Posted on

Joint Venture Contract Negotiations and Approvals with Chinese Partner

Joint Venture Contract Negotiations and Approvals with Chinese Partner

wa mj ar pearls wholesaleJVs, either equity or cooperative, have dominated FDI projects into China till very recently, when with China’s WTO accession, foreign companies, encouraged by the increasingly rule-based foreign investment regime, started preferring wholly owned enterprises for conducting their operations. However, for many segments of the economy, including jewellery, JVs have been successful and remain an important vehicle. For labour contracts and provision of land and real estate, the Chinese partner in a JV can play a major role, as in liaising with the Chinese authorities. It is important, therefore, to learn how to conduct negotiations for successful Joint Ventures with a Chinese partner. The following is an indicative approach:

wholesale pearls south sea pearls wholesale
If you looking for Wholesale Pearls & South Sea Pearls Wholesale, please contact us on phone or whatsapp +6287865026222 (Miss Joaquim Pearls Indonesia)

From MOU to joint venture agreement

Initial discussions for a joint venture with a selected Chinese partner, if fruitful, will result in a Memorandum of Understanding (MOU) signed jointly. The MOU should contain a clear
statement of intent to develop together a feasibility study for a joint venture and to negotiate the terms of the joint venture to the mutual benefit of the parties. The MOU must be filed by the
Chinese party together with a ‘pre-feasibility study’ (in reality a checklist of the major parameters for the proposed JV) with the authorities to whom it reports. More detailed negotiations cannot proceed until the reporting authorities have given a preliminary indication of approval to the project.

Formal MOUs in China, in a joint venture context, are not legally binding but are considered to be a commitment to continue discussions and to carry out a serious feasibility study. Therefore, it is considered to be a breach of good faith for a foreign company to enter into negotiations for the same project with another Chinese enterprise once a formal MOU has been signed, unless it is first terminated by the mutual consent of the two original parties. It follows that the initial choice of preferred partner is crucial. Signing an MOU in haste with an ill-chosen potential partner imposes a major impediment to further progress. If in doubt, the foreign company should confine itself to a simple minute which records that discussions have taken place which will be reported to the boards of the two companies which will decide mutually within an agreed period of time whether or not to continue studying the project.

The pre-feasibility study

The pre-feasibility study usually takes the form of a standard checklist of the main parameters for the joint venture, some of which may be mentioned in the MOU but most of which are an expression of the initial ‘ballpark’ numbers which the parties may have discussed together. The checklist is not a joint declaration of the Chinese and foreign parties, but foreign partner input will certainly be requested.

Key elements in the pre-feasibility checklist include:

  • scope of business
  • total investment in the JV in US dollars
  • amount and shares of registered capital to be subscribed by the partners in US dollars
  • form of contribution for registered capital by each partner: cash, equipment, patented
    designs, technology, land use and buildings (proportions not usually quantified at this
    stage)
  • nature of technology; must be to international standard, preferably advanced
  • planned production capacity (unit/volume output rather than value)
  • proportion of output to be sold in export markets (normally not less than 20 per cent)
  • surface area of facility and of covered factory space (existing or new building)
  • in what proportions equipment is to be imported or sourced within China
  • workforce to be employed (provisional numbers)
  • foreign partner’s commitment to training and continuing technical support

There is a ‘chicken and egg’ element in specifying these parameters at such an early stage, since most of this detail cannot be quantified with certainty in advance of a full-scale feasibility study. Indeed, it is advisable that the foreign party distances itself, as far as possible, from the pre-feasibility process so that responsibility for any major changes to the parameters which have to be identified to the authorities is limited.

The feasibility study

Assuming that the authorities’ response to the pre-feasibility study and MOU is positive, the
parties may now move forward jointly to a full-scale project feasibility study. It is quite possible that the authorities may reject one or more of the parameters in the pre-feasibility checklist — perhaps the form in which contributions to registered capital may be made, or a demand for a higher proportion of export sales. By this time, the relationship between the prospective partners should have advanced to the point where such obstacles are addressed together in the spirit of trying to find a solution which will satisfy the authorities and be acceptable to both sides.

