China (Shanghai) Pilot Free Trade Zone - CBBCShanghai)-Pilot-Free-Trade-Zone.pdf · 2 3 The China...

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China (Shanghai) Pilot Free Trade Zone- November 2014

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1. EXECUTIVE SUMMARY 2

2. BACKGROUND & KEY POLICY HIGHLIGHTS 6

3. POLICY REVIEW FOR MAJOR SECTORS 10

3.1 Investment in Retail & Wholesale 11

3.2 Trading Platforms & Services 12

3.3 Professional Services 17

3.4 Transportation & Logistics 20

3.5 Financial Services 22

3.6 Medical Institutions & Insurance 28

3.7 Telecoms 30

3.8 Creative Industries 33

3.9 Education 35

4. CROSS-SECTOR COMPARISON TABLES 36

4.1 Cross-sector Comparisons - Investments 36

4.2 Cross-sector Comparisons - Trading 37

Contents

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The China (Shanghai) Pilot Free Trade Zone (“FTZ”) announced by the Chinese government in 2013 has been hailed by some as the most exciting economic development for some time in the country. A variety of industries are pinning hopes of legal and regulatory reform on the project and consequently many companies have already begun to commit resources.

CBBC wants to ensure that UK companies take advantage of the changing landscape, and we have prepared this report to mark the first anniversary of the FTZ, and to highlight what we think the FTZ means for UK businesses both today, and in the future. It is worth noting that the FTZ is still evolving and remains very much a work-in-progress; therefore this report is anticipated to be one of a series of such updates.

CBBC and TheCityUK and its members, working with the relevant HM Government departments, have issued a series of papers on the reform process. This report complements those papers by focusing on practical commercial implications, and is based on CBBC’s own research supplemented by extensive consultation with government and corporate representatives. In preparing this report we also conducted interviews with CBBC member companies to provide further perspectives on what the FTZ will mean for UK businesses.

At this point, we see the FTZ as principally a logistics and commodities driven government reform, which is expected to evolve to encompass the whole range of financial and professional services, and beyond. There are two distinct groups of opportunities in our view:

• First, the FTZ will impact a range of new investments into China by companies which currently do not have a presence in the country and are planning their entry.

• Secondly, it will impact companies who have existing operations elsewhere in the country, acting as a driver and incentive for business restructuring and relocation.

We feel that the FTZ has the potential to bring wholesale changes to how several British industries operate in China, and this report will outline our views of likely prospects.

Understanding the Benefits

The regulations for the FTZ have not yet been comprehensively published, meaning that external observers are left to infer the direction of liberalisation. However based on CBBC’s ongoing dialogue with government, regulators and industry players, we see distinct layers of impact going forward.

First, the changes to customs regulations which are already underway, combined with long-anticipated changes to rules of foreign ownership and joint ventures, will shape the outlook for key sectors such as logistics, shipping and commodities houses.

1. EXECUTIVE SUMMARYTimeframe Affected industries

Near-term

• Transport and logistics (e.g. shipping & services)• Retail & wholesale (e.g. e-commerce, bonded warehousing & logistics and trading)• Professional services (especially human resources and consulting services)• Telecoms specific subsectors (e.g. app stores, VPN services and call centres)

In parallel to this, and in part pending the success of the FTZ, laws will be finalised aimed at liberalising aspects of finance and service provision. This will likely be led by high-profile issues such as capital account liberalisation affecting the currency businesses of banks and asset managers. Insurance and healthcare will also likely be amongst those sectors which will see improvement in the landscape.

Medium-term

• Other financial services (e.g. commercial banking, securities such as equities and ETFs, private wealth management, institutional asset management and insurance) • Healthcare• Telecoms more broadly

Lastly, some way down the line there is potential for several sectors of great importance to the UK to benefit, including core financial services.

Long-term / no change

• Other financial services (e.g. private equity / venture capital, securities (bonds) and retail banking)• Construction• Manufacturing

However it should be noted that the longer term prospects are much less certain, since they depend on legislation which has not yet been considered.

Negative List

The FTZ adopts a “Negative List” to specify which sectors are restricted or prohibited inside the zone, enabling us to extrapolate the sectors which will be permitted. The development of policies in the FTZ is constant, and we already observed for instance an updated and shortened Negative List in 2014. The 2014 List contains 139 restricted and prohibited areas, 51 fewer than the 2013 version. The FTZ Management Committee announced that the negative list will likely be revised (i.e. shortened) on an annual basis.

CBBC will be continually working with the HM Government departments such as UKTI to facilitate communications between UK companies and the FTZ regarding their interests in policy formulation. It is worth noting that all Chinese central government ministries and financial regulators also have Shanghai branches, and that lobbying needs to happen at the two levels, as it can sometimes be unclear where the decision-making power resides.

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Practical Opportunities for British Companies

At this stage, the future of the FTZ may appear somewhat theoretical. In certain sectors which are legally opened to foreign investment in the FTZ, there are restrictions which remain in place nationally making it hard to see if or how FTZ based operations can access and benefit from the wider Chinese market.

However, for companies in a number of industries the opportunity is already very real, and by June 2014 1,245 foreign companies had registered in the FTZ. For British companies, we see a number of key prospects, including but not limited to:

Sector Indicative opportunity

E-commerce and retailInventory can be warehoused onshore duty-free before sale, increasing efficiency and reducing the costs of distribution

Ship managementSome restrictions on foreign ownership removed, meaning UK companies can service the enormous port sector of Shanghai

Professional servicesQuantity of (mandatory) business registration and start-up in the coming years will be high, creating large numbers of new customers for legal, accounting and consulting services

Healthcare providersNew facilities such as hospitals will be allowed in the FTZ, without ownership restrictions

FMCGsAgents no longer required to import many consumer goods, easing distribution and improving price competiveness, particularly for perishables such as fruit and frozen seafood

Value-added telecomsData services providers such as app stores, VPN providers and so on will be allowed unrestricted onshore infrastructure meaning that servers and other facilities can be brought onshore

BankingBanks can look forward to a range of currency-related opportunities, including the ability to engage in cross-border RMB pooling both for themselves as well as their customers

More industry sector examples are detailed in Section 3 of this report. Additionally, many companies in subsectors which provide support services to the businesses referred to in this report will have the chance to benefit from their clients’ new operations in the FTZ.

