Why foreign companies are shutting shop in China

[Randy W]

in the SCMP

 

Why foreign companies are shutting shop in China

http://www.scmp.com/sites/default/files/styles/660x385/public/images/methode/2017/02/02/9e3cabe4-e909-11e6-925a-a992a025ddf7_660x385.JPG?itok=yZxLDYry

 

Sony Electronics, Marks & Spencer, Metro, Home Depot, Best Buy, Revlon, L’Oreal, Microsoft, and Sharp – some of the big names to have closed Chinese operations

 

 

 

Panasonic, for instance, stopped all its manufacturing of televisions in the country in 2015 after 37 years of operating in China.

 

When it first opened in 1979, the Japanese home electronics corporation was the country’s first foreign firm, tempted by generous benefits not offered to its Chinese competitors, including lower taxes and land prices and easier access to local governments.

But almost four decades down the road, this certainly isn’t the case anymore.

. . .

“China doesn’t need foreign companies so badly now in terms of acquiring advanced technology and capital as in previous years,” said Professor Chong Tai-Leung from the Chinese University of Hong Kong, “so of course, the government is likely to gradually phase out more of these preferential policies for foreign firms.”

. . .

Until 2007, firms that received foreign investment were subject to 15 per cent income tax while domestic companies paid 33 per cent tax.

But in recent years Beijing has stepped up its efforts to tighten such policies, with the new Enterprise Income Tax Law and Implementation Rules, effective since 2008 unifying the rate for domestic and foreign companies at 25 per cent.

Unclear laws and inconsistent interpretation of them have also been blamed for the flight of some foreign firms.

 

 

 

 

 

[Greg.D.]

I have to confess I don't click on the scmp links anymore. Mainly, they don't play nice on the iPad and then I have a deep distrust of Jack Ma. So I didn't click the link.

 

Seems to be only half the story. If the corporate tax rate is equal, why can't the foreign firms thrive there like domestic ones? I notice the cited brands are retail ... while the story about Panasonic is that their manufacturing presence is gone.

 

Sorry, I know I didn't follow the link.

 

Then there is this link:

 

China’s Decision to Purge Foreign Tech Sector Could Cost It $3 Trillion

https://www.uschamber.com/above-the-fold/china-s-decision-purge-foreign-tech-sector-could-cost-it-3-trillion

[Randy W]

I have to confess I don't click on the scmp links anymore. Mainly, they don't play nice on the iPad and then I have a deep distrust of Jack Ma. So I didn't click the link.

 

Seems to be only half the story. If the corporate tax rate is equal, why can't the foreign firms thrive there like domestic ones? I notice the cited brands are retail ... while the story about Panasonic is that their manufacturing presence is gone.

 

Sorry, I know I didn't follow the link.

 

Then there is this link:

 

China’s Decision to Purge Foreign Tech Sector Could Cost It $3 Trillion

https://www.uschamber.com/above-the-fold/china-s-decision-purge-foreign-tech-sector-could-cost-it-3-trillion

 

 

Your article is simply about China's (and the other country's) economies.

 

Jack Ma isn't all that bad of a guy - the SCMP seems to be pretty well intact from what it was when he took over. And now, no pay wall. It's probably the best source of information about China which is out of the reach of the Communist censors.

 

And guess what - he's got his own browser. He bought the UC browser, which works very well on SCMP. The "engine" is both Chrome and Bing, so it's fairly robust - not quite as robust as Chrome, but good enough. It works behind the Great Firewall, so I rate it as the best browser for use in China. The English they use is good enough that you wouldn't know it was a Chinese product. SCMP works fairly well on my Android cell phone.

 

It's at http://www.ucweb.com/

 

Preferential treatment towards foreign firms goes back to 1994 when they were included under the country’s general tax regulations.

Until 2007, firms that received foreign investment were subject to 15 per cent income tax while domestic companies paid 33 per cent tax.

But in recent years Beijing has stepped up its efforts to tighten such policies, with the new Enterprise Income Tax Law and Implementation Rules, effective since 2008 unifying the rate for domestic and foreign companies at 25 per cent.

 

Unclear laws and inconsistent interpretation of them have also been blamed for the flight of some foreign firms.