The complexity of the feasibility study will be determined by the nature of the project, its technical content, procurement issues in respect of equipment, raw material and locally sourced components, quality assurance standards and sales potential. It is recommended that all phases of the study be carried out by a joint team and that the data provided by either side should have
maximum transparency. In the course of the study, the Chinese members of the team will certainly want to visit the foreign partner’s facilities and to inspect technology, equipment and manufacturing processes.

The amount of detail which the Chinese partner will require to complete the feasibility study for
its purposes and the scope of the study will be broadly similar to the foreign partner’s requirements. The Chinese side will focus particularly on the detailed specification and performance of any equipment and tooling to be imported, and if used equipment or tooling is involved will need to satisfy itself fully as to condition and market value.

Market studies are a necessary part of the overall feasibility study to satisfy both partners that the products which the JV is targeted to manufacture are saleable in both export and domestic markets in the proportions and at the prices planned. In the early days of JVs in China, Chinese partners were often content to rely on a commitment by the foreign partner to take full responsibility for exports with the amounts to be exported in the early years specified in the JV contract. Chinese partners increasingly demand a fully researched market study which demonstrates in which overseas markets and in what proportions the JV’s products can be sold at the projected export sales price.

Conversely, foreign partners, attracted by the pull of billion-plus Chinese consumers, used to be
content to rely upon government institutes’ published statistics or projections and the Chinese partner’s assurances of marketability. Increasingly today prospective foreign JV partners demand studies of key regional markets in China by professional research organizations.

The business plan

The feasibility study should culminate in the preparation of a business plan by the two parties
jointly. This is not a formal requirement by the authorities to whom the feasibility study must be submitted with the JV agreement or draft JV contract, although the Chinese partner needs to
include an income and expenditure plan showing profit projections for the first three to five years of the JV’s life. However, from the foreign partner’s perspective, the addition to the feasibility study of a business plan (in the western sense) and a draft budget for the period from company registration through start-up is strongly recommended. In particular, the business plan should include a cash-flow statement, as well as a profit and loss statement, and operating statements including analyses of fixed and variable expense and a manpower plan which specifies maximum staffing at each stage of development in the JV. In this way, the business plan becomes a financial blueprint, subject to review and amendment by the board of the JV after the company is formed, but a clear reference point for management discussion.

Negotiating the joint venture agreement

In the 1980s it was common for the designated JV partners to negotiate the detailed terms of the
JV in the form of a non-binding joint venture agreement which was then submitted to the local
reporting authorities for approval, together with the Chinese version feasibility study. Following approval, possibly with some amendment, the two sides would then reconvene, convert the joint venture agreement into a draft joint venture contract and, at the same time, draft the articles of association (or ‘statutes’ as they were sometimes called) for the joint venture company.

As the incidence of JV negotiations multiplied and the pace of joint venturing quickened, many
local authorities, notably the Commissions of Foreign Trade and Economic Cooperation in major cities, relaxed the procedure and permitted the partners to proceed direct to the drafting of the
joint venture contract and articles of association. Today, use of the preliminary joint venture
agreement is generally limited to very complex or contentious projects where some intermediary
clarification is helpful or the parties prefer a more protracted negotiation. In the sections which follow, it is assumed that the parties proceed direct to the contract stage.

At this point, the senior management of the foreign party entering into formal JV contract negotiations needs to select its negotiating and drafting team and to decide how it will conduct
the negotiations within the framework of standard Chinese practice. Normally, the principal Chinese party (always referred to as ‘Party A in the documents) will prepare a first draft of the
joint venture contract and the articles of association which it will submit, in advance of negotiation, to the principal foreign party (invariably referred to as ‘Party B’ in a bilateral
agreement).

