International Business

Why organizations are attacking at China

Submitted To: Submitted By:

Maam Khansa Asad Raza MB-10-9059

Institute Of Management Science

Contents
Contents..................................................................................................................... 2 1 Dalian Economic and Technical Development Zone ...........................................4 2 Suzhou Industrial Park ........................................................................................4 3 Tianjin Economic and Technical Development Zone ..........................................4 4 Shanghai Minhang Economic and Technological Development Zone ................5 5 Guangzhou Nansha Economic and Technological Development Zone...............5 6 Chongqing Economic and Technical Development Zone ...................................5 7 Weihai Economic and Technical Development Zone .........................................5 8 Xian Economic and Technical Development Zone .............................................5 9 Qingdao Economic and Technical Development Zone .......................................5 10 Changchun Economic and Technical Development Zone ................................5

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Types of China:

business

presence

in

Foreign Investors establish a business presence in China in one of five ways: 1) WHOLLY FOREIGN OWNED ENTERPRISE (WFOE) 2) Representative Office 3) Joint Venture 4) Partnership Enterprise 5) Hong Kong Company

WHOLLY FOREIGN OWNED ENTERPRISE

It is a limited liability company wholly owned by the foreign investor. A WFOE requires registered capital and its liability is limited to its equity, it can generate income, pays tax in China and its profit can be repatriate back to the investor's home country. Any limited liability enterprise in China which is 100% owned by a foreign company, individual(s) or companies can be called as WFOE.

REPRESENTATIVE OFFICE
It is a liaison office of its parent company. It requires no registered capital. Its activities are limited to product or service promotion, market research of parent company's business, quality control or contact liaison in China. A RO is generally prohibited from neither generating any revenue nor entering into contracts with local businesses in China.

JOINT VENTURE
It is a limited liability company formed between a Chinese company investor and a Foreign investor. The parties agree to create a entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. A JV has usually been used by foreign investors to enter the restricted in industries such as: Education, Entertainment, Mining, Hospital etc. 3| Page

HONG KONG COMPANY

It is often be used as a Special Purpose vehicle (SPV) to invest in Mainland China. Hong Kong is one of the quickest locations to incorporate a business. Although a HK company is not a legal entity in mainland China many foreign investors, especially investors from Europe and North America choose to form a Hong Kong company as a SPV to invest in China.

PARTNERSHIP ENTERPRISE
Foreign investor is a new type of business presence in China. It refers to: a) 2 or more foreign enterprises or individuals establish a Partnership Enterprise (PE) in China and b) Foreign enterprise or individuals with Chinese individual or company establish a Partnership Enterprise in China. It's a new type of business entity in China, and this might take some time for local authorities to determine how these structures fit in with other types of business entity establishment.

Sector on which Foreign companies are attacking

For the foreign enterprise or personal who plan to invest in China, numerous economic and technical development zones become one of the numerous options. The following 10 main economic and technical development zones are the most famous zones which attract the most foreign investment

1 Dalian Economic and Technical Development Zone

As the first economic and technical development zone, Dalian Economic and Technical Development Zone has always been the leader in the development zones. Until the first half year of 2009, it has accomplished the investment in fixed assets of 11.14 billion Yuan, which increased by 15.3%. The actual use of foreign capital is 550 million dollars.

2 Suzhou Industrial Park

Through over 10 years development, the major economic indicators of the park have increased by 30%. In 2008, the park has realized the GDP of 100.15 billion. The total import and export volume reached 62.5 billion U.S. dollars, of which 31.1 billion U.S. dollars of export, a new registered 3.02 billion U.S. dollars of foreign capital, and 1.8 billion U.S. dollars of foreign capital to arrive.

3 Tianjin Economic and Technical Development Zone

Tianjin development zone is the product of Chinas opening up to the outside world. Through 24 years development, Tianjin development zone has established 4| Page

one of the best development zones which have the biggest scale, the fastest developing speed and the best comprehensive benefits. In 2007, Tianjin development zone realized the industrial output of 3350.67 billion yuan.

Shanghai Minhang Development Zone

Economic

and

Technological

Till the end of 2007, Minghang development zone has introduced 171 projects. The total investment amounts to 2.95 billion yuan. With the optimization of the industrial structure, it has over 10 enterprises and core companies which have an average annual production value of 2 billion yuan.

Guangzhou Nansha Development Zone

Economic

and

Technological

Until 2008, Nansha development zone realized the total output value of 30.568 billion Yuan, with a growth of 45.48%. The industrial output value is 85.328 billion yuan. The taxation volume is 7.673 billion Yuan.

6 Chongqing Economic and Technical Development Zone

Chongqing Economic and Technical Development Zone was built with the approval of State Council in 1993. Until April, 2006, it has introduced 427 foreign-funded enterprises from 22 countries. The total investment value amounts to 3.341 billion dollars. The contracted foreign capital is 1.077 billion dollars. And the actual paid-in capital is 877 million dollars.

7 Weihai Economic and Technical Development Zone

Since the establishment of the development zone, it has introduced over 2,000 items with a total investment of 20 billion Yuan. Over 700 of the items are foreignfunded enterprises. The total investment is 2.7 billion dollars.

8 Xian Economic and Technical Development Zone

Since the opening on April, 2004, Xi'an development zone has attracted 32 items, in which, 24 are entering enterprises. In 2007, it realizes the foreign export of 249 million dollars. In 2008, it ranked No. 6 in over 60 export processing zones.

9 Qingdao Economic and Technical Development Zone

Until June, 2009, Qingdao development zone has approved 18 foreign investment items. 12 items have capital increase, in which, 7 items have an investment of over ten million dollars. It has introduced 9 items; the total investment is 5.1419 billion dollars.

10 Changchun Economic and Technical Development Zone

Since the establishment of the Changchun development zone, it has invested 10 billion dollars in the complement of the fundamental facilities. It has totally

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approved 4819 enterprises, in which, 572 are foreign enterprises. 29 enterprises are in the world top 500 companies.

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