 

A survey last year by consulting firm Bain & Company and the American Chamber of Commerce in China (AmCham-China) highlighted those were the two top factors hindering foreign firms’ ability to invest and grow in China.

 

High labour costs and a lack of qualified employees were also among the top five challenges, the study showed.

 

An example of the type of regulation that is now hindering foreign progress is the new cyber security law, approved by parliament last November.

 

It sparked fears that foreign technology firms would be shut out and subjected to contentious requirements for security reviews, and for data to be stored on Chinese servers.

 

Despite more than 40 international business groups signing a petition to amend some sections of the law, the final draft approved by the parliament remained unchanged – a clear indication of Beijing’s determination to toughen its stance against foreign firms.

 

A quarter of the AmCham-China’s 532 member firms taking part in the survey said they had either moved or were planning to move operations out of China by the end of last year, with almost half moving to parts of “developing Asia”.

 

“If more overseas companies want to develop in China at this stage,” Chong said, “I would suggest they consider second- and third-tier cities.”

[Greg.D.]

Like they say: "When the product is free, YOU are the product".

 

From their own web site, they solicit "corporate partners":

 

Solutions

We will help you target your precise customers and audiences through our resource!
What UCWeb will provide:

• Precise targeted product promotion, such as based on location or network operators;
• A dynamic and high performance-price ratio partnership model, such as CPM, CPS, or CPC.

And wikipaedia says it was at first hacked by Australian intelligence agencies; later had poor or no encryption of user information. Still, it sends your search and http requests to their servers in CN. "The company is taking advantage of its own server networks which enable the browser to deliver customized contents to users all around the world."

 

Yecch!

 

I still stick with Firefox and "Firefox Focus": a totally locked down, non-data mining/tracking browser.

 

And, Jack Ma is not the story he presents. He's highly connected, collaborating with, dependent on, and operating with permission of the powers that be. Alibaba and Taobao are still counterfeit and IP-disrespecting bazaars, contrary to his promises.

[Randy W]

Like they say: "When the product is free, YOU are the product".

 

From their own web site, they solicit "corporate partners":

 

Solutions

We will help you target your precise customers and audiences through our resource!

What UCWeb will provide:

• Precise targeted product promotion, such as based on location or network operators;
• A dynamic and high performance-price ratio partnership model, such as CPM, CPS, or CPC.

And wikipaedia says it was at first hacked by Australian intelligence agencies; later had poor or no encryption of user information. Still, it sends your search and http requests to their servers in CN. "The company is taking advantage of its own server networks which enable the browser to deliver customized contents to users all around the world."

 

Yecch!

 

I still stick with Firefox and "Firefox Focus": a totally locked down, non-data mining/tracking browser.

 

And, Jack Ma is not the story he presents. He's highly connected, collaborating with, dependent on, and operating with permission of the powers that be. Alibaba and Taobao are still counterfeit and IP-disrespecting bazaars, contrary to his promises.

 

 

Sounds like Google!

[Randy W]

. . . and Apple takes a step in that direction

 

http://en.people.cn/img/FOREIGN/2015/03/212677/images/logo.jpg Apple removes 58,000 Chinese apps from app store

 

U.S. tech giant Apple removed around 58,000 Chinese apps from the company’s official app store between June 10 and 21, 33.5 percent of which were gaming apps.

According to Thepaper.cn, ASO 100, a Beijing-based data analysis platform, detected the anomaly in the Chinese version of the Apple app store in the past two weeks. On June 15, 22,000 apps were removed, a number that is six to 10 times greater than Apple’s daily removal quota. ASO 100 suggested that such a large-scale removal means Apple is cleaning up and regulating the Chinese app market on its iOS system.

Users and experts expressed their discontent, noting that the mass removal of apps might be a counterattack by Apple on its Chinese counterpart Tencent; Tencent owns WeChat, whose cash rewards feature was blocked on the iOS platform in April. Apple had made no comment on the incident as of press time.

According to ASO 100, Apple’s move didn’t intentionally target the Chinese app's tip service, nor was it trying to single out the special loophole that helps developers bypass Apple’s vetting process when deploying patches and updates to users’ devices. Instead, the overhaul was reportedly intended to merely get rid of bad-quality apps, as well as those that violated regulations.

ASO 100 pointed out that Apple routinely removes a selection of apps every two or three months, so it's not advisable to read too much into this incident.