Perhaps the first issue to address is the force and practice of Joint Venture Law. The principal
applicable law on equity joint ventures (and other forms of foreign investment also) is published
in Chinese and in English in a single volume, entitled Investment in China, compiled jointly by the Foreign Investment Administration and China Economic and Trade Consultant Corporation of MOFCOM. The laws set out clearly (and generally, unambiguously) the content and principal clauses which must be included in both a joint venture contract and the articles of association.
Many of the detailed clauses which appear in the first drafts submitted by Party A are culled
direct from these laws, but the English language is usually not identical. One reason why the wording is often different is that copies of Investment in China with the official English translation are not generally in circulation among Chinese companies.

Variations of substance to the standard clauses of the Joint Venture Law, other than those dealing with the scope of the business, investment and registered capital contributions, scale of
production, export content and the specific responsibilities of the parties, are not generally
allowed by the authorities. Therefore, a commonsense approach to these secondary clauses is to
incorporate them in the joint venture contract and articles of association as drafted, and translated, in the law unless either party has some major objection. Taking this approach to its
logical conclusion, foreign companies negotiating a JV for the first time may be tempted to conduct the negotiations on a ‘do it yourself basis without external advisers, but such a course of action exposes the investor to unnecessary risk.

At the other extreme, the foreign investor may wish to engage a law firm to advise on the legal
documents and to participate in the negotiations. There are a number of leading international law
firms with offices in China, with experienced foreign and Chinese staff authorized to practice law in China. However, involvement of western law firms in joint venture negotiating sessions can be counter-productive and an ‘offstage’ involvement may be preferable. In most JV negotiations the Chinese party will not involve an external Chinese lawyer unless a western law firm is introduced. Mega-projects involving billion dollar investment, international financing or major infrastructure projects are a different matter where the contractual documents are susceptible to western legal drafting, but the routine equity joint venture does not involve international law and the contracts are rigidly controlled by the standard Chinese framework.
Joint venture contract negotiators are well advised to concentrate on substance rather than form.
However forcefully they may seek to interpose tightly drafted clauses in western legal language,
the final product will still contain wording through which the proverbial ‘coach and horses’ could be driven in a western court of law. Essentially, what matters is that the joint venture contract and articles of association are written in transparent business language, which is as unambiguous as possible to both parties.

The success of the JV will depend on a strong, enduring relationship between the partners. If
mutual understanding and respect fail, the joint venture firm should question what the remedies
are. Chinese contracts always provide for ‘the resolution of disputes through friendly consultation’ and, if that fails, by arbitration. Arbitration in China has a reasonable record;
however, many find third party arbitration attractive. Under a judicial system such as China’s
where there are no formal case law precedents to which courts can refer, litigation is hazardous
and an unattractive course of action. If the partnership relationship fails in China and becomes
confrontational, the ultimate recourse is to walk away. However, in the context of negotiating an
acceptable joint venture contract and articles of association drafted in layman’s language, the
foreign partner can benefit from the services of external advisers in language interpretation,
business consultancy and institutional intermediary. During the course of the negotiations, the foreign partner may also need to take advice on taxation or accountancy issues. The bigger international accountancy firms all have audit offices in China, mainly in Beijing and Shanghai, and their expert advice is readily available.

The negotiation process

JV contract negotiations are best conducted in the same city as the approving authorities to
whom the draft contract and articles of association have to be submitted for preliminary approval. Therefore, if the Chinese partner is part of a national corporation the negotiations are better held in Beijing where the relevant ministries are located so that informal opinion may be sought on the issues of substance. Whatever other ministry may be involved in the subsequent approval process, MOFCOM for major joint ventures or the appropriate local authority will certainly be involved, since all foreign investment projects require ultimate MOFCOM endorsement.

Assuming that the foreign party has studied the draft contract and articles of association (and
taken advice where appropriate) in advance of discussion, the actual negotiating sessions are
likely to take less than seven days. The negotiating procedures are well defined. As for the
original set of meetings, the representatives of the two parties will be ranged on either side of a meeting room table with up to ten Chinese representatives present. The composition of the
Chinese team may vary from day to day, but the same key members are likely to attend each
session under the leadership of a designated chief negotiator.

