CW wishes a Happy Spanish National Day 2019
The Spanish National Day was celebrated with excitement on 12 October 2019 in Hong Kong. Our Latin Department colleagues attended the celebration held by the Consulate General of Spain in Hong Kong. Meanwhile, our Senior Advisor, Victor Herrera, attended the celebration of Spanish National Day in Guangzhou organized by the Consulate General of Spain in Guangzhou.
Written by Marant Caballero, Latin Department, CW CPA
The 2019 Edition of Negative Lists and Catalogue of Encouraged Industries for Foreign Investment
Foreign investors are subject to special administrative measures for access to the Chinese market. Currently, China adopts the management system of negative list for granting foreign investors and their investments into China. The negative list sets out industries where foreign investment is prohibited or restricted. To push forward the development of an open economy, the National Development and Reform Commission and the Ministry of Commerce jointly published two updated negative lists and the encouraged industry catalogue for foreign investment on 30 June 2019, which came into force on 30 July 2019, namely:
- Special Administrative Measures for Admission of Foreign Investment (2019 National Negative List)
- Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (2019 PFTZ Negative List)
- Industry Guidelines on Encouraged Foreign Investment (2019 Encouraged Catalogue)
The structure of the updated edition remains the same as the old one (2018 Edition), while some items have been removed or modified. The number of entries in the national Negative List was reduced from 48 to 40, and the number of entries in the PFTZ Negative List was reduced from 45 to 37.
2019 National Negative List
Opening of service industries
- In the field of transportation, the restriction that domestic shipping agencies must be controlled by Chinese majority shareholders has been lifted.
- In the area of infrastructure, the restriction that Chinese majority shareholders must control the gas, heating pipelines and water supply in cities with a population of more than 500,000 has been lifted and only the restriction of water supply remains effective afterwards.
- In the cultural field, the restriction that cinemas must be controlled by Chinese majority shareholders has been removed. The restriction that performance agencies must be controlled by Chinese majority shareholders, which was removed in 2018 Pilot Free Trade Zone Negative List, is now removed nationwide.
- In the field of value-added telecommunications, restrictions on foreign investment imposed by domestic multi-party communications, store-and-forward and call center services have been lifted.
Opening of agriculture, mining and manufacturing industries
- For agriculture, the prohibition for foreign investment in wildlife resources development has been lifted.
- In the field of mining, the limitation of exploration and development of petroleum and natural gas to joint ventures and cooperation has been lifted, and the prohibition on foreign investment in exploration and development of molybdenum, tin, antimony and fluorite has been removed.
- In the manufacturing sector, the ban on foreign investment in Chinese art paper and production in ink stick has been lifted.
2019 PFTZ Negative List
The purpose of setting up Pilot Free Trade Zones is to explore the application of national treatment and the use of negative list in the foreign investment approval process, to boost opening up and innovation in the financial sector, and to provide an invest-friendly regulation environment. In 2018, opening measures regarding performance agencies and oil and gas exploration were proved successful in these Pilot Free Trade Zones and then were spreaded to the whole country. And for this time in 2019, opening measures on industries like fishing of aquatic products and printing of publications are carried out nationwide.
In addition, on 26 August 2019, the State Council announced the Promulgation of Overall Plan for the fifth batch of PFTZs, which will be set up in Shandong, Jiangsu, Guangxi, Hebei, Yunnan and Heilongjiang, in total 6 provinces.
2019 Encouraged Catalogue
Besides the Negative List, China also issued the Industry Guidelines on Encouraged Foreign Investment, which combined the “Industry Guidelines on Encouraged Foreign Investment” in the 2017 Catalogue on Industry Guidelines for Foreign Investment and the 2017 Catalogue of Priority Industries for Foreign Investment in Central and Western Region. This catalogue mainly stresses upon encouraging foreign investment to participate in high quality development of manufacturing industry. More than 80% of the new or revised items in the national catalog belong to the manufacturing sector, supporting foreign investment to pay more attention to high-end, intelligent and eco-friendly manufacturing.