1. EXECUTIVE SUMMARY

CBBC Recommendations

The benefits of the FTZ will not be automatically presented to new market entrants, instead companies need to be proactive about getting themselves involved. We would recommend a number of steps that can be taken to optimise our members’ businesses, as well as those of other UK companies.

• Get prepared – companies who are not already considering the FTZ, but who are in industries which might benefit, should already be assessing the opportunity and preparing themselves.

• Keep up – since most of the reform is driven by governmental sources, members need to ensure ongoing monitoring of the policy landscape.

• Use advisors – the FTZ will not be simple, regardless of future direction, and companies should consider use of relevant lawyers, accountants and consultants.

• Give feedback – CBBC, along with our partners, will continue our efforts to help shape the environment for British companies, and constant feedback is critical.

CBBC looks forward to helping more UK companies to better understand the FTZ and get themselves ready to make the best use of the opportunities for their future business development in China. CBBC is happy to provide more advice specific to your industry sector or subsector, and indeed we work with several hundred UK companies each year.

CBBC recommends UK companies start to assess the impact of the FTZ on their business and plan their strategies accordingly. It is important that UK companies have a long-term, systematic and step-by-step approach.

UK companies operating in the trading and service sectors are encouraged to pay especially close attention to announcements and updates regarding FTZ policies and to actively take part in the various events organised by CBBC, UKTI and the Chinese government relating to your sector.

Successful practices within the FTZ will be gradually rolled out to other parts of China, as strongly emphasised by the Chinese central government. CBBC therefore notes that FTZ policies can be referenced as a means to analyse and predict the long-term policy direction of the Chinese government more generally.

CBBC will keep sharing updates on the FTZ through our member newsletter, website, other publications, as well as seminars and events throughout the year.

We are well-placed to provide help to all UK companies on aspects of maximising the value of the FTZ, including all the recommendations listed above. The FTZ will continue to be a priority for the organisation.

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2. BACKGROUND & KEY POLICY HIGHLIGHTS

Background

Located in the Pudong New Area of Shanghai, the FTZ is China’s first free trade zone. After being approved by the State Council in August 2013, the FTZ was officially launched on 29th September 2013.

Replacing the traditional “low-cost land policy” of traditional industrial parks, the FTZ differs through not being designed to give preferential treatment to companies operating inside the zone. The FTZ’s focus is instead on implementing pilot policies for exploring new systems of governance alongside an opportunity to modernise existing administrative mechanisms. The FTZ will provide a blueprint for further reform throughout China.

The FTZ currently covers a total area of 29km2 and it comprises four zones supervised by China Customs:

• Waigaoqiao Free Trade Zone

• Waigaoqiao Bonded Logistics Park

• Yangshan Free Trade Port Area

• Pudong Airport Free Trade Zone

The Waigaoqiao Free Trade Zone is about 25km from Shanghai’s CBD. From Waigaoqiao Free Trade Zone it takes about 45 minutes to drive to Pudong Airport, whereas Yangshan Free Trade Port Area is about 90 minutes away.

Note: The site of the FTZ at Waigaoqiao was previously referred to as a “BaoShuiQu” in Mandarin, meaning a bonded zone. Confusingly, however, this “BaoShuiQu” was previously sometimes translated into English as a “Free Trade Zone”. The China (Shanghai) Pilot FTZ is new and unique.

According to statistics issued by the FTZ Management Committee, there were a total of 18,828 companies registered within its perimeters as of June 2014, amongst which 10,445 were registered after the establishment of the FTZ. There are also 31 registered banks, including Citi Bank, HSBC, Standard Chartered, Bank of China, Hang Seng Bank and Deutsche Bank.

The diagram below illustrates the classification of industry of newly registered foreign companies within the FTZ.

By June 2014 there were 1,245 foreign companies registered in the FTZ, nearly 9 times more compared to a year before.

Amongst the new registered foreign companies, the top 10 countries/regions where the investors originate are:

Rank Country/Region

1 Hong Kong

2 USA

3 Taiwan

4 Singapore

5 Japan

6 Canada

7 South Korea

8 Australia

9 British Virgin Islands

10 Germany

It is notable that the UK does not feature in this list, but CBBC feels that many UK companies will have registered via the British Virgin Islands or via their Hong Kong based affiliates.

9.6%

33.8%56.6%

Classification by Industry

TradeServices

Others (mostly manufacturing)

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Key Highlights of New Policies

The stated direction for new policies in the FTZ can generally be grouped into four categories:

i. Expanding the finance sector

• Free convertibility of RMB for capital accounts will be reviewed

• Liberalisation of interest rates

• Permits for qualified foreign banks and private capital groups to set up wholly-owned subsidiaries or joint venture banks

• Centralised management for foreign exchange funds; permission for foreign enterprises to participate in future commodity trading; support for host equity trading institutions to establish an integrated financial service platform

• Encouraging the development of shipping finance and the freight index derivatives

• Gradually granting licences for new cross-border financial products

ii. Simplifying administration processes and expanding market access

The “Negative List” has clarified the administration and business scope of foreign invested enterprises. The Negative List is reviewed on an annual basis and each iteration is expected to feature an expanded number of sectors allowed to have operations within the FTZ. The intentions are:

• Simplified procedures for incorporating foreign invested enterprises

• Simplified approval for outbound investments

• Permission for overseas portfolio companies and master funds establishments to invest overseas

iii. Upgrading of customs supervision framework

• Overseas shipments into the FTZ without customs clearance, until goods are sold to outside the FTZ

• Classified supervision, and establishment of demonstration and trading platforms for bonded goods

• Optimising efficiency of customs inspection, immigration and quarantine processes, together with improved port management and more efficient risk control and supervision measures

iv. Creation of a competitive regulatory and tax environment A key feature is to support innovative business models rather than providing reduced tax rates or universal incentives to all sectors, which are common place in special development zones in China.

• Under the “Framework Plan”, financial leasing companies in the FTZ are granted an exports value-added tax (VAT) refund – a policy only currently applicable to the domestic companies in the Tianjin Binhai New Area

• Investors injecting capital in the form of non-monetary assets into their affiliates in the FTZ may amortise their asset appreciation premium over a period of five years for corporate income tax (CIT) and individual income tax (IIT) purposes

• Professionals in high demand may enjoy preferential IIT treatment with respect to gains derived from share-based payments – a policy currently only available in the special zone of Zhongguancun in Beijing

2. BACKGROUND & KEY POLICY HIGHLIGHTS

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3. POLICY REVIEW FOR MAJOR SECTORS

Investment options in the sectors covered in this section have seen numerous restrictions which are commonplace in mainland China lifted exclusively for the FTZ. However, in many sectors there remains a varying degree of ambiguity regarding the opportunities the FTZ will create for foreign investors. In some other sectors, detailed implementation guidelines have already been released by the FTZ Management Committee, allowing CBBC to draw more practical conclusions on the impact of the FTZ on UK companies in the near-term.

