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In the past few years there are many new international airports completed in several major cities of China, i.e. Shanghai, Shenzhen, Beijing, Chengdu, Kunming, Tianjin, Dalian and Guangzhou. International direct flights from major cities of Asia, Europe and America are available.

China has a total population of 1300 million. Similar to Beijing the population in Shanghai is about 20 million, whist that in Canton Province is about 100 million.

The official language is mandarin (Putonghua). English is also widely used, especially amongst youngsters in major cities. There are many kinds of dialect in many parts of China, for example, in Guangzhou, just like Hong Kong, Cantonese is the dialect usually used.

Renminbi(RMB) is the official currency in China. Outside mainland of China it is only convertible in Hong Kong within a limited amount. It is still not yet freely convertible in other exchange markets but expected possible in near future.

National Peopleˇs Congress is the highest authority of the nation. It executes the legislative power through the Standing Committee of the Congress.

The government of China is the State Council, which execute the policies authorized by the Congress.

The majority of the population is in the agriculture force despite many of them have turned to the cities to work in the factories.

The government office working hours are 5-day week with 40 hours a week. Major public holidays concentrate in Chinese ˉNew Yearˇ (in January or February usually), National Day (October), Labor Day (May) (one week each)

There is no compulsory membership in trade unions. However, foreign investment enterprises have to support trade unions with certain facilities.

Since the opening policy launched in China in 1979, there has been rapid economic growth. In 2005 the GDP is above US$2,225,700M and the growth rate is above 9.9% p.a.

Her major trading partners include Hong Kong, Japan, USA, Europe and Australia. Textiles, energy resources, agriculture and light industry are the major industries. Imported products include motorcars, aircrafts, machinery, steel and chemicals.

Following the entry of WTO it is envisaged that economy growth in China is still strong in the next couple of decades.

What are the forms of companies for foreign investments doing business in China?

Foreign enterprises can set up representative offices in China. According to Article 4 of the Detailed Rules on Foreign Representative offices, a foreign resident representative office must not engage in profit-making business operations in China directly. It can only engage in business activities such as promotion, market studies and exchange of technology on behalf of its parent company.

The following basic requirement has to be met in order to set up a resident representative office in China:

It is very important to obtain business license in China before setting up the operation of the business. The license permits the holder to open bank accounts, register with the local tax bureau for payment of income tax on the project and file employee income tax.

What domestic markets will be opened for foreign investments following China's entry to WTO?

* Services including banking, telecommunications, insurance and professional services.

When Chinaˇs entry to WTO, four phases were promised as following: cutting tariff, diminishing or eliminating non-barrier tariff, agriculture and service industries. Including:

2) 400 kinds of import quotas, that is, non-barrier tariffs, will be eliminated by 2005.

3) According to the Agreement of Agriculture Cooperation between China and USA, China agreed to lift the embargo on the export of TCK wheat from 7 states of USA and allow more than 6,000 meatpacking plants to enter China market.

4) Service market, including banking, insurance, tourism, telecommunications and so on, will be open step by step.

What is Closer Economic Partnership Arrangement?

'CEPA' is China's free trade agreement with Hong Kong. It grants easier access to China markets for Hong Kong-made products, and Hong Kong-based service companies which include:-

1. Duty-free export to China for Hong Kong-made products
1,407 categories of 'Made in Hong Kong' products will be exempt from tariffs when exported to the mainland China.

2. Easier market entry for Hong Kong-based service providers
CEPA covers 27 service sectors and reduces, or removes geographical, financial and ownership restraints. Any nationality company can apply if it:

1) is incorporated in Hong Kong,

2) has operated for 3 to 5 years (depending on the sector),

3) is liable to pay Hong Kong profits tax, and

4) employs 50% of its staff locally

How can non-HONG KONG companies benefit from CEPA?

Overseas companies, not based in Hong Kong, can take advantage of CEPA by outsourcing to, or partnering with a CEPA-qualified manufacturer or service provider in Hong Kong.

For Overseas manufacturers, you do not need to have an office in Hong Kong to benefit from CEPA. For your goods to qualify as 'Made in Hong Kong', you need only satisfy simple Rules of Origin. In essence, your products must be "substantially transformed" in Hong Kong.

If you are an overseas service-provider, you can partner with, or invest in, a CEPA-qualified company to benefit from easier access to the Chinese mainland.


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