In spite of the apparent formality, the climate of the discussions should be quite relaxed. If the parties have reached a high degree of unanimity on the structure and financing of the JV during the joint feasibility study work together, there will be a presumption on both sides that the JV will go ahead. This does not mean to say that no serious differences of opinion will emerge in the course of formal negotiation, but a conducive atmosphere of mutual sincerity and flexibility will have been created. On many points of detailed drafting, the focus of discussion is more likely to be on satisfying the legal requirements and state policy guidelines, rather than resolving differences between the parties.
Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
south sea pearls wholesale
For Questions and answer you can contact & chat with us on:

  • Phone : +6287865026222
  • Facebook Massager click below :
  •  facebook.com/mutiaralomboktourpearlwholesale
  • Twitter : @abdurrachim
  • WhatsApp : +6287865026222
  • Email to: abdurrachim@gmail.com
  • Telegram id : mutiarapearl
  • LINE id : chatinmyline
  • wechat id: chatwechat

We send your parcel via FedEx

abdurrachim miss joaquim pearl send via fedex 1
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

abdurrachim pearl fedex
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

This is my name, my phone number and my address, as a sender (written by FedEx)
This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

one sample of inside the box of parcels abdurrachim missjoaquim pearl
one sample of inside the box of parcels

Related Articles:

Posted on

Foreign Direct Investment Vehicles in China

Foreign Direct Investment Vehicles in China

wa mj ar pearls wholesaleLegislation
There are alternative investment formats available to foreign investors in China: equity joint ventures (EJV), cooperative joint ventures (CJV), Sino-foreign-invested joint stock companies (SFJSC), wholly foreign-owned enterprises (WFOE), and holding companies (also referred to as investment companies) (HC) and technology transfer. The doors to foreign direct investment via the EJV and CJV formats were opened first in 1979 with the enactment of the People’s Republic of China Law on Chinese—Foreign Equity Joint Ventures.

WFOE investment became possible after the promulgation of the Law of the People’s Republic of
China on Wholly Foreign-Owned Enterprises in 1986, and the Detailed Implementation Regulations for the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises, which became effective in 1986. FJSC investment became possible in 1985 with the Provisional Regulations on the Establishment of Foreign Invested Joint Stock Companies. HC investment was opened with the 1995 Tentative Provisions for Establishment of Companies with an Investment Nature by Foreign Investors.

wholesale pearls south sea pearls wholesale
If you looking for Wholesale Pearls & South Sea Pearls Wholesale, please contact us on phone or whatsapp +6287865026222 (Miss Joaquim Pearls Indonesia)

In addition to the above, the 1999 Contract Law of the People’s Republic of China and the 1993
People’s Republic of China Company Law are also important pieces of legislation. The Company Law as well as the EJV law also apply to WFOEs where the WFOE laws do not cover a particular matter. For several years China has been enacting, repealing and amending its legislation to facilitate its entry into WTO. China has adopted the civil law system rather than the common law. As such its current practice is to adopt statutes and supplement them with implementing regulations and
interpretations. While court precedent is somewhat influential, it is not binding law per se.

The goal of the WTO is to promote free and open trade among its member states. This does not
directly include investment; however, WTO membership mandates the principle of national treatment and this affects foreign investments. As China is reshaping its laws to unify its bifurcated treatment of domestic and foreign interests, notably in regard to taxation and most
contracts, it still treats FIEs separately from domestic investment in the areas of governance.

Regulation of FDI

The two primary governmental agencies involved in regulating, permitting and governing FIEs
are the Ministry of Commerce and its local arms and the State Administration for Industry and
Commerce and its local arm. MOC is the gatekeeper and all FDI and technology transfers are
channeled through its processes and regulated by it. The SAIC is charged with licensing, corporate governance, trademark administration and fair trade. There are numerous other state,
provincial, local and industrial agencies having their own local regulations that also impact on
FDI.

