As foreign investment in Mainland China is far more regulated than in Hong Kong, professional legal advice is essential and Weir & Associates can be a source of information.  We discuss some important issues below.

Industrial Policy

Pursuant to “provisions guiding foreign investment direction and industrial catalogue for foreign investment”, the 4 categories of industrial projects are “encouraged”, “permitted”, “restricted” and “prohibited.” Foreign investment projects that are “encouraged”, “restricted” or “prohibited” are listed in the “catalogue for the guidance of foreign investment industries”.  “Permitted” foreign investment projects are not listed.

Regional Policies

At present, there are special economic zones (Shenzhen, Zhuhai, Xianmen, Shantou and Pudong, new districts in shanghai), 14 coastal port cities (Shanghai, Tianjin, Dalian, Qinhuangdao, Yantgi, including Weihai, Qingdo, Lianyungang, Nantong, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihi), 49 state economic and technological development areas and 53 state high and new technological industrial development areas, [Note: as at July 2012].

Tax Policies

Foreign-invested enterprises, foreign enterprises and foreign citizens of China, including those from Hong Kong, Macao and Taiwan, may enjoy preferential tax treatment on corporate income tax, personal income tax, consumption and value-added tax, business tax, land tax, stamp duty, vehicle and vessel tax and urban real estate tax.

Purchase of Land Right

Foreign-capital enterprises may purchase land usage rights for a certain period. The rights are granted by the local government and relate to how the state-owned land is to be used and operated. Conditions such as land size, years of use, and general usage and functions determine fees and rent associated with the land.