Setting up Business in China - Advertising Business. 16 September 2015

Transcription

1 Setting up Business in China - Advertising Business 16 September

2 Today s Agenda A. Snapshots of China B. An overview of the China media market C. How to set up a business in China 2

3 (A) SNAPSHOTS OF CHINA 3

4 (A) SNAPSHOTS OF CHINA 4

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6 China GDP 6

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8 Who are we? 8

9 23 Provinces, 5 Autonomous Regions, 4 Municipalities, 2 Special Administrative Regions 23 Provinces ( 省 ): Anhui ( 安 徽 省 ), Fujian ( 福 建 省 ), Gansu ( 甘 肃 省 ) Guangdong ( 广 东 省 ), Guizhou ( 贵 州 省 ), Hainan ( 海 南 省 ), Hebei ( 河 北 省 ), Heilongjiang ( 黑 龙 江 省 ), Henan ( 河 南 省 ), Hubei ( 湖 北 省 ), Hunan ( 湖 南 省 ), Jiangsu ( 江 苏 省 ), Jiangxi ( 江 西 省 ), Jilin ( 吉 林 省 ), Liaoning ( 辽 宁 省 ), Qinghai ( 青 海 省 ), Shaanxi ( 陕 西 省 ), Shandong ( 山 东 省 ), Shanxi ( 山 西 省 ), Sichuan ( 四 川 省 ), Yunnan ( 云 南 省 ), Zhejiang ( 浙 江 省 ), Taiwan 5 Autonomous regions ( 自 治 区 ): Guangxi ( 广 西 壮 族 自 治 区 ), Inner Mongolia / Nei Mongol ( 内 蒙 古 自 治 区 ), Ningxia ( 宁 夏 回 族 自 治 区 ), Xinjiang ( 新 疆 维 吾 尔 自 治 区 ), Tibet / Xizang ( 西 藏 自 治 区 ) 4 Municipalities ( 直 辖 市 ) : Beijing ( 北 京 市 ),Chongqing ( 重 庆 市 ), Shanghai ( 上 海 市 ), Tianjin ( 天 津 市 ) 2 Special administrative regions ( 特 别 行 政 区 ): Hong Kong / Xianggang ( 香 港 特 别 行 政 区 ), Macau / Aomen ( 澳 门 特 别 行 9

10 Let some people get rich first. - Deng Xiaoping As part of its economic reforms and policy of opening to the world, between 1980 and 1984 China established special economic zones (SEZs) in Shantou, Shenzhen, and Zhuhai in Guangdong Province and Xiamen in Fujian Province and designated the entire island province of Hainan a special economic zone. In 1984, China opened 14 other coastal cities to overseas investment (listed north to south): Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihai. Then, beginning in 1985, the central government expanded the coastal area by establishing the following open economic zones (listed north to south): Liaodong Peninsula, Hebei Province (which surrounds Beijing and Tianjin), Shandong Peninsula, Yangtze River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in southern Fujian Province, Pearl River Delta, and Guangxi. In 1990, the Chinese government decided to open the Pudong New Zone in Shanghai to overseas investment, as well as more cities in the Yang Zi River Valley. Since 1992, the State Council has opened a number of border cities and all the capital cities of inland provinces and autonomous regions. In addition, 15 free-trade zones, 32 state-level economic and technological development zones, and 53 new and high-tech industrial development zones have been established in large and medium-sized cities. As a result, a multilevel diversified pattern of opening and integrating coastal areas with river, border, and inland areas has been formed in China. 10

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13 Foreign investors frequently use offshore investment vehicles, many of which are registered in Hong Kong. 13

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15 China is significant and unique 15

16 (B) AN OVERVIEW ON THE CHINA MEDIA MARKET 16

17 China 2 nd largest advertising market in the world with $37 spending Global Ad Spending Growth to Double This Year, Media Buying, 9 July 2014 ( Ad-Spending-Growth-Double-This- Year/ #sthash.K1IotrIN.dpuf) 17

