Top 10 Findings: Creating a Winning Business in China
Published in the News & Observer
http://www.newsobserver.com/2011/10/02/1530065/cree-nurtured-its-ties-in-china.html
The following is a list of best practices to navigate government policies successfully:
- Understand how the Chinese government interacts with businesses
- Align corporate strategy with the direction of government policies
- Keep a constant open dialogue with authorities that regulate your business, especially since personnel and responsibility changes in government are frequent and deliberate to prevent corruption. When Burt's Bees was working trying to figure out the regulatory landscape in China regarding animal testing, the government body in charge of this issue changed – it moved from one ministry to another, adding to their timeline.
- Be prepared to give up – earning government approval often requires compromise in areas such as business policies and intellectual property rights
- Attend events that show commitment to the CCP. Show support to local government and their affiliated administrative organizations in charge of operation of Special Economic Zones.
It should be noted, however, that challenging government policies create new opportunities. Competition amongst provinces, cities, and even districts for foreign direct investment means some localities offer a myriad of incentives to attract job-creating influxes of capital. The competition between the ministry responsible for the Water Cube and that for the Bird's Nest offered Cree a wonderful opportunity to light up two massive Olympic venues.
Tax breaks, preferential policies, and other benefits increase directly with the size of investment. Free trade zones are a prime example. One of the largest free trade zones is Waigaogiao located outside Shanghai. Waigaogiao offers foreign companies numerous advantages by loosening government restrictions and providing tax incentives, simplifying customs requirements, duty exemptions, and looser importer/exporter quotas.
Longistics’ Suzhou Industrial Park (SIP) International Commodities Exhibition Center is an Integrated Free Trade Zone which allows North Carolina based companies to exhibit and send their products there for display without paying import duties. Many local districts now provide discretionary competitive tax incentives which can include rent subsidies and tax rebates for senior management.
Comments