Foreign direct investment in China

Chengdu Hi-tech zone (CDHT) was established in the 1980s, in the south of the city centre. CDHT zone is surrounded by the gorgeous landscape of  Chengdu, one of the oldest cities in China, and it is fast becoming the centre of finance, technology and trade in  southwest China. In the past few years, the city has become the first choice when it  came to foreign direct investment in China : by the end of May 2011, hundreds of companies have  established premises in  CDHT, of which  194  are in  fortune 500 companies, such as Foxconn  world No. 1 Ipad manufacturer  As many companies have arrived  to CDHT, the zone has become a society of technology and large companies are not the only ones to benefit from this move. It is a great opportunity for smaller sized companies to learn and take advantage of the hi-tech environment in which they will be developing.  Investment in China seems to help many businesses as the world’s economy  is suffering, whereas the Chinese one is still steady. The inward investment could be an advantage for investors, as the average wage in Chengdu is relatively low compared to other advanced cities in China.

china foreign direct investment

China Foreign Direct Investment & Foreign Direct Investment (FDI) in China

Investment Environment Overview

 

Climate & Geology

Chengdu, capital of Sichuan province, is an important city in Southwest China. Sitting at the centre of the West Sichuan Plain, it enjoys pleasant temperature and sufficient rainfall.

 

Utilities

Good quality and sufficient water, power and gas supply

 

Environment Sustainability

Chengdu was granted ‘Living Environment Award’ and ‘National Garden City’  by the state Ministry of Construction, and ‘National Environmental Protection Model City’ by the state Ministry of Environmental Protection.

 

Human Resources

42 universities in Chengdu guarantee a talent pool for investors.

 

Logistics and Communications

Highly developed telecommunication systems and logistics facilities connect Chengdu with every corner in the world.

Process outsourcing

IT Software Development & Process Outsourcing

Software sales revenue of CDHT achieved 26 billion RMB in 2008; export volume of software product and BPO reached 180 million USD (including embedded software and software testing). There are about 80,000 employees in 520 software and service companies, which include 21 CMMI certification enterprises. In addition, more than 50 enterprises are in the CMMI processing industry. The IT software development industry in CDHT covers IC design, IT outsourcing, information security, digital entertainment, applications, gathering numerous companies, such as IBM, Microsoft, Symentec, Intel, Accenture, SAP, FreeScale, Unisys,  Tencent, Ubisoft, Wanmei, Kingsoft, SNDA, 30 group, Synnex and many others. Software is featured with two industrial clusters. One is 3G cluster featured with Siemens, Motorola, Nokia, Huawei and ZTE. The other is IPTV cluster featured with Changhong, Datang and JiuZhou. With the rapid development of key companies, a highly innovative software industry is emerging in Chengdu Hi-tech Zone.

With this software industry base, Chengdu Hi-Tech Zone is welly equipped to provide a form of outsourcing that involves the contracting of the operations and responsibilities of specific business functions (or processes) to a third-party service provider, which is known as process outsourcing.

China foreign investment

China Foreign Investment

 

Chengdu commits itself to build a standardized and service oriented government to provide China foreign investment services to investors with the establishment of Chengdu Municipal Comprehensive Service Centre, Chengdu Foreign Investment Promotion Centre and Chengdu Taiwanese Business Complain Centre.

Chengdu Hi-Tech Zone is granted the same administration power as the municipal level and provides 3 phases’ services to enterprises which composed with promotion of investment & construction and enterprise service through a special parallel examination and approval process.

Chengdu Hi-tech Zone has set up two government service centres both in the south park and the west park conducting “one stop” services and “zero fees” policy, providing professional services for key projects.

Chengdu has a sound public security condition with no major criminal cases for many years. The satisfaction rate of Chengdu citizens for comprehensive security and city management is at 94%.

china foreign direct investment

China Foreign Direct Investment & Foreign Direct Investment (FDI) in China

Investment Environment Overview

http://www.chengduhitech.co.uk/Investment_Environment.asp

 

Climate & Geology

Chengdu, capital of Sichuan province, is an important city in Southwest China. Sitting at the centre of the West Sichuan Plain, it enjoys pleasant temperature and sufficient rainfall.

 

Utilities

Good quality and sufficient water, power and gas supply

 

Environment Sustainability

Chengdu was granted ‘Living Environment Award’ and ‘National Garden City’  by the state Ministry of Construction, and ‘National Environmental Protection Model City’ by the state Ministry of Environmental Protection.

 

Human Resources

42 universities in Chengdu guarantee a talent pool for investors.