18 Top 10 Ad Markets 18

19 Competitions extremely competitive In media, it has more than 3,000 TV stations (644 in UK; 63m population) << ~5 times more TV stations; but 20 times more population In agencies, since it has over 178,000 local agencies (~4,200 in UK) << 42 times more Multinational firms with just a 30-year history in the market. 19

20 skills development Social marketing: China could be different because of the massive division between rich and poor << Gini index: 42.6 (UK: 38.1) Brands can contribute to change: Every day, there is a new flow of innovation, and new manufacturing, tax, pricing, and distribution options. Those companies such as Haier, Huawei, Lenovo, TCL become global firms. Brands would continue to use research to determine the best brand fits and develop collaborative and engaging campaigns to maintain its target customers# # 20

21 10.2% retail volume mkt share of white goods, world s largest world s largest telecom equip maker; serves 45 of the world s largest telecom operators computer H/W electronics; world s largest PC vendor by unit sales; electrical appliances: TVs (world s 3 rd largest), Videocam; mobile phones; 2014 T/O US$32b US$46b US$39b US $16b 2014 NPAT US$2.4b US$4.5b US$0.8b 21

22 Changing role: to a collaborator and curator The increase in skills development in different areas will also reflect the changing role of the marketer and advertiser from a broadcaster of messages to a collaborator and curator. Skills like making the most out of social media, out of mobile, mastering new areas, and constant up-skilling could soon become the rule, not the exception. 22

23 Digital advertising spending China's total digital advertising spending (comprises desktop and mobile internet campaigns) was estimated to rise 16 % to US$18 billion this year from last Digital is also expected to account for 37.2 % of the country's total media advertising spending share this year, surpassing campaigns on television for the first time. (1 of 12 countries in the according to data from emarketer 23

24 Chinese marketers are increasingly focused on epr, aiming to reach China s 500m net users. Clients are using more than one agency with digital agencies making a strong pitch for epr work. According to a face-to-face survey including over 120 senior marketers and 212 PR agency relationships in China, R3 finds the following challenges being faced by PR agencies in Mainland China 24

25 Challenges a) 44 % of all epr spends in China are currently going through digital agencies and not PR; b) the average marketer in China works with 1.8 PR agencies and relationships are now as short as 2.4 years (down from 2.8 years); c) huge rise in project-based relationships to more than 1/3 of the cases, with only 23% commit to a flat annual retainer fee; d) increase in the use of procurement to negotiate compensation to more than 65% of the cases. 25

26 Dominant players Local PR agency Blue Focus and World leader Ogilvy PR are perceived to be the two dominant players. Some other big names are: Grey Group China, Leagas Delaney, JWT, Lowe China, DDB China Group, Leo Burenett, Interone, BBH, PHD. But there are another 70 PR and social agencies mentioned by marketers in this study # # 26

27 Mobile Advertising Driven by its fast-growing online industry and expanding smartphone user population, China has become the world's 2 nd largest mobile internet advertising market towards the end of Spending on mobile advertising campaigns in China in 2014 has jumped about 276 % YoY to US$7.11 billion * * SCMP-16 December 2014: China set for No 2 spot in mobile advertising spending 27

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29 Net Mobile Internet Ad Revenue Share Worldwide 29

30 Future of advertising in China: DIGITAL Even though the masses are using mobile devices, per capita income in Mainland China remains low. China s mobile internet ad spending was only 10.9% of Digital Ad spending for 2014 There are still many consumers using feature phones and less advanced smartphones. Beijing is supporting 4G networks rollout, allowing more consumers nationwide to enjoy mobile broadband services and adopt advanced smartphones. The future for advertising in China could become only digital the growth of Youku and Tudou at the expense of TV viewership would only continue. 30

31 Net Digital Ad Revenue share worldwide 31

32 Going hyper-local By best estimates, there will be 1 trillion products connected to the Internet by 2015 ( Internet of things ). it could mean that for advertising industry in China, it should be able to do passive crowd-sourcing in near future, making consumers contributors to brands innovations and improvements. Beyond the top 100 cities in China, the next 300 are small today, but by 2020 will command 30% of the Chinese advertising should become McKinsey s recent study of China s tier cities 32