Cooperative or contractual joint ventures

CJVs provide a flexible joint venture format. This is often preferred for shorter-term projects. The venture may be, but does not have to be, an incorporated legal person. If the company does
register as a legal person, then a minimum of 25% of the registered capital has to be contributed
by the foreign investor. The parties are free to distribute profit and recover investment capital as negotiated. For example, the parties may agree on an equal equity split but provide for a different profit allocation ratio. CJVs have been popular in projects involving large start-up development costs such as hotels and oil and gas projects. A CJV must have either a Board of Directors with a Chairman and Deputy Chairman, or a Management Committee, with a Director and Deputy Director, as well as a managerial structure and these functions are similar to those of an EJV described below.

Equity joint ventures

EJVs represent a compromise of China’s initial preference for technology licensing rather than
investment and they have been allowed and regulated since 1979. An EJV is a limited liability
company created pursuant to the EJV Law in which the investor parties share investment, control, risk and profit in accordance with the equity split. The Board of Directors plays the role of shareholder and board because, since no shares are issued, there are no shareholders. Equity
interests are certified by qualified accountants.

The industrial sectors open to EJVs are more numerous than those open to WFOEs. The Guideline Catalogue of Foreign Investment Industries classifies sectors as encouraged, permitted, restricted and prohibited. With WTO accession the first three categories have all increased, at the expense of the prohibited category. There are many sectors where EJVs are, but WFOEs are not, allowed. In some sectors the foreign equity is limited to a certain percentage.

EJVs are established via the following process:

  • The parties negotiate and sign a Letter of Intent which, although not necessarily legally
    binding, is very important and should be treated seriously. The LOI should cover all
    important issues related to the project and be broad enough to allow a party to alter its
    position if necessary. It is wise to include exclusivity and confidentiality provisions in the
    LOI and to state that they are intended to be legally binding
  • The Chinese party prepares a project proposal report to be submitted to MOC or other
    approving authority
  • The LOI is then submitted to the approval authorities for preliminary approval, which
    includes permission to negotiate the project; following preliminary approval, a joint
    feasibility study is undertaken. As the feasibility study is the basis for formal project
    approval, it effectively defines the permitted project in the eyes of the Government.
    Again, while the feasibility study is not necessarily legally binding it is extremely critical
    and should be treated as such. Although the Chinese investor may be willing to take
    charge of the feasibility study work, the foreign investor should participate and be sure
    that it represents its views as well. Both parties must sign
  • While the feasibility study is under way the parties negotiate the joint venture contract and
    its annexes which typically include the articles of association, technology license, export
    agency agreements and other important contracts or documents
  • The feasibility study, joint venture contract and articles of association are then submitted
    to the approval authority. The contracts take effect upon approval
  • The joint venture company registers with the Administration of Industry and Commerce
    and receives its business license
  • Within 30 days of the issuance of the business license, the company must process
    registrations with customs, tax, the State Administration for Foreign Exchange and other
    government agencies

Throughout the approval process it is deemed to be better for the foreign party to establish and maintain good relationships with government officials and departments rather than leave the matter to the Chinese partner. In general, approval levels for productive projects are: $ 100 million of registered capital and greater – The State Council; US$30 million to US$100 million – MOFCOM; less than US$30 million – state authorities. The local approvals are seen as easier to obtain than MOFCOM approvals even though the approving authority might be a branch of the latter. Because of this the local partner might suggest the project be broken into parts within the limits allotted to local authority. This might work to the disadvantage of the foreign investor and should be avoided. While EJVs are the FDI format most acceptable to MOFCOM, they are not allowed in every sector and, where allowed there may be limitations on the equity interest held by the foreign investor.