 

Logistics and Communications

Highly developed telecommunication systems and logistics facilities connect Chengdu with every corner in the world.

fdi in China

Costs for FDI in China http://www.chengduhitech.co.uk/Guide/Investment_Costs.asp

Investment costs are divided into the following three sections:

• Land and Plant

• Logistics

• Labour Costs

You can find the detailed information on the following document:

 

Land and Plant
o Land
The price for industrial land is not lower than 150,000 Yuan/mu (2.7 million Yuan per
hectare)
o Plant
There are various standard plants for enterprises to rent or to purchase. The average
rental price for plants in Exporting Processing Zone (EPZ) is 18 Yuan / m2, and the
average purchase price for them is 2300 Yuan / m2. The average rental price for plants
in Moulding park is 18 Yuan / m2, and the average purchase price for them is 3200
Yuan / m2. The rental price of 50 Yuan / m2 is applied in Tian Fu software park.

foreign direct investment

China Foreign Direct Investment & Foreign Direct Investment (FDI) in China

Investment Environment Overview

http://www.chengduhitech.co.uk/Investment_Environment.asp

Climate & Geology

Chengdu, capital of Sichuan province, is an important city in Southwest China. Sitting at the centre of the West Sichuan Plain, it enjoys pleasant temperature and sufficient rainfall.

 

Utilities

Good quality and sufficient water, power and gas supply

 

Environment Sustainability

Chengdu was granted ‘Living Environment Award’ and ‘National Garden City’  by the state Ministry of Construction, and ‘National Environmental Protection Model City’ by the state Ministry of Environmental Protection.

 

Human Resources

42 universities in Chengdu guarantee a talent pool for investors.

 

Logistics and Communications

Highly developed telecommunication systems and logistics facilities connect Chengdu with every corner in the world.

foreign investment

Foreign Investment & Foreign Direct Investment (FDI) in China

Investment Environment Overview

 

 

Climate & Geology

Chengdu, capital of Sichuan province, is an important city in Southwest China. Sitting at the centre of the West Sichuan Plain, it enjoys pleasant temperature and sufficient rainfall.

 

Utilities

Good quality and sufficient water, power and gas supply

 

Environment Sustainability

Chengdu was granted ‘Living Environment Award’ and ‘National Garden City’  by the state Ministry of Construction, and ‘National Environmental Protection Model City’ by the state Ministry of Environmental Protection.

 

Human Resources

42 universities in Chengdu guarantee a talent pool for investors.

 

Logistics and Communications

Highly developed telecommunication systems and logistics facilities connect Chengdu with every corner in the world.

 

china investment

China Foreign Investment

http://www.chengduhitech.co.uk/Guide/Investment_Services.asp

 

Chengdu commits itself to build a standardized and service oriented government to provide China foreign investment services to investors with the establishment of Chengdu Municipal Comprehensive Service Centre, Chengdu Foreign Investment Promotion Centre and Chengdu Taiwanese Business Complain Centre.

Chengdu Hi-Tech Zone is granted the same administration power as the municipal level and provides 3 phases’ services to enterprises which composed with promotion of investment & construction and enterprise service through a special parallel examination and approval process.

Chengdu Hi-tech Zone has set up two government service centres both in the south park and the west park conducting “one stop” services and “zero fees” policy, providing professional services for key projects.

Chengdu has a sound public security condition with no major criminal cases for many years. The satisfaction rate of Chengdu citizens for comprehensive security and city management is at 94%.

investment in china

Investment in China – Government Policies

http://www.chengduhitech.co.uk/Guide/Government_Policies.asp

Overall Incentive Policies

Supporting developments in market share and strength of enterprise

Chengdu Hi-tech Zone will financially support enterprises in IT, pharmaceutical, precision manufacturing industries and their management teams that surpass a certain amount in sales revenue and tax contribution to local government.

Key projects invested by key enterprises will be funded through special breeding fund of Chengdu Hi-Tech Zone which covers fixed assets investment subsidy, power subsidy amoung others.

Encouraging Utilization of Capital Markets at Multiple LevelsEntrepreneurship investment orientation fund of 500 million RMB is set up to attract social capitals to invest in IT, bio-pharmaceutical and precision mechanic manufacturing sectors.

Financial support will be provided when enterprises apply for IPO on Main Board stock market, SME stock market, GEM and overseas stock markets as well as stock transfer quotation system. Securities dealers will be rewarded for helping enterprises get listed.

Supporting Enterprise Sharpening Competitive EdgeEnterprises which obtain more than one year bank loan will be granted an interest subsidy. Organisations that provide warranty for financing of small and medium-sized enterprises in Chengdu Hi-Tech Zone will be rewarded based on certain proportion of total warranty amount.

Technology renovation project of enterprises in production will be rewarded with certain amount of interest subsidy for a loan.

The legal representatives will be rewarded if their enterprises win the honour of either of the following names: world famous products, Chinese famous products, Chinese famous brand, National inspection exemption products, Sichuan or Chengdu famous brand.

Enterprises with national, provincial and city-level enterprise engineering R&D centre will be rewarded.

Encouraging and Supporting Developments of Modern Service Industry and Other New IndustriesBased on the contribution to Chengdu High-Tech Zone, a certain amount of fund are subsidized to the companies as below: National headquarter or regional headquarter of famous domestic and foreign enterprises registered in Hi-Tech Zone; professional investment organisations; service enterprises operated in Hi-Tech Zone cover retailing, catering, entertainment; legal entities set up by famous domestic and overseas financial organizations such as bank, insurance and securities companies; those engaging in attorney, accounting, investment management and other knowledge based services; intermediary, counselling, and other information services; products R&D, testing, authentication and other production services; and film & TV, game, cartoon, fashion, planning & creation and other new industries.

