September 2009



Ankor Wat bas relief EDITED_0.jpg

Ankor Wat bas relief EDITED_0.jpg

Setting up in China is a long road and there are no shortcuts available

I wanted to take a few moments and address a series of apparently Ankor Wat bas relief EDITED_0.jpg innocent, but actually rather serious, questions that have arisen recently with several new clients when they are contacting us about what it takes to get started here in a new Wholly Foreign Owned Enterprise ("WFOE") in the manufacturing or services sector...

1.  How long is this all going to take?

By statute, there are at least four (4) different sequential periods of thirty (30) days each the Investment Control Board ("ICB") will make you go through.  As the ICB governs all new foreign investments of any kind, none of these are optional.

If there will be either import or export licensing, or both, that will add at least another thirty (30) to forty-five (45) days.  And one can not even ask for this licesning until all matters already identified above are already issued.  It is all sequential.

NEW LEGISLATION YOU NEED TO KNOW House Funds Plan / 深圳市住房公积金制度改革方案 深府[ 2009]107号; By Ella Xu

A 17 year old law previously existing in name only in Southern China, about House Funds, will be modified and actually enforced starting in 2009. This will create another major impact to most of the companies that are already starting to follow the new nationwide Labor Law and Labor Contracting Law of PR China in 2008.

Those 2008 amendments created things like a Labor Arbitration Tribunal, seeking to protect workers rights against abusive employers, required actually writing down employment agreement (imagine that!) and other basic and objectively reasonable sets of protections. We have been a long standing supporter of those amendments, which were an unfortunate necessity based on the way some employers treated their employees.

In Shanghai, Beijing and Zhejiang Province, the House Funds Law – a component of the Chinese ‘social insurance’ framework – had been implemented (and actually followed) very well in the past years. Almost all of the local enterprises there, including both state-owned and private companies, have already been paying into the house funds program for their employees. That rate was set at 13% and was carried by the employer 100%.