COUNTRY STARTER PACK Country Starter Pack 2 Introduction to China China at a Glance
Total Page：16
File Type：pdf, Size：1020Kb
PEOPLE'S REPUBLIC OF China COUNTRY STARTER PACK Country starter pack 2 Introduction to China China at a glance POPULATION - 2018 GDP PER CAPITA (PPP) - 2018* SURFACE AREA USD$18,110 Contents 1.415 INCOME LEVEL 9.6 1. Introduction 4 1.1 Why China? Opportunities for Australian businesses 5 Upper middle million 1.2 China at a glance 9 1.3 China and Australia: The bilateral relationship 21 billion *Gross Domestic Product (Purchasing Power Parity) IMF square kmS 2. Getting started in China 24 GDP GROWTH 2018 CAPITAL CITY GDP 2018 2.1 What you need to consider 26 2.2 Researching China 38 2.3 Possible Business Structures 43 US$13.41 trillion 2.4 Manufacturing in China 48 POLITICAL STRUCTURE 3. Sales and marketing in China 52 3.1 Agents and Distributors 54 6.6% 3.2 Online Sales 57 3.3 Direct selling 67 GDP GROWTH FORECAST (IMF) Communist State 3.4 Franchising 68 6.3% (2019), 6.1% (2020), 6.0% (2021) 3.5 Marketing 68 Beijing GENERAL BANKING HOURS 3.6 Labelling requirements 71 4. Conducting business in China 72 RELIGION CLIMATE CURRENCY FISCAL YEAR 4.1 Chinese Culture and Business Etiquette 73 Monday to Friday 4.2 Building Relationships with the Chinese 77 8AM to 5PM 4.3 Negotiations and Meetings 82 4.4 Due diligence and avoiding scams 86 jan-dec 5. Business practicalities in China 92 INTERNATIONAL DIALLING CODE 5.1 Laws and regulations 93 5.2 Import Duties, Tariffs and Regulations 98 5.3 Taxation 103 BUDDHIST 18%, CHRISTIAN 5%, 5.4 Audit and Accountancy 107 MUSLIM 2%, FOLK RELIGION Extremely diverse Renminbi (RMB) Calendar year 22%, UNAFFILIATED 52% TROPICAL IN THE SOUTH TO 5.5 Employing Workers 108 SUB-ARCTIC IN THE NORTH 5.6 Banking in China 115 +86 5.7 Repatriating Profits and Getting Paid 117 > STOCK EXCHANGE 6. Visiting China 120 SHANGHAI STOCK EXCHANGE (SSE) 6.1 Visas 121 6.2 Currency 122 TIME DIFFERENCE AUSTRALIAN IMPORTS AUSTRALIAN EXPORTS EXCHANGE RATE SHENZHEN STOCK EXCHANGE (SZSE) 6.3 Air travel and Airports 123 TO BEIJING FROM CHINA (2018) TO CHINA (2018) (2018 AVERAGE) 6.4 Ground transport 124 OFFICIAL LANGUAGE 6.5 Hotels and Dining 126 2 hours A$74.9 A$118.4 (RMB/AUD) 6.6 Health and Welfare 127 behind (AEST) Billion Billion A$1 = RMB 4.94 Mandarin (Chinese) 7. Engage with us 132 Pǔ tōng huà 普通话 Country starter pack Country starter pack 4 5 Introduction to China Introduction to China 1.1 WHY CHINA? OPPORTUNITIES FOR AUSTRALIAN BUSINESSES 1. Introduction Is there any label that can do justice to modern China? Asian giant, global powerhouse, economic phenomenon – all are true, but somehow inadequate descriptions for the extraordinarily powerful position that the People’s Republic of China has come to occupy in the world economic order. Forty years ago, after a long period of economic stagnation, China was not in the world’s top eight economies. Today, thanks to a breathtaking social and economic transformation that began in the late 1970s, China is on track to overtake the United States as the world’s number one economy within a few decades, if not sooner. By some measures, it has already done so. We are living in what many are now calling ‘The Chinese Century’. The irresistible rise of China has implications and consequences for us all on so many levels. But for the purposes of this guide, it largely comes down to one word: opportunity. For Australia, and Australian businesses in particular, has there ever been an opportunity like China? Consider some key facts: • China is home to more than 1.42 billion people – or about 56 times the population of Australia • China is the world’s number one trading nation and manufacturer by output • In 2018, Chinese GDP is estimated to be USD 13.41 trillion, second only to the United States • China’s GDP growth rate over the past three decades has often bypassed 10 per cent, and consistently exceeded 7 per cent • As the Chinese economy matures, annual GDP growth is still tipped to exceed 6 per cent • Household incomes in China are soaring, with more than 400 million people now considered middle class. By 2022, over 550 million people in China will be considered middle class. • China’s urban middle class is expected to reach 70 per cent of its population by 2030. • China is Australia’s biggest trading partner by a huge margin. The stats say it all: when it comes to business and trade, China is the main game on the planet. On almost every measure, it is now bigger than the rest, and getting bigger every year. As such, China can scarcely be ignored by any business looking to expand operations beyond its own domestic market. Country starter pack Country starter pack 6 7 Introduction to China Introduction to China For Australian businesses, opportunities in China have Australian businesses in China. Years before the landmark Education: China is Australia’s largest source of Legal services: ChAFTA benefits Australian law firms by sprouted