33 Source: China Statistical Yearbook 2013 and Guangdong Statistical Yearbook

34 Eg. Guangdong Province 1 st GDP 1 st Population 1 st Outward Foreign Direct Investment 34

35 The Greater Pearl River Delta Region 35

36 Key Facts about PRD 36

37 Holistic approach For brands, the rise of social and ecommerce presents a unique challenge, one that some argue requires a much more holistic approach to influencing the customer journey than in other markets. 37

38 (C) HOW TO SET UP A BUSINESS IN CHINA 38

39 What do you want to do in China? Manufacturing Services Retail Sourcing In China for China? In China for Overseas? 39

40 Market entry strategy Implementation Entry options Business operation models Market assessment 40

41 Foreign Investment in Industries Industry Catalogue for Guiding Foreign Investment edition Entrance Model Encouraged Permitted Setting up Procedures Prohibited Restricted Taxation Treatment 41

42 Entry Option (1): NRE Non-Resident Enterprise Representative Office Joint Venture One-off projects Licensing to distributors and/or franchisees No production or business operations Subject to withholding tax on income derived from China Wholly Foreign Owned Enterprise 42

43 Entry Option (2): RO It s not a legal entity. Profit-making activities are not allowed. Non-Resident Enterprise Representative Office Joint Venture Wholly Foreign Owned Enterprise Market research and networking with Chinese companies. A must for some regulated industries (eg. Finance industry) before undertaking other forms of investment in China. Maximum no. of foreign employees is 4. The Principal of the RO is liable for all of the RO s obligations. Taxation based on expenses deemed as a PE. RO s license has to be renewed every year. The head office has to be at least 2 years old - a criterion to set up a representative office in China The RO can t hire by itself. Even though it can run interviews, it needs to use a local human resources agency, such as FESCO Adecco, to handle the recruitment process. 43

44 Entry Option (2): RO (cont d) Non-Resident Enterprise Representative Office Principal Co. RO Joint Venture Wholly Foreign Owned Enterprise Chief Representativ e Legal Representative General Representative(1-3 foreign) 44

45 Entry Option (3): JV Restricted Industries/Gov. relatioships/supply chain access/land, equipment or assets Non-Resident Enterprise Representative Office Joint Venture Wholly Foreign Owned Enterprise Can generate income and engage in profit making activities on a joint basis. The JV is liable for all of its own obligations as a standalone entity. Control with joint control over the business, and own assets and property jointly - Protecting intellectual property is crucial Foreign investors must invest at least 25% into the JV for it to be treated as a foreign-invested enterprise. Any JV partner has the right to sell their ownership interest to a 3 rd party WITHOUT the partner s consent << ensure it is dealt with directly in the JV agreement (art. 11) 45

46 Entry Option (4): WFOE Non-Resident Enterprise Representative Office Joint Venture Wholly Foreign Owned Enterprise For permitted and encouraged industries. 100% equity and control Business scope must have a defined business scope The WFOE itself is liable for all of its own obligations as a stand-alone entity The process to establish a WFOE can take 4-6 months (will take shorter time SOON!) 46

47 WFOE or JV? WFOE Pros Cons Pros Cons Fast decision-making process Capital contribution from 1 party JV Capital from 2 or more parties More effort and time for decision-making and operations Protected Intellectual Properties (IP) Limited knowledge of the China market Share of the costs and the risks IP piracy risk 100% ownership and control Need to build up relationships with local businesses and governments Use local relationships of Chinese JV partner Dependency No internal cultural differences Internal cultural differences 47

48 WFOE or JV? A Joint Venture or a WFOE? Do you have a say? Yes No Is JV required by law? Arranged Marriage No Yes Is it true that without a Chinese partner, you wouldn t be able to get access to: Close government cooperation, or National, multi-regional or regional supply of customers Ready to use land, equipment and labors Form a JV No Yes WFOE Form a JV 48

49 Setting up your WFOE in China Holding Co. Choosing a Legal Structure Who should be the holding of the WFOE? Considerations from: A tax standpoint Company formation process Future change of the legal structure Fund flow WFOE 49

