Welcome to JLJ's e-newsletter - China Focus. With our latest articles, we hope to share with you insights on the latest China regulatory updates, trends, and other news.
Each month, we bring this
e-newsletter to you as part of JLJ's value-added service. |
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China's 12th Five-Year Plan: Main Drivers of Analytical Instrument Industry
 This article is the first in a series of articles covering several industry specific Five-year plans.
Over
the past four years, the Chinese analytical instrument market has
experienced double-digit growth, reaching nearly US$ 4 billion by 2010;
the China market has become one of the primary growth drivers of the
industry worldwide.
In
accordance with the 12th five-year plan passed earlier this year, the
Chinese government will place further emphasis on the analytical
instruments industry. Below are a few key drivers of the industry's
growth from the government's initiatives expected over the next 5 years:
-
Increasing government funding on basic research
- increased investment in the construction of key national laboratories
for the research of 19 natural sciences and 8 engineering disciplines
-
Tightening regulations on national food safety
– integration of risk evaluation systems and standardization of
monitoring criteria for quality control as well as 1,300+ new planned
supervision/testing centers
-
Strengthening control on environmental protection –
establishment of nationwide environmental and ecological monitoring
centers for the prevention and control of water, air and soil
pollution, with US$ 75 billion allocated for control of heavy metal
pollution alone
- Stimulating growth of biopharmaceutical industry – government investment of US$ 10 billion for new drug development
Government
attention in the above four areas is expected to further drive demand
for analysis instruments over the next five years potentially creating
opportunities for foreign players.
However,
as with any industry, especially analytical instruments, companies
potentially interested in entering China's analytical instrument
industry should first fully understand market regulations, government
purchasing requirements, as well as other challenges and opportunities
before taking any significant steps or commitments.
For more information about this article or The JLJ Group's market research service in China, please email mark.ray@jljgroup.com .
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New Policies on Capital Settlement
 The
State Administration of Foreign Exchange issued a notice in the end of
July, announcing changes to the process and required documents for
capital settlement by foreign invested enterprises.
The main highlights of the updated regulation concerning foreign companies are as follows:
- Original Documents
Under the past regulation, duplicates were sufficient for the process
of preparing a capital settlement, but under the new changes, a company
must provide originals and duplicates when using the following
documents:
| A. |
Relevant proof of payment using the RMB obtained from the previous
settlement of capital, detailed list of the allocation of capital,
and an original and a duplicate copy of the relevant vouchers, such as
an invoice with the enterprise's official seal or financial seal |
| B. |
A Letter of Payment Order of the RMB obtained from the settlement of capital |
| C. |
A document certifying the purposes of the RMB obtained from the settlement of capital |
- Settlement Amount Limitation
| A. |
A foreign company may file for up to a maximum 100,000USD total capital settlement each month, and no more than 50,000USD per settlement without the need for additional documentation |
| B. |
If an individual settlement is over 50,000USD or more than 100,000 per month, additional documentation is needed. In such cases the process for capital settlement will include providing documents certifying the purpose of the RMB obtained from the settlement of capital as well as proof of external payment with the RMB obtained from the preceding settlement of capital, the commercial contract or the payment notice provided by the payee, and the documents listed in 1.A above |
- Transaction Cancelation
Transaction Cancelation - If a transaction that was made using a
portion of the capital settlement and has been canceled by the foreign
company, it must notify the bank within 5 working days.
If you would like to know more about the capital settlement process in China, please email tim.lamb@jljgroup.com.
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Extending the Retirement Age in China
 Chinese
Officials are once again talking about extending the retirement age in
China. During the 22nd meeting of the 11th National People's Congress
(NPC) on August 24th, 2011, the case for extending the retirement age
is being made and solutions proposed.
There
are two main factors creating pressure to reform the retirement
regulations. The first is the continued pressure on the pension fund,
which will only continue to increase as the overall population in China
ages. Currently over 12.5% of China's population is over the mandatory
retirement age, and is expected to grow to 25% by 2030. Also, in urban
areas such as Shanghai, a third of the population is expected to be
over retirement age by 2020.
In
response to these factors the NPC is considering to take a multi-staged
gradual approach to extending the retirement age over a number of
years. This will involve first brining women's retirement age in line
with men's, which is 60. From then, the retirement age for both men and
women will be extended to 65. Another aspect of the proposed solution
is to set up the means to re-employ retirees into non-labor intensive
work such as doctors, teachers, etc.
While
the NPC is for the most part keen on extending the retirement age to
address the related issues, the acceptance by the general public is
unsure, as shown by response to a policy that came out in Shanghai at
the end of 2010. Under that policy employees are allowed to voluntarily
keep working past retirement age as long as an agreement is achieved
between the employer and the employee.
According
to a report on the results of the policy by the vice director of the
Shanghai Human Resources and Social Security Bureau, few people come to
postpone their retirement, and among the applicants , half of them work
for private companies and are well paid, with a monthly salary of
around RMB10,000 (US$1,530). In addition, there has been controversy
surrounding the new policy as retirement age employees worry it will
lead to a stress for the older population.
Although
it is clear that adjustments must be made to the retirement regulations
in China, the final form is undecided and the impact is unknown.
For more information on the retirement age in China, email vicky.chen@jljgroup.com.
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FDI in China Still Strong
Foreign Direct Investment (FDI) in China remains strong despite poor growth numbers in June.
 According
to the Ministry of Commerce (MOC), at the end of June FDI in China saw
an increase of only 2.83 percent year-on-year, a significantly low
number when compared to recent growth rates. However, experts say that
a monthly FDI figure is inconsistent and should not be used to make any
assumptions about China's ability to attract foreign capital. This
point was highlighted by the quick reversal in FDI growth in July.
By
the end of July there was a significant raise of 19.8 percent, a total
of $8.3 billion, with a total increase to $69.2 Billion since the
beginning of the year, 18.6% growth year-on-year. Moreover, in the past
7 months, over 15,600 Foreign Invested Companies were approved (2,138
in July alone), 7.89 percent more than last year.
In
general, China is still a very attractive destination for FDI,
especially when compared with other emerging economies in the world.
One of the main attractions is China's large market for emerging
industries such as clean tech, new IT, and advanced equipment, which
are all strongly supported by government policies.
Another
area attractive for FDI is China's service sector, even as investment
in the sector globally has slowed considerably. By the end of 2010
investment in the service sector had grown by 28.6% and accounted for
46.1% of total investments. Given that development of the sector is
also a top priority for Chinese officials, the outlook is very good.
According to MOC, Last year's FDI in China reached $106 billion, this
year they are predicting that the number will be exceeded by a
considerable margin.
For more information about China FDI, contact Tim Lamb tim.lamb@jljgroup.com.
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