Is your company considering the implications of 吃苦耐劳 and 富二代 when implementing growth strategies?

Is your company considering buying an existing brand or a manufacturing plant? Or has your company chosen to launch a new product and enhance a customer service? Both, in Mexico and in China, management is permanently challenged with these questions to drive the company towards increasing sales and profit growth.

Some companies choose to follow an acquisitions strategy; others, to build new customer relationships and enhance existing ones; some even go for a mixture of both. The reasons behind this decision depend on industry, company size, the ability to manage the integration of two cultures, product portfolio, market players, market maturity, among other factors. Either way, there is a common factor that companies must always fully understand: whom your clients are, what is that they want, when do they need it, and where are they located.

Over the last years, China has become a global priority either to sell or to buy. Two solid arguments are: the promise of more than one billion potential customers and being the largest manufacturing center in the world. After all, China's breakneck economic growth has pulled hundreds of millions of people out of poverty; in other words, the Asian country has become the largest or among the largest markets for several industries: luxury goods, cars, mobiles, stocks, energy consumer, pharmaceutical products, etc.

Like in many other parts of the world, the benefits of this growth have been unevenly distributed among Chinese nationals, provinces, regions and even within districts and ethnic groups in a city. China´s vastness and complexity requires a comprehensive understanding on consumer-clients and market forces.

Chīkŭnàiláo (吃苦耐劳) emphasizes that a person should bear hardships and work hard, and is widely used on difficult times. Those who were born during the 30´s, 40´s and 50´s have lived and worked through rough times to build the foundations of the modern China. Opposite to this experience,
Fùèrdài (富二代) has become a popular term to children of entrepreneurs who became wealthy under Deng Xiaoping's economic reforms. These nuveau riche only learned about the hardships of the Great Leap Forward and the Cultural Revolution in the books

To the new wealthy generation born in the late´s 80s, a Dānwèi (单位) might represent a cosmopolitan art gallery in Beijing or Shanghai to hang out with peers or perhaps a good chance to grab a cappuccino at an outdoor restaurant. For their grandparents or parents, Dānwèi brings a wave of nostalgia of a place of employment that offered security and safety under Mao's rule.

While there is an endless debate about if China will escape from contradictions of a market economy (reducing poverty and inequality), companies across China are adjusting their growth strategy to the influence on consumption expenditure of factors such as: of Chīkŭnàiláo and Fùèrdài. At Deloitte Chinese Services Group, we understand the difficulty there is in sizing your target market in China and would, we will be glad to bring our local expertise to help you decide where and how to grow.

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China M&A Round-up 08-20-2010
Find attached the latest Deloitte China M&A weekly report. These are among the transactions announced between August 13, 2010 – August 20, 2010.

• Sun Wah Capital Limited, a diversified conglomerate based in Hong Kong, agrees to acquire additional shares in Canada-based financial service group, Kingsway International Holdings Limited (HK: 00188) for US$7.85 million.
• Sinopec Group and CNOOC talk to Brazilian oil and gas start-up OGX to buy some of the latter's oil assets.
• Huaneng Group is in advanced talks to buy a stake in US power utility InterGen for about $1.2 billion.
• Zhongjin Gold raises US$600 million to acquire assets from parent China National Gold Group Corp.
  

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China M&A Round-up 08-13-2010
These are among the transactions announced between
August 06, 2010 – August 13, 2010.

• Li & Fung is set to acquire its sister logistics firm for US$ 656.7 million.
• Apple started off the talks with Handseeing Information Technology Co. about its first acquisition in China for US$150 million.
• Sohu.com sell 16% stake in Sogou to Alibaba Group.
  

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Global Economic Outlook: a Deloitte Research publication / 3rd Quarter 2010
Global Slowdown or false alarm?
The global economy continues to grow but uncertainty has gripped observers about the sustainability of growth in the world´s three biggest markets: the United States, Europe, and China. In the United States, growth has been disappointing and the job market appears conspired to alarm markets. Finally, China´s tightening or monetary policy and efforts to cool an overheated property market have raised fears that growth will slow.

In this issue of the quarterly Global Economic Outlook, our economists peruse the economic environment and place these events in perspective.

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Deloitte Technology Fast 50 China 2010
The beginning of the Deloitte Technology Fast 500 program was the Technology Fast 50 that started in 1995 in San Jose. This program quickly expanded to numerous cities and countries. The EMEA Technology Fast 500 program was launched in 2001 and focused on promoting fast-growing technology companies across Europe. The program is now considered as benchmark for fast-growing technology companies across the globe.

More information: http://www.deloitte.com/

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Real Estate Investments in Asia: Fine-Tuning Your Tax Strategies
September, 14. 12:00 noon – 1:00 PM HKT (GMT +8)
Host: Oliver Farnworth
Presenters: Hemal Mehta, Nicholas Walters, and Vicky Wang
Real estate is a key asset class for local, regional, and global investors, but unique tax rules and structuring issues create challenges in each jurisdiction.
Which factors can investors consider to optimise their tax position on rental income and capital gains on disposal? We will discuss:

• The status of key real estate markets around the region, notably China, India, and Japan.
• Basic real estate structures commonly found in these jurisdictions, including onshore and offshore investment structures.
• Recent developments to consider when planning real estate investments in the region.
• Emerging trends and issues, including expected developments in the area of tax, regulations, and market developments.

Hear updates on key Asian markets and learn about practical business and tax issues associated with real estate investments in Asia.

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Asia Pacific Dbriefs

China Cross-Border Investment Quarterly Roundup, Plus a Special Report on the Chemical Sector
September 16, 2010
11:00 AM Eastern Daylight Time
What foreign direct investment activities have taken place in China this past quarter, and what are recent changes in the overall investment environment? As a special focus, what are latest trends in China's booming chemical industry, set to become the world's second largest after the U.S.?

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Archived Webcasts
China Spotlight 中国焦点

Permanent Establishment Risk: A Look at China's Changing Environment
August 24, 2010
Host: Leonard Khaw
Presenters: Julie Hao and Vicky Wang
Permanent establishment (PE) risk is a complex international tax issue worldwide. In China, a significant shift has taken place in tax authorities' focus on PE issues.
What factors should foreign companies consider to identify, manage, and mitigate PE risks in China? We will discuss:

• Relevant domestic law and international treaties that govern PEs and typical situations which create PEs.
• Typical profit attribution of a China PE, an update on seconded-in employees, and situations in which having a PE might produce a lower tax burden in China.
• The use of a representative office.
• Best practices in managing PE risks.

Gain a deeper understanding of PE risks in China and explore ways to address it.

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常设机构税务风险: 探视中国不断转变的环境
2010年8月24日
主持人: 孙菊茹
主讲人: 王鲲及郝进军

常设机构税务风险在世界各地都是一个复杂的国际税务问题。
中国税务机关近年来特别重点关注有关常设机构的问题。
外国企业应考虑哪些因素来确认、管理并减少在中国的常设机构税务风险？本网络讲座将讨论：

• 与常设机构相关的国内法律法规和国际协定，及产生常设机构的典型情况；
• 中国常设机构归属利润的通常作法，外派来华员工相关税务问题的更新，
  及通过常设机构获得较低税负的可能性；
• 代表处的使用；
• 管理常设机构税务风险的最佳实践。

深入了解在中国日益增加的常设机构税务风险，并助您找出应对方法。

播放此网络讲座