50 Setting up your WFOE in China (cont d) What do you need to prepare? Holding Co. WFOE 1. Legal name and Structure 2. Holding Company Registration Documents 3. Authenticated Proof of Shareholder Existence 4. Principal Activities of the Holding Company 5. Proof of Financial Status of the Holding Company 6. Basic Name of WFOE in Chinese and English 7. Description of Scope of Business 8. Start-up Capital 9. Management Structure 10. Office Tenancy Agreement and Property Lease Certificate 11. Audited financial statements of the holding Co. 50

51 Setting up your WFOE in China Holding Co. Management Structure BOD ~ 3-30 members or only 1 executive director (few shareholders/small companies) WFOE Legal Rep. (LR) ~ The Chairman of the BOD Supervisor Board of Directors (BOD) 1 or 3 30 members General Manager (GM) Legal Representative (LR) Chairman of BOD LR and GM can be the same person General Manager (GM) ~ Responsible for the BOD. GM and LR can be the same person (Chinese or Foreign, Resident or Non-Resident in China) Supervisor ~ Monitoring acts of directors and GM. Must not be the BOD members, GM or any high level managers of the WFOE (Chinese or Foreign, Resident or Non-Resident in China) 51

52 Setting up your WFOE in China (cont d) Holding Co. Popular Structure Options 3 BOD Members and 1 Supervisor WFOE Sole Director and 1 Supervisor Board of Directors (BOD) 1 or 3 30 members Legal Representative (LR) Chairman of BOD Supervisor General Manager (GM) LR and GM can be the same person 52

53 Setting up YOUR WFOE in China Example: Manufacturing WFOE 1 st Month 2 nd Month 3 rd Month 4 th Month 5 th Month Planning and Preparation Pre-Establishment Procedure Post- 53

54 Setting up YOUR WFOE in China Example: Trading /Service WFOE 1 st Month 2 nd Month 3 rd Month 4 th Month 5 th Month Planning and Preparation Pre-Establishment Procedure Post- 54

55 After 1 October tguangzhou.gov.c n/web/eng/jsp/co ntent/content_de tail.jsp?catencode = & contentid=

56 After 1 October tguangzhou.gov.c n/web/eng/jsp/c ontent/content_d etail.jsp?catenco de= &contentId=

57 Public authorities Ministry of Commerce (MOFCOM) - overseeing domestic and foreign trade, regulating and promoting foreign investment and utilization - supporting Chinese companies that expand overseas - examines and approves foreign investment activities in China and develops trade policies - administers import/export licenses; sets quota systems; and formulates foreign investment catalogues and catalogues for imported/exported products and technologies. State Administration of Taxation (SAT) - the highest tax authority in China - authorized by the State Council to oversee China s tax syste - draft national tax regulations (sometimes in conjunction with Ministry of Finance) - execute the collection and administration of taxes attributed to the central gov t. 57

58 Public authorities (cont d) State Administration of Foreign Exchange (SAFE) - manages foreign exchange activities in China - setting relevant regulations - administering China s foreign exchange reserves - SAFE approval or record-filing is required for a range of inbound and outbound forex payments. State Administration of Industry and Commerce (SAIC) - responsible for brand protection - enforcing anti-monopoly competition affairs - for general administrative affairs including company registration and issuance of business names and licenses 58

59 Taxation Turnover Tax Value Added Tax (0%,3%,6%,11%,13%,17%) Consumption Tax ( variable, based on sale price/sale volume) Business Tax 3%-20% Income Tax Enterprise Income Tax 25% Withholding tax of 10% for non-residents on interest, royalties, rental and other passive income Individual Income Tax 3%-45% 59

60 Taxation (Cont ) Small-scale tax payers Turnover up to RMB500,000 for cos engaged primarily in the manufacturer of goods or provision of taxable services Turnover up to RMB800,000 for cos engaged in the wholesale or retail of goods Turnover up to RMB 5 million for cos engaged in VAT-taxable services under VAT reform (incl. Transportation, modern service (eg. Advertising) General tax payers A company must obtain VAT general taxpayer status in order to issue VAT invoice (fapiao) (in effect a certificate for deduction of input VAT), a key requirement for conducting business with many Chinese suppliers and clients. 60