- In the electronic information industry, the Catalogue further includes the development and manufacturing of 5G core components, integrated circuit etching machine, chip packaging equipment, cloud computing equipment etc.
- In the equipment manufacturing, items related to industrial robot, new energy vehicles, key components for smart vehicles are added or amended.
- For the medical and pharmaceutical industry, the Catalogue adds the development and production of new key raw materials for the production of vaccines, cell therapy drugs, and large-scale cell culture products.
- To encourage the new material industry, the Catalogue further updated the section about the development and production of new materials for aerospace, monocrystalline silicon, large silicon wafer etc.
- In the commercial services sector, the Catalogue updated the sections about project consultancy services, tax consultancy services, inspection and testing certification services etc.
- For business services and trade, cryogenic distribution, e-commerce, construction and operation of railway arterial network and railway special line are updated.
- Under the technology service sector, artificial intelligence, clean production, the development of Carbon Capture and the development and application of energy saving, and circular economy technologies are included.
- In Yunnan, Inner Mongolia, Hunan and other regions with certain distinguished agricultural resources and labor advantages, the Catalogue modifies items regarding the industries of agricultural product processing, textile clothing and furniture manufacturing.
- In Anhui, Sichuan, Shaanxi and regions where the development of electronic industry clusters is accelerating, the Catalogue adds the development and manufacturing of integrated circuit, tablet computer and communication terminal etc.
- In Henan, Hunan and regions with dense transportation and logistics network, the construction of new logistics storage facilities and auto refueling stations has been added.
The incentive policies supporting the old catalogues of encouraged industries will apply to the 2019 Encouraged Catalogue, including:
- For encouraged foreign investment projects, the import of self-use equipment within the total amount of investment shall be exempted from the customs duty and import value-added tax;
- Enterprise income tax will be collected at a reduced rate of 15% for qualified foreign invested enterprises in Western Regions which fall into the category of encouraged industries;
- Relevant land use policies are applicable to foreign-invested and domestic enterprises equally. China will continue to provide land in priority to the “encouraged-type” of foreign investment industrial projects on intensive land use; After the reserve price for land use is determined, no less than 70% of the national minimum standard for land for industrial use corresponding to the same rank of land may be implemented.
At present, China is striving to accelerate the development of emerging industries and create a strong domestic market opened to global investors, which provides not only market opportunities but a more strengthened legislative framework for supervising the foreign investments in China. Coupled with China’s new Foreign Investment Law, which will come into effect on 1 January 2020, foreign companies that are already established in China may consider the following actions:
- Revise the current market situation and explore beneficial restructuring options considering the new Negative Lists and the 2019 Encouraged Catalogue;
- Pay close attention to any changes of the local rules set forth by local competent authorities in response to the new Foreign Investment Law to be implemented soon.
As for investors who are still yet to put forward the China project:
- The Negative Lists and the 2019 Encouraged Catalogue shall be first reviewed in order to confirm whether a Wholly Foreign-Owned Enterprise can be set up or a Joint Venture is needed.
- In the latter case where a Joint Venture is considered, be aware of the upcoming changes that the Law on Sino-foreign Equity Joint Ventures, and the Law on Sino-foreign Cooperative Joint Ventures shall be repealed after the new Foreign Investment Law comes into effect on 1 January 2020. Therefore, it is strongly advisable to consult with a China legal counsel for solutions to cope with the legislative changes.
Should you wish to know more about China’s recent changes in foreign direct investment laws, please feel free to reach out to our China Consultancy Team.
Senior Manager, Greater China
FDI Legal Counsel, Greater China
Written by Edwin Yin, China Consultancy Team, CW CPA
Participation in the Global Tourism Economy Forum 2019 in Macao
Our CW Latin Department was very grateful for the kind invitation by the Argentine Consulate in Hong Kong, represented by the Consul General Mr. Gustavo Fazzari, to participate in the “Global Tourism Economy Forum 2019 ” (“GTEF 2019”) held in Macao. Great effort from both Argentine and Brazilian delegations presented themselves together on this occasion. Our advisor, Gabriela Lenis, was present at the Forum.