CDHT Incentive Policies for Promoting Software Industry (For Trial Implementation)

Office

Software companies that set up an R&D office at Chengdu Hi-Tech Zone with a certain amount of employees are entitled to an office rental subsidy. Companies which set up a self-built office are entitled to preferential land price in the software development zone.

HR Incentives and Training1) Personal Income Tax

Within the first 5 years since operation of Software Company, managerial and technical staff will be rewarded 20%-100% of their personal income tax payment.

2) Training Subsidy

Software companies and software talent training institutes are subject to training subsidy provided by Chengdu Hi-tech Zone in accordance with the amount of attendees and skills level of the courses.

3) Company set up by returnees with over 5 years overseas experience in software R&D or management and with average number of more than 10 full-time employees in Hi-Tech Zone, is subject to a subsidy of 200,000 RMB.

Tax and Financial Support1) Corporate Income Tax

Based on the prevailing corporate income taxation laws and regulations stipulated by the central government, if the new company is qualified as a high-tech software enterprise, a corporate income taxation rate of 15% shall apply. Any newly founded software enterprise after certification shall, from the year beginning to make profit, be exempted from corporate income tax in the first and second years and allowed a fifty percent reduction in the third to fifth years.

2) Value Added Tax

If the company is certified as software enterprise, for selling self-owned software products, VAT will be levied on 17% and the actual levied portion over 3% will be refunded right after its levy, using to finance R&D department or enlarge scale of reproduction.

3) Business Tax

Based on the prevailing corporate income taxation laws and regulations of foreign invested enterprise stipulated by the central government, the company will be exempted from business tax after examination by tax authority, for its business in technical transfer, technology development, the relevant consultation and other technical services.

4) The equipments software industry companies need to use internally; the technology (including software), corollary parts and spare parts imported with equipments according to the agreement, are able to be exempted for levying tax and import-linking VAT, except products on none-exempted Tax of Import Products List for Foreign Investment Projects and none-exempted Tax of Import Products List for Domestic Investment Projects.

Industry Supporting Policies1) Within first 5 years since operation of Software Company, the Zone will refund 50% or 70% of the reserved portion of the total of income taxes, VAT and business taxes back to enterprises if the reserved portion reached RMB 200, 000 and 500,000 respectively.

2) If the company applies for the CMM/CMMI2, CMM/CMMI3, CMM/CMMI4, CMM/CMMI5 certification, the project company will be subsidized by 70% for the certification fee from the government with proper approval.

3) If the company’s annual export value reaches USD100,000-500,000, the company would be rewarded not less than RMB20,000 per year; if reaches USD500,000-1,000,000, not less than RMB30,000 per year; if above USD1,000,000, not less than RMB50,000 per year.

4) Software or BPO enterprises are encouraged to obtain capital from capital market and will rewarded 300,000RMB when entering stock transfer quotation system; and 1 million RMB for IPO in domestic stock exchange; 2 million RMB for IPO in overseas stock exchange market.

Incentive Policies for Financial Back-up Service Office Centre (For Trial Implementation)

The financial back-up service office centre set up in Chengdu Hi-Tech Zone, it will enjoy the policies for promoting development of software industry in principle.

Incentive Policies for Innovative Industry and Entrepreneurship

CDHT financially supports national or provincial primary industrial projects, small and medium sized technological enterprises, returned scholars entrepreneur projects which have been granted supporting fund.

Subsidy will be provided to innovative, oriented industry project with promising market.

Enterprises that apply for national and provincial Technology and Engineering R&D Center certification are entitled to certain amount of subsidy.

Public technology platform of Chengdu National Software Industry Base: 8 million RMB per year for its development and operation.

Special fund of RMB 3 million  to support establishing professional public technology platform for industry except software industry.

Creating Favourable Environment for Innovative Industry and Entrepreneurship

Business agencies that assist enterprises to apply for National Innovation Fund are entitled to certain amount of subsidy; and reward in case of successful application.

The legal representatives of enterprises with significant technology innovation achievement and specific IP protection strategy will be rewarded.

Enterprises which obtain domestic patent, practical new patent, and inventive patent of foreign developed country will be subsidized.

Incentive Policies on Financing

A financing and investment platform is established by Chengdu Hi-Tech Zone and National Development Bank, Chengdu Commercial Bank and Import and Export Bank of China for supporting enterprises to obtain a bank loan easily.

CDHT has established an entrepreneurship orientation fund of 5 million RMB in initial stage and the total fund is 1.5 billion. As a part of which, a biopharmaceutical entrepreneur VC of 150 million RMB has been set up jointly by CDHT and VIVO. More specialized investment fund will be launched with cooperation with eminentdomestic and overseas investment companies.

In addition, Project introduction reward, Incentives for high level talents and Employment of relocated farmers are also available.