61 Taxation (Cont ) Main tax for advertising business Tax base Rate VAT Turnover 3% for small scale tax payer 6% for general tax payer * General tax payer can have deduction of input VAT Surplus (construction tax, etc) Cultural construction fee Enterprise income tax VAT payable Totally 12% Turnover 3% *advertising release expenses deductable Net profit 25% 61

62 Using Hong Kong (tax, economic benefits) Headquarter HKLTD Flexibility to change the legal structure (with Less challenges from China tax authorities re Beneficial Ownership) Low income tax rate (16.5%), No capital gain tax, Lower withholding tax rate 5% on dividends derived from the WFOE (some conditions must be met); 0% withholding tax rate for dividend repatriation from HK to HQ Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) # WFOE Easier set-up procedure 62

63 # CEPA Trade in Goods 0 tariff on imported goods originated in Hong Kong Need to fulfill CEPA rule of Origin Trade in Services Preferential treatments Need to be a HK Service Supplier Mutual Recognition of Professional Qualification Construction and related Engineering Services, Securities and Future Services, Insurance Services, Patent Agents Services, Professional Accountants Services, Estate Agents Trade in Investment Facilitation Increased cooperation in 10 areas 63

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67 WHO BENEFITS FROM CEPA? Hong Kong-based service providers (in 18 sectors): Company must be incorporated in Hong Kong Doing business in Hong Kong for past 3-5 years Liable for Hong Kong profits tax Employing 50% of staff in Hong Kong Any nationality 67

68 CEPA supp X: Cultural and Creative Audio-visual products Current scope of access Production and distribution of video and sound recording products in the form of joint ventures is allowed industries Access for HKSS under CEPA HKSS are allowed to form wholly owned enterprises on the mainland to engage in video and sound recording production and distribution services (including movie products). Internet culture business Foreign-invested enterprises are HKSS are allowed to set up contractual JV to run internet culture not allowed to engage in internet business units and internet online service business premises on the culture business. mainland, with the mainland party holding dominant interests. Printing of packaging materials The minimum registered capital required for setting up printing enterprises to provide services in respect of packaging materials is Rmb10 million. HKSS can set up wholly owned enterprises to provide printing and binding services for packaging materials.the minimum registered capital is Rmb1.5 million, the same as that applied to mainland enterprises. Printing of publications Minority-owned JVs are allowed for foreign companies in the printing of publications and other printed matters. HKSS can set up JV enterprises to engage in the printing of publications and other printed matters. The proportion of HKSS shareholding should not exceed 49% HKSS are allowed to set up equity JV enterprises in Qianhai and Hengqin on a pilot basis in the printing of publications and other printed matters. The proportion of HKSS shareholding should not exceed 70%. 68

69 Using Hong Kong (understanding China and West) Headquarter HK s physical proximity and >30 years of experience of working the Mainland market a rich pool of professional talent and financial expertise HKLTD >> HK accounts for over 70% of total investment in Guangdong Province (that in turn accounts for 38% of Mainland China s total exports and 31% of its GDP) and 40% of Mainland China overall. WFOE 69

70 Using Hong Kong (Banking and Asset management Hub) Headquarter HKLTD A major asset management, capital formation, banking and insurance hub supported by a business-friendly environment, and a trusted legal system. >> Ranked first in the World Economic Forum s annual Financial Development Report (Oct 2012) as bolstered by strong scores in non-banking financial services such as IPO activity and insurance. >> The financial industry employs 230,000 people in 2013, or 5.9% of the city s entire workforce WFOE >> One of the largest banking centers in the world with 70 of the world s top 100 banks being established a presence here. 70

71 Using Hong Kong (RMB offshore centre) Headquarter the most comprehensive and competitive platform for offshore RMB business >> RMB trade settlement handled by banks in HK exceeded RMB 6.3 trillion (2014), increasing 60% comparing to the previous year HKLTD >> has the largest pool of offshore RMB liquidity: RMB deposits and outstanding RMB CoD > RMB 952 billion (2014) WFOE 71