Highlighted New Opportunities

• Online retailers can warehouse inventory customs-free in FTZ bonded warehouses, reducing costs and mitigating risk

• Overseas suppliers can utilise online trading platforms such as Kua Jing Tong to sell their commodities directly to Chinese consumers without/before setting up commercial presence in China

• The DIG (direct imported goods) Market is an alternative option for overseas suppliers wanting to circumvent agency fees

• Overseas alcoholic beverage producers and retailers can take advantage of new exhibition and trading centres to explore the Chinese market

3.1 Investment in Retail & Wholesale

i. Mail order & online shopping

Foreign invested companies will be allowed to operate mail order and online retail services with direct mail delivery from overseas, without the need for warehousing in China, while restrictions will remain outside the FTZ. The changes appear to allow large mail order retailers from abroad to set up businesses independently in China.

Inside FTZ Outside FTZ

Mail Order and Online Shopping

PermittedRestricted,and requires approval from MOFCOM

ii. Food retail, wholesale & distribution

Inside the FTZ, foreign invested companies are allowed to retail, wholesale and distribute products such as grain, vegetable oil and sugar, without a restriction on the number of outlets.


Wholesale and Distribution of Vegetable Oil, Sugar and Fertiliser;

Retail and Wholesale of Grain and Cotton

WFOE permitted, without any restriction on number of outlets

JV required (Chinese partner controlled) in the following scenarios:(1) Number of stores exceed 30(2) Chain stores selling products from multiple suppliers or multiple brands

iii. Manufacturing & sales of gaming consoles

Foreign investors are permitted to register a company inside of the FTZ to operate manufacturing and sales of gaming consoles to the Chinese market, (with approval of gaming content).


Manufacturing and Sales of Entertainment and

Gaming Consoles

Permitted, approval of gaming content required

Foreign investment not permitted

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Direct Mail Model: Amazon

On 20th August 2014, Amazon signed a Memorandum of Understanding with the FTZ authorities, announcing a move to provide a cross border e-commerce platform, allowing it greater access to Chinese customers. Amazon says that Chinese customers will be able to buy the products at the same price as those on Amazon’s overseas websites, with only the addition of logistics and customs duties for personal articles.

From June to August 2014, Amazon imported around 1,000 shipments in order to trial the “direct mail model”. Amazon also plans to set up its own logistics warehouse inside the FTZ.

Amazon says that once up and running, an “FTZ model” could be also be established, allowing Amazon to compete in with third party e-commerce platforms such as Tmall.

ii. Waigaoqiao Directly Imported Goods Market (DIG Market)

The DIG Market in the FTZ has already attracted enormous interest from Shanghai residents keen to buy imported goods. Its frozen seafood, meat and fresh fruit, directly imported from overseas, are very popular because of their perceived high quality and relatively low prices compared with imported produce elsewhere. Goods displayed in the DIG Market are already duty paid on display.

The DIG Market claims to have about 5,000 stock keeping units (SKUs) and it is expected to increase to 10,000 SKUs in the near future. About 70% of products are food and beverages, and all products are from overseas.

The DIG Market adopts a membership system, but without a membership fee. Products from overseas suppliers can be stocked in the DIG Market by signing a service contract with the operator.

Several other DIG style markets will open soon outside the FTZ in other parts of China. In the future, DIG markets are expected to be rolled out to nationwide hubs and act as delivery distribution sites for online business and small-scale wholesale operations. By cutting out distributors between overseas suppliers and end customers, overseas suppliers will enjoy enhanced price competitively or profit margins in a new sales channel.

In August 2014, the FTZ Management Committee submitted a pilot plan for Ministry of Commerce’s approval regarding importation of vehicles under the DIG system. If approved, this is a potential development which would provide addition opportunities for UK businesses in the automotive sector.

3.2 Trading Platforms & Services

i. Trade facilitating platforms

Currently there are two models for mail order services in China:

• The first is a “direct mail model”. With this model, all products ordered online will be delivered directly from overseas suppliers. There is typically a 7 to 10 day lead time.

• The second is the “FTZ model”. With this model, products are stored in the FTZ with a bonded status and delivered to customers from the FTZ after they order. Lead times are much shorter than with the direct mail model as a result. The FTZ model is expected to be increasingly prevalent with time.

One trade facilitating platform which is already proving popular is “Kua Jing Tong”. It is a good online business platform for UK food and beverage companies to test their products in the market at reduced risk, before establishing a more independent commercial presence in China.

Direct Mail Model: Kua Jing Tong

Kua Jing Tong is an authorised cross-border online business platform. Some key features of Kua Jing Tong are as below:

• Price and customs duty are clearly indicated to customers on Kua Jing Tong’s website, and is displayed separately for customers’ reference.

• Products are usually sold at a lower price, as most imported products bought into the FTZ are subject to a blended tariff rate called “tariff for personal articles” rather than normal import tariffs imposed on goods imported into non-FTZ parts of China under regular trade tariffs (e.g. MFN rates) and luxury excise duty (where applicable) - there are four grades of blended tariffs – 10%, 20%, 30% and 50%; most food is subject to the 10% rate while most alcoholic spirits are subject to the 50% rate.

• Kua Jing Tong also ensures goods’ speedy delivery and ease of payment via its online service, as all products are bonded in the FTZ and pass customs clearance upon order.

More than 20 suppliers and online business operators have already registered with Kua Jing Tong. These include Hyundai department store (the second largest online business operator in Korea), New Tao, Janesce and Sunland.

According to the Management Committee of the FTZ, by the end of 2014 30 online operators are expected to cooperate with Kua Jing Tong, big players such as including Walmart.

Kua Jing Tong recently added the FTZ model to their current business processes. Benefits include improved efficiency of after-sales services, because all products can be returned or changed domestically without shipping back to the port of origin.


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iii. Shenlan Bonded Exhibition Centre

Another highlight of the FTZ is the “Shenlan” bonded exhibition centre adjacent to the zone, which has been awarded special approval from Shanghai government. Imported products at Shenlan are considered to have a bonded status for exhibition and sales purposes. The link between “bonded storage” inside of the FTZ and “physical stores” in Shenlan next to the FTZ provides flexibility of storage, exhibition and sales opportunities for suppliers.

