” and we hope that within this volume and our other publications you feel that we have achieved this.

Sincerely,

Asia Briefing

4 The Greater Pearl River Delta Contents

1. Setting the Scene...... 7 The China Picture...... 8 PRD in Perspective...... 17

2. Provinces and of the PRD...... 33 GUANGDONG PROVINCE...... 34 Dongguan...... 38 Foshan...... 41 Guangzhou...... 44 Huizhou...... 49 Jiangmen...... 52 Shenzhen...... 55 Zhongshan...... 58 Zhuhai...... 61 FUJIAN PROVINCE...... 64 Fuzhou...... 68 Xiamen...... 71 GUANGXI PROVINCE...... 74 Nanning...... 77 HAINAN PROVINCE...... 80 Haikou...... 83 ...... 86 ...... 91

3. Establishing Business...... 95 Setting up in China...... 96 Business Taxes...... 104 Development Zones...... 108

Appendix, Directory, References...... 122 Glossary of Terms...... 126

The Greater Pearl River Delta 5 1. Setting the Scene - The Region in Perspective

Overview

1.1 The China Picture 1.2 The PRD in Perspective About the Country Relics of China’s economic opening

A Socialist Country?

China’s market is described as “socialism with capitalist characteristics,” wherein the free market largely reins, but the government plays a prominent role and the previously dominant state-owned enterprises (SOEs) still exist in vital sectors. A far cry from its socialist history, Chinese leadership today seems to follow the maxim “to grow rich is glorious.”

eng Xiaoping initiated an “” in 1978 to reform and modernize the Chinese economy, Dpromoting foreign trade and investment as potential catalysts for growth. In the 30-plus years following reform and opening-up, China’s economy developed at an unprecedented rate, averaging about 10 percent per annum, and that momentum has held steady into the .

8 The Greater Pearl River Delta The China Picture | Setting the Scene – CHAPTER 1

A Changing FDI Identity China has been the second largest recipient of inward forward direct investment (FDI) in the world, behind the , for over a decade. With the assistance of large quantities of FDI, China became the world’s factory, but this is now an identity in transition. Wage rates in China are rising at around 9 to 15 percent annually, though increases are higher in coastal cities, such as , which increased 20 percent year-on-year in 2010. Further, the increasingly specific, increasingly strong labor legislation is improving worker’s rights in China. As such, Southeast Asian countries are increasingly coming to the table as “China alternatives” for labor-intensive manufacturing. No longer merely a manufacturing haven, China is forging a new identity to present to foreign investors. One aspect of this is the Chinese consumer. The Global Financial Crisis in 2008 had caused an economic downturn in many economies around the world, yet it did virtually nothing to curb China’s growing retail sales, which were estimated to have steadily increased by at least 11 percent year-on-year since 2007. With sales sagging abroad, a variety of foreign firms are investing in China to sell to the Chinese consumer market. The Chinese government is continually making efforts to encourage foreign “In 2011, the government investment on its own terms. In 2011, the government announced its 12th announced its 12th Five- Five-Year Plan, which lays the foundations for the economy in the years to Year Plan, which lays come (2011 to 2016), along with draft revisions to its Foreign Investment the foundations for the Catalogue, which provides -specific guidelines on foreign investment economy in the years to utilization. Priority areas for foreign investment under the 12th Five-Year Plan come (2011 to 2016). are agriculture, high-tech and green industries. ”

A Continent of a Country China is an incredibly heterogeneous country with vast geographic variations in language, people, industrial specialty and development level. While the wealthiest cities in the country can give European cities a run for their money in terms of modernity, driving a few into the countryside will reveal that China is still, in fact, a developing country. From an administrative perspective, China is divided into , provinces, autonomous regions and special administrative regions. China watchers joke that there are so many geographic differences that the country is, in fact, a continent. There are many ways to divide China into more manageable pieces based on shared characteristics, but one of the easiest ways is to look at it as five geographic regions.

The Greater Pearl River Delta 9 About Dezan Shira & Associates

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in and the United States. Dezan Shira & Associates’ experienced business professionals are committed to improving the understanding and transparency of investing in emerging Asia.

Our offices

India China , Beijing, , ,

Shanghai, , ,

Shenzhen, Guangzhou, Zhongshan

Hong Kong Italy United States

Vietnam , Ho Chi Minh Singapore

About Dezan Shira & Associates: Scan this QR code with your smart phone to visit: www.dezshira.com/offices.html Business Guide to and The River Delta (Fourth Edition)

Designed with the foreign investor in mind, this guide presents region and city-specific intelligence available through few other English sources. Its pages provide an overview of the region from a business standpoint, examine the economy of the region's provinces and prominent cities in depth, and introduce the basics of establishing a business in the region.

With detailed economic indicators and primary research largely based on Chinese government and news sources, this guide is an accessible and engaging compilation of the practical information you need for doing business in the region. Part of a series including business guides to Beijing and , South China and the Greater Pearl River Delta, and West China.

“Whether you are a newcomer to China or already doing business here, you should not be without China Briefing. They are the best in their field and an essential part of any multinational businessman’s࣠ intelligence on China.” -Jack Perkowski, chairman and founder, ASIMCO Technologies; author, “Managing the ”

“China Briefing is an established and well respected provider of good quality, useful China legal, tax and business operational information and is a great resource to European investors.” -Joerg Wutte, former president, European Chamber of Commerce, Beijing

“China Briefing is a must-read resource for anyone involved in China business. With so much material available on the mysteries of doing business in China, it is refreshing to read these practical, down to earth guides. They are well produced, easy to read, and incredibly insightful.” -Michael Cronin, COO, Capital, Beijing

Published by Asia Briefing Ltd. All rights reserved. @2011 Asia Briefing Ltd. Unit 1619, 16/F, Miramar Tower, 132 Nathan Road, Tsimshatsui ഺ Kowloon HONG KONG www.china-briefing.com; www.asiabriefingmedia.com "China Briefing" and logo are registered trademarks of Asia Briefing Ltd. Asia Briefing Ltd. is a Dezan Shira Group company; www.dezshira.comࣺ ሿ