72 RMB trade settlement and Daily turnover (Real Time Gross Settlement) in HK 72

73 Offshore RMB deposit in HK Vs other places 73

74 Using Hong Kong Set up of HK Co HK Co Starts to function HK Co after a year Business starts to grow Set up/ Acquire operation in China Hong Kong Ltd Co Hong Kong Ltd Co Hong Kong Ltd Co Hong Kong Ltd Co Invest WFOE / RO Or JV / Acquisition OR Buy a HK Co 74

75 Choosing the Investment Vehicle What are your short-term and long-term goals? Own set up or partnerships? what to get from partners Seeking organic growth? How to enter the market? goals and resources Have the right relationships and advisors? Are you committed to allocating resources to localize and compete against local players? What are the initial resource needs? How about cash repatriation issues? Is the business model flexible enough to accounting for changing regulatory policies, crises and opportunities? Are your tax and legal strategies aligned with your business strategy? 75

76 The End Thank You. Contact us now! Contact Person: Rosanna Choi Tel:

77 Thinking of doing business in China? a brief tax summary Mike Hayes 16 September 2015

78 Enterprise income tax Financial & tax year = calendar year The general EIT rate in 2015 = 25% Thin-profit enterprises (small or mediumsized enterprises) - EIT = 20%

79 Enterprise income tax A thin-profit enterprise is either: - an industrial enterprise which has: annual taxable income not exceeding RMB0.3m 100 or fewer employees, and total asset value not exceeding RMB30m or - an enterprise of any other kind which has: annual taxable income not exceeding RMB0.3m 80 or fewer employees, and total asset value not exceeding RMB10m

80 Enterprise income tax An EIT rate of 15% is applicable to high and new technology enterprises encouraged and supported by the Chinese government

81 Withholding taxes WHT With UK treaty relief Dividends 10% 0% Paid to a government organisation 5% Interest 10% 0% Royalties 10% 6% Foreign company owns directly or indirectly at least 25% of the paying company s capital Loan or credit guaranteed or insured by a government organisation or central bank

82 Withholding taxes WHT With UK treaty relief With HK treaty relief Dividends 10% 5% 5% Interest 10% 10% 7% Royalties 10% 6% 7%

83 VAT Various rates from 0% to 17% Small scale tax payers generally 3% General tax payers generally 17%, but certain reduced rates e.g. 13% for grain & other food items Small scale? - Production of goods & services, sales < RMB500k - Wholesaler/retailer, sales < RMB800k - Services under VAT reform, sales < RMB5m (includes advertising)

84 Business tax Units or individuals who provide taxable services, transfer tangible or intangible assets or sell real estate inside China, or engage in any other type of service inside China that is not classified as VAT-related are subject to business tax VAT and business tax are mutually exclusive

85 Business tax Industry or activity Tax rate (%) Construction industry 3 Culture & sports industry 3 Entertainment industry 5 20 Financial & insurance industry 5 Real estate sales 5 Service industry 0/5 Transfer of intangible assets 5

86 Consumption tax Units or individuals who produce, process, or import taxable consumables in China, as well as organisations and individuals who are engaged in the retail business of diamonds, gold, silver and diamond ornaments

87 Personal income tax 3% to 45% Depends on type of income

88 Not considered Transfer pricing Local incentives Expat remuneration packages Local taxes Exchange controls

89 And finally.. any questions?

90 Contact details Office: Direct line: Mobile: Web:

91 Disclaimer This presentation covers topics only in general terms and are intended to give a wide audience, an outline understanding of issues in tax, and therefore cannot be relied on to cover specific situations; applications of the principles set out will depend on the particular circumstances involved. Furthermore, responses given in the seminar to questions are based on only an outline understanding of the facts and circumstances of the cases and therefore do not form an appropriate substitute for considered specific advice tailored to your circumstances. We recommend that you obtain professional advice before acting or refraining from acting on any of its contents. We would be pleased to advice you on the application of the principles outlined in this presentation to your specific circumstances, but in the absence of such specific advice cannot be responsible or liable.