China Customs conduct pre-pricing review and electronic supervision, and the China Inspection & Quarantine Bureau (CIQ) conduct pre-inspection on the imported products. This can prevent importers having their declared pricing challenged by customs later, which can cause delays and fines.

At the time products are sold, payment will automatically be split into two parts, the first payment for the products goes directly into the retailer’s account; and the second payment for the products’ customs duty goes to a China Customs bank account. If imported products cannot achieve sales targets after exhibition in Shenlan, unsold products can be returned into the FTZ within three months for re-export or stored in the zone until appropriate sales channels can be found.

According to the FTZ Management Committee, more similar bonded exhibition and trade areas similar to Shenlan are expected to be established in the future.

Bonded exhibition ensures the flexible distribution of products without duty payments and can offer a reduction in cost for importers. British SMEs, who have yet to enter the Chinese market, can benefit from the opportunity these platforms present to test local demand for imported products.

iv. Waigaoqiao International Exhibition & Trading Center of Wine & Beverage (“IWC”)

IWC is currently the biggest exchange platform for imported wine in China. The IWC allows business to exhibit and promote imported beverages and allows a facility to explore local reception to new products. Consignment services and distributor search services can be provided as well as Customs/CIQ services.

The high cost of entering the Chinese market due to the need for regional specific marketing, promotion and advertising has dissuaded some SMEs from setting up in China. The IWC provides an opportunity to display products and develop a regional network at a reduced cost.

IWC provides regular promotions and events, such as product launches, wine tasting events and presentations on import procedures. Some special exhibition areas have been formed for countries such as France, Portugal and Chile.

Other imported beverages found at the IWC include Japanese sake and Mexican tequila.

Other products such as cosmetics, machine tools/engineering machinery, automobiles, pharmaceuticals/medical devices have separate professional platforms for trade and exhibition in the FTZ.

For more information, please refer to official website: http://www.ftztrading.com/


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Interview: Armstrong Teasdale

CBBC’s researchers went to visit Steve Yu, Partner and Head of UK-China Trade Practice at CBBC member law firm Armstrong Teasdale LLP, to find out their impressions of the FTZ.

1. Overall comments: The FTZ is a landmark scheme which will involve incremental policy liberalisation, and it will be a success if the Chinese government let it be. However, while the FTZ is envisaged as a gateway for a new round of FDI, and it may be later, so far only 12% of investment has been FDI, most of which has come from Hong Kong and Taiwan according to recently published statistics. Armstrong Teasdale’s general advice is that if your company needs to carry out its primary business outside of the FTZ or if your major business partners are not based in the FTZ, then the location of the FTZ, mostly in Waigaoqiao, is perhaps not ideal and you may have to also set up a branch company outside of FTZ to operate your business.

The FTZ is currently best news to two types of firms (2 & 3 below):

2. Companies with operations restricted outside the FTZ but less so inside: Such as hospitals, speed railway and subway construction, air transport ground services, basic telecom and domestic VPN services, lease financing, travel agencies and games console manufacturing (but many are limited to JVs instead of being wholly foreign-owned).

3. Pure trading companies: These companies can take advantage of the one-stop filing system and streamlined custom clearance. In addition, if they have forex requirements they can borrow RMB from Hong Kong at a lower rate to fund their operations (although this practice may not be encouraged as a strategic consideration by the FTZ authorities).

4. Law firms: From the regulations it looks as if foreign and Chinese law firms are encouraged to enter into an association on a contractual basis, but it can cause a new issue regarding how to deal with professional liability insurance. Recruitment can be another issue as the FTZ is so far from downtown.

5. Looking to the future: The national overarching foreign investment catalogue will probably not be drastically revised, and future FTZ regulations will not be able to circumvent it. The FTZ is going to be around and evolving for a long time, so we would simply advise proactive monitoring and cautious optimism for most companies at this stage. By doing so, you would make yourselves able to move quickly when new opportunities arise as a result of policy changes in the future. However, if current existing policies afford your business operations clear advantages, then UK companies could look in detail at setting up businesses in the FTZ right away.

3.3 Professional Services


• New opportunities to set up joint ventures with controlling share (up to 70%) in human resources agencies

• Joint ventures to service outbound tourism allowed for the first time

i. HR services

The permitted JV shareholding of foreign investors has been lifted from 49% as it is outside the FTZ, to permit a controlling stake up to 70%; and the requirement for registered capital has been reduced from USD 300,000 to USD 125,000.

It is estimated by the Ministry of Commerce that the human resource services sector, such as online recruitment, professional outsourcing, and HR management consulting services will be worth billions of RMB in 5 to 10 years, making this an exciting development for foreign HR service providers.


Human Resource Service Providers

• Investors from HK/Macau are able to set up wholly-owned HR agencies; no stated minimum registered capital

• Non-HK/Macau foreign investors are allowed to set up JVs with up to 70% owned by the foreign investors; minimum registered capital of USD 125,000

• Foreign partners require at least 3 years’ experience in HR agency services

• Only joint ventures are allowed; but investors from HK/Macau are allowed to hold maximum of 70% equity; minimum registered capital is USD 125,000

• Non-HK/Macau foreign investors are allowed to set up a JVs with up to 49% owned by the foreign investors; minimum registered capital of USD 300,000

• Both Chinese and foreign partners require at least 3 years’ experience in HR agency services

Note that Joint Ventures (JVs) in this report refer to both Equity JVs and Cooperative JVs. Unless stated otherwise, it is implied that a Chinese party is required to own the controlling stake in a JV. And lastly, Joint Ventures are interpreted throughout as a venture between one foreign party and one Chinese party.


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ii. Travel services

The FTZ allows foreign investment in outbound tourism with the exception of travel to Taiwan. This contrasts to foreign investment outside the FTZ which is restricted to inbound tourism activities.


Outbound Tourism Business

JV permitted,except trips to Taiwan

Foreign investment not permitted

iii. Legal services

Chinese law firms and foreign counterparts are encouraged to explore the FTZ’s mechanisms that allow closer business cooperation, such as foreign law firms working with Chinese counterparts to sign agreements and holding joint consultations. However, it is also highlighted in the 2014 “Negative List” that foreign companies wishing to provide legal services can only operate by setting up representative offices within the FTZ.


