Greater China Updates – March 2021
China Aiming to Innovate on the AI Industry
The Chinese authorities of the Ministry of Industry and Information Technology (MIIT) have announced, at the end of February of 2021, 5 new development zones dedicated to the innovation of the AI industry. Previously, there were only three zones: Shanghai (Pudong New District), Shenzhen, and Jianan-Qingdao, with the new additions in Beijing, Tianjin (Binhai New District), Hangzhou, Guangzhou, and Chengdu, the number has increased to 8.
Each zone will innovate on AI towards a specific purpose:
- Beijing: Manufacturing intelligent vehicles in the framework of the Winter Olympics
- Tianjin: Coordinate the development of the Beijing-Tianjing-Hebei area through the Pilot Free Trade Zone
- Hangzhou: Focused on the development of the Hangzhou smart city and modern services
- Guangzhou: Developing the supply change to integrate Great Bay Area (Guangdong-Hong Kong-Macao)
- Chengdu: Connection to the Belt and Road Initiative focusing on the medical and financial sectors
China Transfer Pricing: Latest Guidelines on Cross-border Payments
The State Administration of Foreign Exchange (SAFE) has issued a new set of guidelines to settle the payment in foreign currencies and receipts for Transfer Pricing (TP) adjustments. China keeps strict rules on foreign exchange controls, making it difficult for MNCs to settle TP payments. The newly released guidelines are an attempt of the Chinese authorities to ease these processes.
Generally, cross-border payments are categorized as payments in current accounts or capital accounts. However, there are certain cities running pilot programs for TP. The guidelines aim to align SAFEs and banks’ procedures as well as those in the pilot zones. The new guidelines deliver three proposals:
- TP adjustments: It will be necessary to present relevant information and supporting documentation such as invoices, profit adjustments, Additionally, these transactions will be processed as the original trade category, either products or services, allowing banks to treat them as transactions and letting them process the bank remittances for TP adjustments.
- Cost-sharing adjustments: As with the TP Adjustments supporting documents and information will be required. However, SAFEs must deliver a report on the sub-category.
- Others: Circular 14 will govern these schemes. However, there are not more details about it now.
Pilot Cash-Pooling Service for Multinational Companies Launched in Shenzhen and Beijing
China’s monetary authorities have decided to launch the first batch of pilot projects in Shenzhen and Beijing to facilitate further the use of cross-border funds by multinational enterprise groups. The pilot projects will allow large multinational companies with relatively high credit ratings to purchase foreign exchange at will within a certain limit. The purchased funds can be deposited in the domestic primary account for cross-border payment.
Visa Facilitation for Applicants Inoculated with Chinese COVID-19 Vaccines
China is easing entry restrictions for foreigners inoculated with Chinese COVID-19 vaccines. During the week of 15 March 2021, Chinese embassies in multiple countries have introduced the conditions in which a visa application shall be supported if the visa applicant has received their Chinese COVID-19 vaccination and a vaccine certificate. Travelers who wish to enter China should first contact their respective Chinese embassy to obtain the latest visa application instructions.
What other items be registered as a trademark in China?
In China, not only company names, logos, words or drawings can be registered as trademarks, colors, smells, and even sounds can be registered trademarks too, as long as they are distinguishable. Yet, the distinctiveness of colors, smells, and sounds can be highly subjective. Therefore, the process and requirements of registering colors, smells, and sounds as trademarks are not so clear. Nevertheless, with the raising awareness of intellectual protection in China and the power of social media, we shall see more and more registration applications for these new concepts in the future.
Tips for maintaining your Hong Kong corporate bank account active
Opening a corporate account in Hong Kong in recent years is not so easy or quick. The banks follow a strict policy to guarantee that no illicit businesses are being conducted even after the bank account is opened. If they detect any account irregularities, the bank may reject the account opening application or close the existing account. Here are four tips to avoid bank account suspension:
- Maintain minimum account balance required by the bank
- Respond to your bank regarding the annual assessment of your account
- Keep your company information up-to-date
- Avoid leaving your account stagnant for a long period