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93 Jim James UK Trade & Investment International Trade Team London Region Specialist in print & digital publishing and the advertising, design, branding agency sector Multi sector brief specifically for China Lived & worked in China for three years

94 The UK Government s ambitions Double UK exports to 1 trillion a year by ,000 more UK companies exporting by 2020 One in four UK companies to export (currently one in five) Maintain the UK s position as the most favoured location in Europe for inward investment Become the number one location in Europe for investment from emerging markets To further improve the UK s international business environment To achieve increased bi-lateral trade with China

95 UKTI s mission 1. Support UK companies to grow their business through international trade 2. Connect UK business to the world s top commercial opportunities 3. Create new international partnerships 4. Attract high quality inward investment to the UK 5. Establish whole-of-government relationships with major wealth creators to increase exports and investment 6. Impart knowledge about global markets

96 UKTI Overview 2,400 staff 1,300 overseas In 107 countries through Embassies, High Commissions and Consulates 176 offices globally 400 Advisers and support staff in nine English regions Offices in six Chinese cities CBBC partnership through OBNI 96

97 London International Trade Team UKTI service delivery for London region companies 45 International Trade Advisers 12 country/region specialists private sector and market experience close working partnership with Banks, Chambers of Commerce, Professional Institutes and Trade Associations UKTI and ERDF funding streams

98 International Trade Advisers Experienced international business people. Give help and advice which is relevant and appropriate to business One-to-one impartial advice & strategic support Market selection, information, research & route to market Overseas contacts & introductions Assistance in identifying partners and customers Links to UKTI and OBNI staff in China, UK and around the world Missions and conferences Financial support (SMEs) Tailor made programmes & services 98

99 Key Sectors - London Automotive Biotechnology Construction/Infrastructure Creative & Media Education & Training Engineering Environment Fashion Financial & Legal Food & Drink Furniture Giftware & Jewellery Healthcare & E-Health ICT Manufacturing Pharmaceuticals Power & Energy Security Sports & Leisure And more...

100 UKTI trade services portfolio Tradeshow Access Programme (TAP) Inward trade missions Business opportunities High Value Opportunities (HVOs) Aid-funded business First Time Exporters Open to Export Venture Capital Unit Professional Training CASS Export Growth Service Passport to Export Export Marketing Research Scheme (EMRS) Overseas Market Introduction Service (OMIS) Export Communications Review (ECR) and funding Events and seminars Outward trade missions International financial advice Capital Accelerator Programme

101 Why use UKTI trade services? Unrivalled global network of specialist advisers in UK and overseas. Free or subsidised rates to access support. UKTI helped over 30,000 businesses last year, generating over 30bn in additional sales, creating 36,000 new jobs and securing a further 70,000. UKTI supported 1 billion of major project wins in the last full year UKTI supported over 1 billion of major project wins Helped secure 8bn of defence and security exports. Most customers report improved business performance (54%); significant business benefits from working with UKTI (71%); and increased R&D investment. We help companies do more business.

102 Doing Business in China ten things to think about 1. Internet access in China is different 2. Connections (guanxi) are all important, do favours, build relationships 3. IP protect your rights from the start 4. Business is as likely to be done in dining rooms as in meeting rooms 5. Hierarchy and seniority are far more important (HR/management) 6. Contracts are seen as more flexible, legal system is different 7. Most deals are done based on long term goals rather than a quick win 8. Negotiations can be tough, make sure you get paid! 9. Lack of reliable data and market entry restrictions 10. When you think you have covered everything, something else will come up

103 Intellectual property in China IPR protection gradually improving, but Chinese law supersedes international IPR law Develop an IP Strategy prior to entering market Register your IP early Control your IP staff positions, roles and responsibilities, business systems and procedures. Assume some copying and consider consequences Seek professional advice

104 Rules for success in China Determine if your strategy is appropriate for China Do your homework - before you leave UK! Be prepared do market research, use in-country expertise Invest time to build good relationships senior personnel & visit regularly Laws get good legal advice! Contracts check and check again; don t be pressurised Cultivate contacts Develop an understanding of the culture Understand your partner & clients Patience! Patience! Patience! - because it is worth it in the end

105 Further information Contact E: T linkedin.com/ukti (UKTI London) twitter.com/ukti_londonse youtube.com/uktiweb flickr.com/ukti blog.ukti.gov.uk