Cooperation Between Chinese and Foreign Law

Firms

Cooperative mechanisms to be explored

Cannot provide legal services related to Chinese legal affairs; Cannot employ Chinese practising lawyers;Cannot conduct joint operations with Chinese law firms

Interview: Deloitte Legal Network – Shanghai Qin Li Law Firm

CBBC’s researchers went to visit Clare Lu, Partner of Shanghai Qin Li Law Firm, to find out their insights on the FTZ.

• Overall comments: The Framework Plan for the FTZ should be interpreted as the final vision for the FTZ and not a guide as to what the policies will be in the short term. It’s hard to say if the FTZ will be a favourable development for each British investor, because different investors have different business models and purposes. Many enterprises have set up companies in the FTZ for different reasons. Some of them may know clearly how to benefit from the new policies, but some of them are still exploring. If the government continues to encourage exploration and reform, Deloitte suggests interested companies carry out detailed feasibility studies first and talk to regulators before deciding on whether the FTZ is right for your business.

• Global trading companies: CBBC asked Deloitte about the distinction between opening a branch or a new legal entity in the FTZ. It is permitted to open an FTZ branch of an existing trading company (which already has an entity outside the FTZ), but it may not be eligible for the FTZ’s preferential policies in practice. For example, it is harder for a trading company’s branch to acquire a customs code, the 10 digit code companies register with China Customs, in order to utilise the newly liberalised trading policies.

• RMB convertibility and offshore banking: Currently the rules regarding RMB convertibility under capital accounts in the FTZ remain very similar to outside of it. Offshore banking seems not to be a priority for the FTZ regulators at this stage, as two-way capital investments are still not being explored in the Framework Plan.

• RMB two-way cross-border cash pooling: It is a positive new development that companies no longer need approval/filing from the PBoC, and this is already being utilised by some of Deloitte’s clients. Utilising other relaxations in the financial sector, Deloitte are helping some MNCs to set up/restructure themselves including using “China Holding Company” model headquarters around which internal functions such as treasury management can be re-organised in order to become more efficient. Such China Holding Companies can also be used as effective investment vehicles to operate investment funds more easily.


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3.4 Transportation & Logistics


• New and immediate opportunities for “public international ship agencies” and air freight transportation sales agent businesses

• Danish conglomerate Maersk Line has already set up a subsidiary within the FTZ to take advantage of the opportunity to establish a public international ship agency WFOE

It should be noted that the many legal barriers to operating in transport and logistics are theoretically relaxed in the FTZ. However, it remains difficult to see if and how foreign invested companies will be permitted to operate even as joint venture partners, or how they could operate a business purely within the confines of the FTZ. Over time as case studies emerge, we will obtain greater clarity about how these new regulations will work in practice.

i. Rail transportation

While cargo transportation has legally opened up to wholly foreign–owned investment, passenger transport companies remain restricted to JVs, with Chinese partners as controlling shareholders.


Rail Cargo Transportation

WFOE permitted JV only

Rail Passenger Transportation

JV only JV only

ii. Road transportation

Investment in the operations of passenger coach/bus terminal stations are allowed in the FTZ, although limited to joint ventures with foreign ownership not exceeding 49%.


Passenger Coach/bus Stations

JV permittedForeign investment not permitted

3. POLICY REVIEW FOR MAJOR SECTORSiii. Waterways and ocean freight

Foreign parties will be able to own a controlling share in “public international ship agencies” for the first time via the FTZ, but not other types of ship agencies. However, some ambiguity regarding definitions and interpretation remain at this stage.

There are also new opportunities to open wholly foreign-owned enterprises in subsectors such as cargo loading and also marine transportation.


Public International Ship Agencies

JV only,foreign ownership cannot exceed 51%

JV only,foreign ownership must be less than 50%

Other Ship Agencies JV only,foreign ownership must be less than 50%

JV only,foreign ownership must be less than 50%

Cargo loading and unloading


Marine transportation container stations and

depot businessesWFOE permitted JV only

International marine transportation

WFOE permitted, (vessel ownership should primarily be registered in the name of the foreign company)

JV only

While investment in international ocean shipping operations has been liberalised in certain cases, investment in domestic waterway operations remains restricted to joint ventures, with Chinese partners as controlling shareholders.

iv. Air freight transportation

Air freight operations have opened up to wholly-foreign owned investments, but other areas such as general airline operators remain highly restricted.


Air Transportation Sales Agent Businesses


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Subsectors with Slight Policy Revisions

Slight policy revisions have been noted in the following subsectors, however significant limitations remain:

• Air transportation operators (including passenger transportation)

• General aircraft operators for agriculture, forestry and fishing

• General airline operators

• Air transport ground services

• Aviation oil projects

• Civil aviation ticket reservation services

• Construction and operation of civil airports

3.5 Financial Services


• Cross-border RMB pooling is an already functioning reform, meaning that banks can both pool RMB for the purposes of their own capital requirements as well as win new business from corporates seeking to do the same for themselves

• Qualified accountancy firms will have opportunities to set up branches as qualified partnerships and limited liability partnerships inside the FTZ for the first time. They will also not be subject to the restriction of having no more than one branch in a single city, as is the case outside the FTZ

Financial reform and liberalisation is one of the most salient features of the FTZ. In December 2013, the People’s Bank of China announced a financial guideline “Opinions” for the FTZ, followed by some detailed suggested rules and regulations for its implementation. These include:

• Companies and individuals working in the FTZ should be able to open Free Trade Accounts, which would treated similarly to bank accounts outside China;

• Cross-border RMB borrowing should be liberalised to allow financial institutions or enterprises to borrow RMB from overseas, provided the funds are used for projects within the FTZ and overseas

• Two-way cross-border RMB pooling, centralised collection and payment, to allow MNCs in the FTZ to concentrate their liquidity and provide two-way payment services for cross-border RMB current account items between their domestic and overseas affiliates

• Cross-border RMB current account concentrated payments/receipts, to reduce the number of deals and cross-border payments, and assist enterprises to decrease foreign exchange risk

• RMB settlement for cross-border e-commerce via authorised institutions registered in Shanghai or branches registered in the FTZ

• Interest rate liberalisation – market-based interest rates for foreign currency deposits with a ceiling of USD 3 million. Interest rates for deposits exceeding USD 3 million would be subject to negotiation between the financial institutions and their customers

By the end of June 2014, a large number of foreign and domestic financial institutions had already set up their commercial presence in the FTZ. Data from the FTZ Management Committee shows that there were already 1,859 Asset Management Companies; 436 Financial Leasing Companies and Special Purpose Vehicles; 113 Equity Investment Companies; and 70 Licenced Financial Institutions.

