Asiabizblog - Business and Law for China and Asia

There is a good deal to criticize in this comment, but much to praise.

Chinese business executives who deal with Americans think no differently. One who deals with Chinese, especially in business, would be foolish to dismiss this comment -- instead, one should make it a topic of study. We will come back to it in our discussions this fall, to discuss its implications, its truth and the false perception that it harbors.

Regardless, Americans take notice. You (we) must go the extra distance simply to catch up. The extraordinary success of Zhang's Opening Ceremony lends credence to his criticism.

August 18, 2008

Work in China Job Sites -- Podcast

Looking to work in China? Listen to a brief introduction to a China job site.

Work in China Job Site -- NewChina Career

Several years ago, I was surprised to hear from a number of friends at the midpoint of their careers who expressed the desire to work in China. A number of them were, as we say, "on the beach," but the suntan lotion had dried up. A few had significant international experience, some had none. All of them needed to work.

(A handful asked how quickly it would take them to become fluent in Mandarin. Two to three years of intensive study will bring you to the barest of minimums and most likely not even conversational ability. For those who speak Mandarin, there are more opportunities, of course, unless you wish to teach English.)

I applaud the courage to search elsewhere for work -- born of necessity -- but valorous nonetheless. Doron Vermaat, Managing Director of NewChina Career, has asked me to blogroll his site, which is a job search site for China, Now, I have never myself used this website, and I don't know Doron personally, but I've surfed it. For those readers who wish to work in China, here is a site which is, as Doron writes, "100% free for job-seekers."

Readers who've had positive experiences with other China job sites are welcome to write about them in our Comments section directly below this post. (Please don't use this as an opportunity to plug your product -- I will delete comments that do so.)

August 14, 2008

Asiabizblog Announces Podcasts to Return in Fall

Asiabizblog announces that its informative and popular podcasts will return to the Web this fall, in English and Mandarin. You'll also notice we've widened our margins and increased the text size for easier viewing.

Reach Out and Touch Someone: China's Metals Traders Touched by U.S. Agency Fine

China's international reach for precious commodities extends as far as Cuba, lately earning the Minxia Non-Ferrous Metals Company a substantial Office of Foreign Assets Control (”OFAC”) fine. (Not this far more delightful Minxia.)

How is it that a Chinese metals dealer has been ordered to pay $1.5 million to the US Treasury?

Our story begins with a fairy tale island, white beaches nestled in lapping warm waves of a clear blue sea. [Ok, so my descriptive muse has overdone it a little...] Playboys and celebrities once danced to a Cuban Rhythm. They still drive 1959 Bel-Airs there, because that's the last year American autos could be imported. The American embargo of Cuba began in the depths of ancient time and, unbelievably, continues to this day, viz. the Cuban Assets Control Regulation (31 CFR 515), etc.

The excellent ExportLawBlog takes up the story:

Minxia Non-Ferrous Metals is a subsidiary of China Antimony Chemicals Co., Ltd., which, in turn, is a subsidiary of China Minmetals Non-Ferrous Metals Co., Ltd., which is, in turn, a subsidiary of the giant Chinese metal conglomerate China Minmetals Corporation. This climb up the corporate ladder may reveal what had OFAC in a snit about Minxia’s trades — namely, the $600 million joint venture between China Minmetals Corporation and Cuba to exploit Cuba’s large nickel supplies. China is one of the largest consumers of nickel which is a key component of stainless steel, and nickel is Cuba’s largest export — plenty there to get OFAC in a tizzy. In fact, the Bush administration announced a crackdown on nickel exports in July 2006, claiming that they constitute more than half of Cuba’s foreign income.

Sadly for the Chinese, if this was the cause of the fine, the Chinese interest in the nickel joint venture was recently bought out by Venezuela in what may not have been an arms-length, consensual transaction.

Make sure you click over to the ExportLawBlog page for this item to get the links, generously provided by its editor.

August 7, 2008

The China Downturn Bandwagon

Hmmm... Now everyone is jumping on the China downturn bandwagon.

Textile exports fell 4.2 percent in June from the same month last year, a serious blow to an industry that employs millions of people. Overall export growth in June was 18.2 percent, down from May's 28 percent rate.

Note the change in overall export growth means that there has been a decrease in the rate of increase, but that exports continue to grow.

August 6, 2008

German Companies Planning to Pull Production Out Of China

Der Spiegel reports that one out of five German companies has ceased or is planning to cease production in China due to rising costs.

"The big story here is that globalization is for real -- and China is no longer what it was," says Ronald Haddock, a vice-president at consultant Booz Allen Hamilton...

