Investment Strategies and Execution in China

Core Messages

• Political and economical reforms, rapid industrialisation, growing stock market capitalisation and the opening up of the Chinese market have contributed in making China an attractive option for investors.
• China has adopted reforms and an open-up policy towards FDIs to further increase its attractiveness and is now one of the world’s top two destinations for FDI with a total of approx. 560 billion USD at the end of 2004.
• To gain market access in China, a foreign investor normally chooses to invest into an Equity Joint Venture (EJV) and Cooperative Joint Venture (CJV) or a Wholly Foreign-Owned Enterprises (WFOE), whereby currently WFOE is the most popular investment vehicle and accounted for 70% of all FDIs in 2004.
• Intellectual property (IP) theft is seen as one of the challenges or even a deterrent when investing in China, but Chinese authorities have enhanced and tightened IP protection.
• Tax concessions are granted as an incentive to invest in the established special economic zones and development zones.
• The import and export regulations have been renewed and are now easier to implement, and import tariffs have been lowered.
• In 2004, import and export values of foreign-funded companies accounted for about 60% of the country's total trade volume.
• Although China's easing restrictions on foreign investment and improved transparency of investment policies have reduced the need for foreign investors to find a local partner, the support of local experts is still recommended, as locals are better able to function within the local regulatory and business environment.