By the end of June 2014 there were 31 domestic or foreign banks operating in the FTZ, including foreign institutions HSBC, Standard Chartered, Citi Bank, DBS, ANZ and Deutsche Bank.

This section contains a case study from CBBC member firm HSBC. For additional financial innovation case studies, please refer to the FTZ website: www.china-shftz.gov.cn/

i. Accounting services

Outside the FTZ there are a number of restrictions on accountancy firms, including firms being prohibited from opening up branches in the city where their headquarters are located, and from opening more than one branch in a single city.

For the FTZ however, the Ministry of Finance announced that the following types of accounting firms will be allowed to establish branch offices in the FTZ and use “Shanghai PFTZ” in their branch office names.

• Qualified Partnerships will be allowed for companies with “stable operations”

• Limited Liability Partnerships will be allowed for companies with more than one year experience, and stable operations


Accounting Firms Allows qualified partnerships and limited liability partnerships to set up branch offices

Key restrictions


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ii. Wholly foreign-owned banks

In the FTZ, foreign financial institutions are permitted to establish wholly foreign-owned banks, or joint ventures with qualified private capital.


BanksWFOEs and JVs permitted;incorporation time shortened and simplified

WFOEs and JVs permitted;

• Require at least two years as a representative office in China before setting up a branch for commercial banking,

• Other strict criteria and lengthy approval processes

iii. Restricted licence banks

Restricted licence banks (banks working primarily in wholesale banking) are to be allowed in the FTZ on a trial basis. Detailed implementation rules and regulations are currently awaiting release, after which we will know more about how to substantiate this opportunity.


Restricted Licence Banks

Allowed on a trial basisForeign investment not permitted

iv. Offshore businesses

Qualified Chinese banks in the FTZ are allowed to open a Free Trade Account for financing, investment and other cross-border transactions separated from onshore transactions.


Offshore Business Free Trade Accounts

Permitted for all qualified Chinese banks

Only four approved banks: Shanghai Pudong Development Bank, Bank of Communications, China Merchants Bank and Ping An Bank

v. Financial leasing companies

Financial leasing companies are allowed to provide a wider range of services and better utilise offshore funds to establish SPVs for carrying out single-ship and single-aircraft leasing businesses.


Business Operations

Financial leasing companies are permitted to engage in commercial factoring business, if the project is related to their financial leasing business

Financial leasing companies are not permitted to engage in commercial factoring business

Minimum Registered Capital Requirements

• Removed for companies set up by financial leasing companies within the FTZ for the purpose of undertaking a single project (e.g. leasing an individual ship or aircraft);

• USD 10 million for both the foreign and domestic funded enterprise otherwise

• USD 10 million for a foreign invested enterprise;

• RMB 170 million for a domestically funded enterprise

Import VAT for Leased Equipment

An import VAT rate of 5% granted to aeroplanes of 25 tons minimum load-free weight that are purchased from outside China and leased to domestic airlines (normal import VAT rate is 17%)

No favourable discount on import VAT


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Case Study: HSBC Bank (China) Company Limited

HSBC Shanghai’s FTZ Sub-branch was officially opened in January 2014, as one of the first foreign banks to receive approval. It will focus initially on servicing corporate customers with cross-border financial needs.

In February 2014, HSBC launched a “centralised RMB cross-border transaction management solution” including pay-on-behalf and receive-on-behalf services and netting functions. The newly-launched centralised payment scheme applies to RMB cross-border settlements, enabling multinational companies to consolidate and offset account payables and receivables through a single transaction.

French MNC Saint-Gobain, has used this new solution via its subsidiary in the FTZ. It is now able to centralise payments and collections for its goods and services, along with other current account items, consequently making RMB settlement faster and easier between the group’s various affiliates. The solution also improves the cash management efficiency for its Asia treasury centre located in Shanghai, outside the FTZ.

The successful case with HSBC with Saint-Gobain was recognised by the Shanghai Finance Office and the FTZ Management Committee and published openly for other companies’ future reference in March 2014.

In February 2014, HSBC launched the “RMB cross-border settlement for individuals” service under a mainland China current account in the FTZ. The newly-launched service facilitates RMB cross-border remittance for individuals in the FTZ, thereby promoting wider cross-border use of the RMB. In its first individual RMB cross-border settlement, a customer who works in the FTZ was able to transfer RMB income overseas via their RMB account in Hong Kong.

According to Richard Li, Head of Retail Banking and Wealth Management at HSBC China, “The newly-launched service facilitates RMB cross-border remittance for individuals in the FTZ, thereby promoting wider cross-border use of the RMB”.

In May 2014, HSBC also launched a “centralised foreign currency management solution” service, which was used by a German MNC via its subsidiary in the FTZ. This new solution has allowed the German company to set up a cross-border sweeping structure via its FTZ subsidiary to deploy foreign currency funds more efficiently between its overseas and domestic affiliates. This model also enables it to utilise a number of other techniques including netting and centralised foreign currency exchange, to enhance working capital efficiency and to reduce foreign exchange exposure.

Interview: Standard Chartered Bank

CBBC’s researchers went to visit Henry Zhang, Managing Director and Head of Corporate and Institutional Clients of Standard Chartered Bank (China) Limited to get their impression on FTZ.

• Overall comments: Standard Chartered was one of the earliest foreign banks to set up a subsidiary in the FTZ. Currently it primarily utilises FTZ policy liberalisations such as offshore finance portfolios (cross-border RMB), PE funds and leasing portfolios. It sees the opening up of finance policies in the FTZ as incremental, prudential and replicable. In the long term, Standard Chartered envisages future FTZ policy reforms will generate new financial tools and products and attract other sectors and companies to set up in the FTZ to take advantage of them.

• Listed in the “FTZ Enterprise Innovation Cases Collection”: Standard Charted has been keen to come up with innovative new products based around new FTZ policies. Thanks to an innovative solution devised for its client Baoxin Auto Group Ltd, the FTZ Management Committee recently selected Standard Chartered as the only foreign bank and the only UK enterprise to be listed in the “FTZ Enterprise Innovation Cases Collection”. It is recognition of the cross-border two-way RMB cash-pooling model set up for the auto dealer, which works with famous brands such as BMW, Porsche and Jaguar Land Rover. Taking advantage of there being no upper limit on capital movement, Baoxin Auto’s liquidity management is now more efficient, enabling it to use domestic and overseas capital in a more free and flexible way for the benefit of its business operations.