As a platform for the world’s tourism industry stakeholders to exchange and collaborate, GTEF 2019 promoted the sustainable development of the global tourism industry with a focus on China. It engaged facilitated high-level exchanges on timely and thought-provoking topics, creating sweeping and rewarding opportunities for tourism promotion, investment and cooperation.
On this occasion, more than 1,500 attendees and 40 exhibitors attended with a strong presence of Latin America. Representatives from nine Argentine travel agencies joined the Business Matching on 14 October. The Argentine delegation was headed by Mr. Jose Gustavo Santos, Secretary of State for Tourism of Argentina.
Written by Gabriela A. Lenis, Latin Department, CW CPA
Delegation of Argentine agricultural entrepreneurs in Hong Kong
CW CPA appreciates the invitation by Mr. Gustavo Fazzari, Consul General of the Argentine Republic in Hong Kong, to participate in the meeting at Hong Kong Trade Development Council (“HKTDC”) on 27 September 2019. Consul Nicolas Pirrello and Ms. Anne Chung, Manager, International Relations of the Belt & Road Initiative of the HKTDC were present at the meeting, together with our Latin Department advisors, Gabriela Lenis and Raul Chan, and discussed the business opportunities in Hong Kong as a gateway to the Asian market.
It is worth mentioning that this is the fifth trip to China organized by the Argentine agricultural consultancy company, Nóvitas S.A., which organizes annual training tours around the world and has more than 25 years of experience in the Argentine market. On this occasion, the tour was to visit major Chinese cities, including Hong Kong, from 17 to 30 September 2019. The head of this delegation was the Director of Nóvitas S.A., Mr. Diego De La Puente.
Written by Gabriela A. Lenis, Latin Department, CW CPA
Project WeCan Partners Sharing Session
Since 2017, CW CPA has been a partner of Project WeCan, a Business-in-Community initiative empowering disadvantaged students with opportunities to pursue higher studies and future careers. Every year, Project WeCan organizes Partners Appreciation Reception to thank all the partners for the support and contributions to the Project. Besides, Partners Sharing Session are also held for the partners to share their ideas and experience.
Earlier this year, the Partners Appreciation Reception was held in May at the Government House and the Partners Sharing Session was held recently on 27 September 2019. Ms. My Ly, Senior Manager of our Company Secretarial Department joined the session. Project WeCan partners shared volunteer programs and stories and exchanged ideas among themselves. It was an enjoyable networking among the partners and guests.
Written by Mandy Lau, Administration Department, CW CPA
Welcoming a Brazilian delegation in Hong Kong
Hong Kong Electronics Fair (Autumn Edition) 2019
The Hong Kong Electronics Fair (“Fair”) celebrated its 39th edition from 13 October to 16 October. This year, one of the main highlights of the Fair was the Tech Hall that showcased 5 important technological areas: 3D Printing, Robotics & Unmanned Tech, Smart Tech, Startup and Virtual Reality. Last year the Fair hosted around 3,740 exhibitors from 21 different countries. This year, the number of exhibitors increased up to 3,908 coming from 26 countries around the world, such as China, South Korea, India, USA, UK, Japan, Canada, Italy, Germany, Thailand, Malaysia, Russia, Australia, France, Netherlands, Spain, Singapore, Philippines, Vietnam etc.. Exhibitors brought along their remarkable and outstanding products to the Fair. Our colleague, Raul Chan, attended the event on 14 October and visited many exhibitors.
Written by Marant Caballero, Latin Department, CW CPA
CW Brazil Desk showcasing China’s business environment at the Canton Fair 2019 Autumn
CW’s Brazil Desk delivered a seminar together with our Brazilian business partner Guelcos International during the Canton Fair, one of the most important trade events in China with the longest history and of the largest scale.
The main points addressed in the event were the benefits of setting up businesses in the Greater Bay Area. Our Brazilian consultant, Mr. André de Souza talked about how to import successfully from China and the country’s growing tourism industry.
Written by Kemelly Morais Vera, Brazil Desk, CW CPA