across a huge – some might even say bewildering agreement was signed, China had already taken over international students with the services export market permitting them to be the first foreign entrants able to – range of industries, market sectors and geographic from Japan as Australia’s largest trading partner. worth AUD 11.7 billion in 2018. In 2018, there were establish commercial associations with Chinese law firms locations. Rapidly rising income levels in China and mass 255,364 Chinese students enrolled in Australian education in China. This specifically occurs in the Shanghai Free migration from rural to urban areas have created an In 2018, annual two-way trade between China and institutions (including schools), representing 29 per cent Trade Zone (SFTZ). Australian law firms are allowed to abundantly large class of urban consumers demanding Australia reached almost AUD 215 billion. Iron ore, of all international enrolments. Over 153,000 of these offer Australian, Chinese and international legal services improved housing, a cleaner environment, overseas travel, gas and coal make up the bulk of Australian exports were in higher education institutions, including universities, through a commercial presence, without restrictions on better education, a higher protein diet and an enhanced to China (more than AUD 79 billion), but Australian while 22,000 were in vocational education. As levels of the location of clients. choice of financial services. From the sophisticated service industries – led by education and tourism – are disposable income continue to increase in China, Chinese consumers of developed cities such as Beijing, Guangzhou a growing part of the trade relationship. China is also parents are increasingly choosing to send their children Information communication technology (ICT): Huge and Shanghai, to the growing middle classes in lesser- the largest foreign buyer of Australian agriculture, abroad for secondary education in preparation for foreign growth in e-commerce in China has resulted in significant known inland cities, the newly industrialised China is a forestry and fisheries products, with imports totalling university. In 2018, there were 13,600 Chinese students opportunities for innovative Australian businesses across veritable smorgasbord of opportunity. around AUD 13.5 billion in 2017-18. Australia’s main enrolled in Australian schools. In contrast, only 4,796 the IT and communications sectors. The annual value of imports from China are manufactured goods, which were Australian students went to China to study in 2016. Chinese e-commerce totaled USD 1.33 trillion in 2018, an This is not to say that doing business in China is without worth more than AUD 21 billion in 2018 and is led by increase of 23.9% from USD 1.03 trillion in 2017 and, by unique challenges and complications. Apart from language telecommunication equipment, IT products, furniture and Tourism: China is Australia’s second largest inbound 2020, is forecast to exceed the combined e-commerce and cultural barriers, which can be considerable, foreign homewares. tourist market (as measured by arrivals), and the largest of the United States, Britain, Japan, Germany and France. businesses must navigate issues ranging from complex when measured by tourism expenditure. More than The e-commerce boom is directly linked to the explosion bureaucracies, challenges in intellectual property (IP) The entry into force of the free trade agreement in 2015 1.4 million Chinese visited Australia in the year ending in internet connections across China, both via computers law enforcement, to quality control and the sheer, was set to broaden and deepen the trade relationship. September 2018 and were the largest source of tourism and smartphones – at the last count there were around 1.3 overwhelming size and diversity of the country. There is also New service sector opportunities are already opening expenditures (AUD 10.9 billion) into the Australian billion internet users, including 800 million mobile internet the overarching challenge of the different way that business up, with Australian financial and legal firms now able to economy. These numbers appear likely to continue users. The Chinese Government’s target is to connect 1.2 is conducted in China compared with other countries, the do business in China for the first time, and many other growing, particularly after the introduction of provisions in billion people (85 per cent of the population) to 3G or 4G large and highly competitive market for both domestic and services industries permitted to set up wholly-owned ChAFTA for easier visa access for Chinese visitors. These mobile internet by 2020. To meet these targets, China foreign businesses, and the complexity of understanding Australian subsidiaries there. Australian agricultural provisions include working holiday visas for 5,000 young is expected to engage foreign companies to assist with and selling to the Chinese customer.