• Looking to the future: Standard Chartered hopes further financial liberalisation will be rolled out in a phased, prudential and predicable way. This may include the opening up of capital accounts and further deregulation of interest rates and offshore finance. Standard Chartered sees the launch and development of FTZ as a huge opportunity for China to be better in line with the international business practice and ingrate itself deeper in the global economy.


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3.6 Medical Institutions & Insurance

i. Medical Institutions


• Foreign investors can set up a wholly foreign-owned hospitals within the FTZ, expanding scope to provide high-end medical services to China’s growing middle-income and wealthy residents

Restrictions will be lifted on the minimum total investment and operating terms for medical businesses. This allows the establishment of wholly foreign-owned medical clinics or hospitals.


Medical Institutions WFOE permitted

JV only,also subject to the following

restrictions: (1) Foreign ownership up to 70%;

(2) Minimum investment of RMB 20 million;

(3) Maximum operation period of JV is 20 years

In July 2014, the FTZ signed agreement with Artemed Group, a German medical and healthcare provider, to become the first wholly foreign-owned medical institution in mainland China.

According to the FTZ authorities, more than 20 international high-end medical institutions are already in talks with the Chinese government, with the intention of entering into China’s healthcare market soon.

Whilst it is promising to see liberalisation of China’s medical industry, there are still a number of practical issues obstructing future foreign investment. One significant issue is that national legislation, which remains in the FTZ, limiting foreign doctors to 12 months’ work in China. Another is the restriction on the import of medical devices - specifically high-tech equipment classed as ‘Category Ill’ items which require approval from China’s central government.

ii. Medical Insurance Providers


• Foreign invested medical insurance institutions are already allowed in the FTZ, however detailed implementation rules and regulations are currently awaiting release as the current regulations remain ambiguous

• The good news, regardless, is that foreign-owned hospitals will be permitted to open more clinics, a growth in the private medical industry will provide an additional opportunity for medical insurance providers to expand their business


Specialised Foreign Medical Insurance

InstitutionsPermitted on a trial basis

JV only for life insurance companies, with foreign

ownership not exceeding 50%

In September 2014, Shanghai Life Insurance Company received official approval to set up in the FTZ becoming its first legal insurance company entity. Although this was a Chinese insurance company, foreign invested insurance institutions are currently allowed to enter into China via joint ventures, and we expect substantial policy revisions to be announced regarding their operation in the FTZ in the future.

Policy revisions are highly anticipated for medical insurance provision by foreign companies in the FTZ.


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3.7 Telecoms


• New specific opportunities to provide online data processing and transaction processing services

• Other areas worth exploring include information services such as app stores, data storage and forwarding services, call centres services and VPN services

• China Telecom, China Mobile and China Unicom have all set up subsidiaries in the FTZ to take advantage of the new opportunities. These opportunities are also available to foreign investors and CBBC has knowledge of foreign MNCs which are already in detailed discussions with the FTZ Management Committee


App Stores WFOE permitted JV only

Data Storage and Forwarding Services (e.g. Content Delivery

Networks)


Call Centre Services WFOE permitted JV only

Multi-Party Communication Service

(Can serve mainland China outside the FTZ)


Virtual Private Network Services

(Can serve mainland China outside the FTZ)

WFOE permitted;Incorporation filing simplified

WFOE permitted, but the application and approval process is more complex, and there are qualification requirements for the Chinese partner

Online Data Processing and Transaction

Processing Services (e.g. e-commerce)

WFOE permittedJV only, with foreign ownership not exceeding 55%

Foreign companies in the telecommunication sector in the FTZ must fulfil qualification requirements including:

• All secured operational capital and professionals must be appropriate to the scale of their business.

• The minimum registered capital is RMB 1 million.

• Foreign companies must have secured business premises, equipment, technical solutions and regulations in place to protect the security of information. The facilities and equipment of the service must also be located inside the FTZ.

• Both the company’s major investors and senior management team must have no record of violating Chinese telecommunication administration and management regulations in the last three years.

The following areas of telecoms are still prohibited or heavily restricted for foreign firms in the FTZ as they are outside:

• Other telecommunication services including voice calling

• Radio stations, television stations, channels, transmission and coverage networks

• Provision of news websites and online audio and video

• Engagement and participation in online gaming operational services

• Internet data centre operations


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Interview: Vermilion Partners

As an experienced China hand, CBBC was interested to hear the thoughts of Edward Radcliffe, Partner of CBBC member and cross-border investment banking advisory firm Vermilion.

• Overall comments: The establishment of the FTZ is a major step for the Chinese government, and the adoption of the Negative List system is a significant change, which will take some time for Chinese bureaucracy to adjust to.

China is good at testing new models. The Special Economic Zone (SEZ) concept, which was initiated in Shenzhen and rolled out to other locations, helped underpin reform encouraging foreign direct investment in China. Outside Shanghai, a number of other cities are already competing with each other to become the next FTZ. This may seem premature, as much ambiguity continues to surround the Shanghai FTZ’s rules and regulations and their future implications. Nonetheless, there does appear to be strong appetite for continued economic reform.

Many foreign observers have been frustrated by the recent pace of reform but it is encouraging that the FTZ is receiving attention from the highest levels of the Chinese government - witness Premier Li Keqiang’s visit in September 2014. It will be interesting to see whether the pace of economic reform now starts to pick up.

• Health insurance: It would be encouraging to see the government bolster its healthcare reform initiative by permitting greater foreign participation in health insurance. Trialling such a policy in the FTZ would be an effective way for the Chinese government to assess the benefits and challenges of various healthcare funding and provision models.

• Value-added telecommunications: Liberalisation measures in this area are already good news for foreign investors, as they are now permitted to own a controlling share in joint ventures based in the FTZ and in some cases operate on a wholly foreign-owned basis.

3.8 Creative Industries

i. Design Services

Marine design (luxury cruise ships & yachts)

Foreign investors are allowed to establish wholly foreign-owned companies in the FTZ, in contrast to elsewhere in China where they can only operate as joint ventures. Finnish ship design company ALMACO has already registered as the first foreign design company in the FTZ.


Luxury Cruises and Yacht Design Companies


Ship Machinery Design Companies


Engineering design

Qualification requirements for foreign invested engineering companies registered in the FTZ have been relaxed.