Corporate fright at seemingly unstoppable upwardly moving human resources cost, the rapid turnover of highly trained workers, the insufficiency of energy supplies coupled with fast rising demand, the slight appreciation of the RMB and a revulsion by many consumers in the West at the prospect of seeing their local shops stocked entirely by Chinese -- all contribute to the "China no longer is what it was" phenomenon. Elsewhere on this blog, I have suggested as much, viz., a decrease in the increase of the rate of at which Chinese goods find their shores in the US. Even so, read this:

Chinese companies, too, are increasingly outsourcing production abroad, Eddy Henning, the head of corporate banking at Deutsche Bank in Beijing, told the newspaper. "Someone who just wants to produce T-shirts is more likely to go to Vietnam or Africa," he said.

As energy prices make container transport unprofitably expensive for heavy products, some furniture manufacturers in North and South Carolina in the United States have brought back production from China. But has the tide turned back to the countries that have lost their manufacturing? Not likely:

In only four years, from 2002 to 2006, the value of furniture production in China has nearly tripled in value, from just under $20 billion to just under $60 billion. As production has increased, China's furniture exports have experienced a similar boom. From 1997 to 2006, the value of furniture imported to the US from China has increased more than nine-fold, to hit $14.4 billion in 2006. The percentage of US furniture imports from China rose from 32% in 2001 to 50% in 2005. Due to a weaker currency and state regulations, Chinese manufacturers can produce finished products at much lower costs. In fact, the average wage of a Chinese furniture production worker is only four percent of the average wage of a worker in the U.S. This fact combined with China's modern, high-tech plants make them a huge threat to the stability of the industry in North Carolina.

One wonders whether the German companies profiled by Der Spiegel are smaller companies which should never have been in China in the first place. The Chinese export engine continues to hum. Visit the ruins of the American manufacturing industries throughout the US and one will see what it really means to pull production.

August 5, 2008

Event Reminder: Chinese Income Tax Online Seminar

While it may be true that tax collector is one of the two oldest professions, no pejorative comment affects the fact that tax collection, wherever it may occur, will put its hand in one's pocket and scrounge around for even loose change. The multinational, whose pockets are considered fertile territory for treasure hunting, feels the touch of many-fingered hands of all nationalities.

Thus, when a national tax code changes dramatically, as in the case of China's new corporate income tax, not only does the multinational itself encounter often obscure changes in reporting requirements and the amount of tax it must pay, but its effect upon the tax law of other nations in which the multinational reports taxes can be complex and ill-understood.

For example, the IRS has issued new guidances on how non-US companies controlled by US persons can achieve deferral of income tax. Specifically with regard to American businesses operating in China, how does one rationalize Chinese and American corporate tax regulations so as to minimize the total tax paid to both? What is the effect of the changes to the tax regulations upon transfer pricing? Should US subsidiaries operating in China conduct themselves in a certain way with regard to third-party subcontractors so as to ensure minimization of corporate tax, both in China and the US?

To answer these important questions, Strafford Publications has announced the following online audio seminar to be presented on Thursday, August 7, 2008 at 1:00–2:40pm Eastern:

China's New Business Income Tax
Shielding Non-China Income From the Expansive Enterprise Income Tax
Plus: The Impact of IRS Contract Manufacturing Regs for U.S. Operations in China
A Live 100-Minute CPE & CLE Teleconference with Interactive Q&A

Speakers:

Peng Tao, Of Counsel, DLA Piper, New York.

Melanie Chen, Managing Director of China Group, UHY Advisors, New York

Alan Granwell, Partner, DLA Piper, Washington, D.C.

For more information and to sign up for what promises to be a seminar of great interest to corporate management, their attorneys and accountants, click this link.

August 4, 2008

Family Ties and the Chen Liang-yu Scandal

Chen Liang-yu (陈良宇) was Shanghai Party Secretary (上海市委书记) until removed in 2006 following an alleged scandal involving Social Security. [In Chinese.] Was the Social Security scandal the fundamental reason for his removal?. His swift rise to the Politburo in 2001 as a protégé of Jiang Zemin and the Shanghai faction preceded an even swifter fall following the presidency of Hu Jin-Tao in 2003.

Whether or not Chen Wei-li (陈维力) was a fundamental participant in his father's corruption or the innocent son of a guilty man, it is clear from this discussion that the simple fact of his family connection to the accused was an important bargaining chip upon which prosecutors relied to induce "a good attitude" (良好态度) in both men in the courtroom and most likely with the prosecution's investigation. [In Chinese.] If it is true that $400 million was appropriated from the Social Security program as alleged -- and, who knows, it may have been a lot more than that -- how much has been returned? Little mention {none...) has been made of that aspect of this case. Where did all those great gobs of money really go?

For some background on the scandal itself, see this page. [In Chinese.]