China factors
A guide for investing in China
Global Chinese Services Group
May 2016
Preface
For the last decade and a half, China sustained a growth rate of ~10 percent becoming the second largest economy
pegged at $10 trillion. Today its domestic market lags on the back of pronounced problems of overcapacity in
industry and property, weak demand and defation, it faces a new reality, a new normal.
The National Bureau of Statistics (NBS) recently announced the 2015 second quarter GDP growth, which beat market
expectations registering a 7.0 percent year on year growth, with industrial output rising by 6.9 percent. Despite
challenges that have intensifed the downward pressure on the market, the wider economy has been showing signs
of recovery. This is the result of recent government efforts to realign the economy to be less dependent on debt-
fuelled infrastructure and real estate investment. Peopleˉs Bank of Chinaˉs monetary easing efforts to arrest the
deterioration of business activities and lay a solid foundation are supporting a shift to an economy driven by services.
The crux of the administrationˉs growth plans is to drive innovation-driven development, application of smart
technology, green development and to become a manufacturer of quality. Private sector and foreign investments
are crucial to achieve this market mix. Furthermore, the intention to reduce the number of industries where foreign
investment is prohibited underpins potential opportunities the new normal offers overseas companies and investors.
To encourage overseas investment, the government set up the Shanghai free trade zone (FTZ) as a pilot program.
Following its success, Tianjin, Guangdong and Fujian were also declared as FTZˉs. The intention (and part of the
programˉs purpose) is to encourage manufacturers to upgrade from low-end manufacturing onto smart technologies.
Overarching these measures is the effort to institutionalize economic diversifcation and inclusiveness (of both state-
owned and private companies) - which slowly bearing fruit.
The 2015 China inbound investment brochure delves deeper into the local market landscape, analysing key
proponents and industries that offer lucrative opportunities for foreign investment. With 17 offces and 10,000
people across Mainland China, Hong Kong and Macau, serving local and multinational companies, Deloitte is
uniquely qualifed to support your investment decisions with a full range of audit, tax, consulting and fnancial
advisory services. We hope this piece of thoughtware serves as a useful guide to make your next bold move in China.
Content
Preface
Overview
Industry overview & segmentation
Implication for setting up business in China ¨C
from tax & legal perspective
Regional snapshot
Global Chinese Services Group268
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China factors: A guide for Investing in China 1
Overview
China has gradually implemented reforms since
the late 1970s. The
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