Engineering Design Companies

(Excluding Engineering Surveys)

Foreign investment permitted;no need to provide previous project records on initial application

Foreign investment permitted;foreign companies required to provide previous project records and other qualification material for approval

ii. Artwork Trading Services

Businesses such as art dealers and auctioneers can take advantage of the FTZ’s bonded goods function. The FTZ also offers preferential legislation and facilities for artwork storage, exhibition and trading which companies can also utilise.

By not needing to pay large amounts of customs duties and deposits during the period of exhibition, art dealers can enjoy a reduced financial risk. International auction houses or art dealers can take this opportunity to enter the China and East Asia markets via the FTZ.

Christie’s the British auction house is currently operating in the FTZ to take advantage of its new features.


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Shanghai International Artwork Bonded Trading Center

Located in Waigaoqiao, the Shanghai International Artwork Trading Center has formally operated since September 2013. It expects to become the largest art dealing facility in China by 2016.

The Center offers secure facilities with strict temperature and humidity controls that allow valuable pieces of art to be stored safely. Artwork stored in the Center also enjoys the FTZ’s bonded duty policy which provides companies with greater flexibility on imports.

For more information see: http://www.artwgq.com/english/index.php

iii. Entertainment Agencies

The establishment of wholly foreign-owned entertainment agencies such as promoters or events companies are permitted within the FTZ and can provide services for the wider Shanghai area.

Outside of the FTZ, foreign invested entertainment agencies must be formed as joint ventures with a Chinese partner.


Entertainment Agencies WFOE permitted JV only

The “Negative List” maintains some restrictions and prohibitions to foreign investment in the entertainment sector. This includes restricting all production of radio, television and film projects to joint ventures (as found outside the FTZ) and prohibiting all foreign investment within the news and publishing sectors.

3.9 Education


• Joint venture educational and training institutions can be set up inside the FTZ with relative ease, avoiding the convoluted approval and registration processes which remain required outside the FTZ

The FTZ Management Committee have issued detailed administrative measures on for-profit FTZ training and education institution JVs in order to help to guide foreign investors understand the possibilities in the FTZ. Currently, foreign investment in the training and education sector is still limited to JVs, however further liberalisations are expected in the future.

After signing a registration contract in August 2014, Harrow International School Shanghai is due to open in 2015 in the FTZ. This will be the fourth Harrow International School in Asia, follows the opening of campuses in Bangkok, Beijing and Hong Kong.


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4. CROSS-SECTOR COMPARISON TABLES

4.1 Cross-sector Comparisons - Investments

Inside FTZ Outside FTZ (including Bonded Zones)

Permitted Foreign Invested Firms

• No entry for those on the Negative List;

• Those not listed in the negative list will be granted permission to incorporate in the FTZ

• Categorised into ‘encouraged’, ‘restricted’ and ‘prohibited’ sectors, per the national Catalogue for the Guidance of Industries for Foreign Investment

Inbound Investment

• Foreign invested projects only require the filing process instead of an approval process;

• Filing management will replace approval of joint venture contracts and articles of association;

• Foreign investment permitted in areas not on the negative list

• Approval system applies to all foreign invested projects and investments;

• Contracts and articles of associations of foreign invested enterprises need approval by authorities;

• Foreign invested companies must be limited liability

Outbound Investment

• General outbound investment projects only require filing, without approval procedures;

• Enterprises established for outbound investment will be managed predominantly by way of the filing system

• National Development and Reform Commission responsible for approval of outbound investment projects; and also offshore investment certificates for Chinese enterprises

Industrial and Commercial Registration

System

• Subscribed registration capital system replaces statutory system;

• Company registration done before licence is granted;

• Annual reporting replaces annual inspection system;

• Blacklist for irregular business operations

• Traditional statutory system

• Companies apply for licence before company registration

4.2 Cross-sector Comparisons - Trading

Inside FTZ Bonded Zones Non-Bonded Zones

Regulation of People

• Relaxed quarantine and inspections

• Entry through special passages after quarantine and inspection

• Entry/exit after quarantine and inspection

Regulation of Commodities

• Quarantine and inspection upon entry into the FTZ will be liberalised

• Entry/Exit from the FTZ to the rest of China will be controlled



Licences and Filing System

• Simplified filing system for movement of goods from abroad to FTZ, with no tariffs

• Filing system for movement of goods from abroad to bonded zone, with no tariffs

• Import and export quotas and licenced management

Supervision• Centralised, classified and electronic regulation

• Import/export quotas and licenced management for movement from bonded zone to non-bonded areas

• Batch supervision

Tariffs

• Establishment of a platform for bonded goods’ exhibition and trading in FTZ

• Tariffs levied when leaving FTZ for rest of China

• Commodities are circulated freely within the bonded zone under the filing system

• Tariffs levied when leaving bonded zone for rest of China

• National tariffs levied

Please note the following definitions:• ‘Common Zones’: industrial or economic development zones, science or high-tech parks, etc• ‘Bonded Zones’: usually includes bonded warehouses which foreign goods can enter without levying duties, and manufacturing and trade within the zone can be exempt from tax

CBBC offers a wide range of services and benefits for UK companies. Please contact us to find out more,

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For sector specific advice and information, please ask for one of our sector experts:

Creative & Culture: Life Sciences & Healthcare:Fenella Barber (UK) [email protected] Chris Cotton (UK) [email protected] Simpson (CH) [email protected] Anna Zhao (CH) [email protected] Education & Skills: Financial & Professional: Giles Blackburne (UK) [email protected] Juliet Zhou (UK) [email protected] Stewart (CH) [email protected] Anatole Pang (CH) [email protected] Retail: ICT:Fenella Barber (UK) [email protected] Mark Hedley (UK) [email protected] Wilson (CH) [email protected] Kirk Wilson (CH) [email protected] Food & Drink: Energy, Infrastructure & Environment Claire Urry (UK) [email protected] Mu Boyi (UK) [email protected] Chen (China) [email protected] Patrik Li (CH) [email protected]

Engineering, Manufacturing & Transport: Vince Cunningham (UK) [email protected] Zhang (CH) [email protected]

CBBC has offices and representatives across the UK: London, Scotland, Wales, Northern Ireland,

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Contributions to this report by:

• Junchao Zhang, Assistant Director of Research

• Ingrid Ge, Economist

• Anatole Pang, China Business Advisor, Financial & Professional Services

• Michael Ryan, Senior Manager, Research & Consultancy

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