Checklist for a joint venture contract:

  • name and location of the JVC
  • business scope of the JVC
  • capital structure and contribution schedule
  • Board of Directors provisions: Chairman, members, powers, limitations and meetings
  • general management provisions: managerial structure, powers and limitations
  • land and facilities — offices, plant and factory
  • project schedule – construction and start-up
  • sales
  • financial provisions – tax, audit, accounting, finance management, bank accounts, profit
    allocation and distribution
  • investment incentives
  • labour – sourcing, hiring, probation, firing and unions
  • procurement of technology
  • procurement of raw materials for production
  • joint venture term, expiration and termination provisions
  • duties, powers and rights of the investors
  • liability of the investors
  • dispute resolution

Wholly foreign-owned enterprises

WFOEs, companies owned by one or more foreign investors, are authorized under the Wholly Foreign-owned Enterprise Law in 1986, and the Wholly Foreign-owned Enterprise Law Implementing Rules of 1990, are seen as having fewer management and profitability problems and are now more popular among the foreign investment community than joint ventures because they do away with conflicting partner interests, corporate cultural differences and other control problems inherent in any joint venture.

WFOE project proposals are submitted to MOC or local authorities, depending on the registered capital of the project, and if approved, a formal application is made with the company’s proposed articles of association and a feasibility study. Documents relevant to the investors are also required. If approved it takes the form of a limited liability company for a specified term, although a perpetual existence is theoretically possible. After approval the WFOE must go through the same AIC registrations as any other company. Laws, regulations and policies, which are passed for other FIEs often apply to WFOEs.

Where an investment project has begun as a joint venture limited liability company, it is often converted into a wholly foreign-owned company with the buyout of the PRC party’s equity. This is accomplished by assignment of equity after approval of the Chinese partner and the original approval authority pursuant to the 1997 Several Regulations Of The Ministry Of Foreign Trade And Economic Cooperation And The State Administration For Industry And Commerce Concerning Changes In The Equity Interest Of Investors In Foreign Invested Enterprises. Considerable discretion is given to the local authorities in the actual conversion process.

Holding (investment) companies

HCs are governed by The Provisional Regulations for the Investment and Operation of Investment Companies by Foreign Investors and by the 1996—2001 Explanations of and Supplements to the Provisional Regulations. The impetus for this vehicle came from the foreign investment community which wanted a format that would allow certain facilities that were not present under the other formats. This investment format is a FIE limited liability company, either wholly-owned or joint ventured, without the right to manufacture. It allows integration and rationalization of a parent’s China investment structure, direct hiring of PRC staff, centralization of PRC project shareholdings, human resources, sales, marketing and technical services and procurement. It does not allow direct intra-group lending or consolidated accounting.

Athough having an HC raises the profile and prestige of the parent company within China, an HC has not been allowed to be engaged in trading services, production, or buying A shares (reserved for PRC legal persons) of listed PRC companies. With WTO accession, HCs are expected to be utilized in trading and financing investments (without participation of the People’s Bank of China) as it opens up to FIEs. Because of the trading restrictions, therefore, an HC is not a replacement for a representative office in locales employing a strict interpretation of the HC laws and regulations.

The requirements for establishing an HC are stringent: the foreign investor’s asset value must be at least US$400 million; the parent must have established at least one FIE with at least US$ 10 million of the foreign investor’s investment; and have at least three FIE projects which have received project approval or have set up at least 10 manufacturing or construction FIEs in which it has invested at least US$30 million. Like many PRC regulations, the HC Regulations are selectively applied by MOC, which is given the discretion to ignore certain requirements for establishing an HC.

Additional matters

There are other matters that are relevant to FDI such as arbitration, tax, customs and termination. Moreover, there are local regulations, policies and practices which apply to many issues discussed above and attention must also be paid to those when meeting with local officials. MOC is the approving authority for projects valued at over US$ 30 million. For projects below that limit, the agencies in charge of approval include the state ministries, provided a project does not require overall balancing in terms of production, construction or operations. This rule applies to investment projects in the ‘permitted’ and ‘restricted’ categories. For the ‘encouraged’ category, provincial authorities are the approving authorities for investments exceeding US$ 30 million, and local authorities for investment below that level. In light industries, regardless of size, provincial level authorities are allowed to approve foreign investment. The investment limit is lower for projects in the relatively backward western region of China.
Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
south sea pearls wholesaleFor Questions and answer you can contact & chat with us on:

  • Phone : +6287865026222
  • Facebook Massager click below :
  •  facebook.com/mutiaralomboktourpearlwholesale
  • Twitter : @abdurrachim
  • WhatsApp : +6287865026222
  • Email to: abdurrachim@gmail.com
  • Telegram id : mutiarapearl
  • LINE id : chatinmyline
  • wechat id: chatwechat

We send your parcel via FedEx

abdurrachim miss joaquim pearl send via fedex 1
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

abdurrachim pearl fedex
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

This is my name, my phone number and my address, as a sender (written by FedEx)
This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

one sample of inside the box of parcels abdurrachim missjoaquim pearl
one sample of inside the box of parcels

Related Articles:

Posted on

Investing in the Jewelery Industry in China

Investing in the Jewellery Industry in China

wa mj ar pearls wholesaleThanks to her large market size, huge population (offering dual gain in terms of cheap labour and quantum of demand), a workforce adept in low-skill manufacturing and infrastructure and preferential government policies, China has managed to attract huge foreign investment since the days of reforms and opening up the started in the late 1980s, overtaking the US as the largest recipient of FDI in 2002, a position she maintained in the next year. Investment, rather than trade, which is affected by various tariff and non-tariff barriers, has become an attractive proposition for FDI in many sectors. Jewellery processing is an area, which is encouraged by the government.

wholesale pearls south sea pearls wholesale
If you looking for Wholesale Pearls & South Sea Pearls Wholesale, please contact us on phone or whatsapp +6287865026222 (Miss Joaquim Pearls Indonesia)

China enjoys certain advantages in this sector in terms of natural resources, and skill of the workforce. For an Indian enterprise, the choice of a Chinese production base can be due to a high level of protection granted to finished jewellery products here, as also the need to cater to specialized demands from Chinese consumers. A thorough knowledge of the investment conditions in China is an essential prerequisite for this. This chapter will include information relating to investment like:

  1. Categories of foreign investment allowed
  2. Different modes of foreign investment
  3. Tips for negotiation with Chinese partners in case of JVs
  4. Post-entry strategies of marketing
  5. Taxation of foreign enterprises

Investment Climate in China

After China’s WTO accession, in order to streamline the process of approval for foreign direct investment into China, and to clarify the country’s social and economic priorities, the central government promulgated a set of new Regulations for Guiding the Direction of Foreign Investment in 2002, to replace the Provisional Regulations for Guiding the Direction of Foreign Investment (1995). The new Regulations assign the responsibility for regularly publishing a Foreign Investment Catalogue to the National Development & Reforms Commission (NRDC), the Ministry of Foreign Trade and Economic Cooperation – renamed as Ministry of Commerce (MOFCOM) in March 2003, and the State Economic and Trade Commission (now absorbed in the restructured MOFCOM). This catalogue guides the examination and approval of foreign investment projects.

Under the Regulations, foreign investment projects fall into four categories: Encouraged, Restricted, Prohibited and Permitted. Projects in the first three categories are defined in the Catalogue in detail, while permitted projects are all those outside the purview of the first three. There is some flexibility within the Catalogue; for instance, projects in the ‘Permitted’ category will be deemed ‘Encouraged’ if they export 100% of their output. The category to which a project belongs has implications in terms of investment approval and the extent of tax exemptions.

Encouraged foreign investments include the following:

  • Projects related to new agricultural technology, construction of energy sources, transportation and raw materials for the industry
  • Projects using new or advanced technology, including projects that can increase product quality, save energy and raw materials, raise economic efficiency and alleviate shortages in the domestic market.
  • Projects that meet international market demand, enhance product quality, open up new markets and increase exports
  • Projects that involve integrated use of China’s resources or use of renewable resources, involving new technology or equipment for preventing and controlling environmental pollution.
  • Projects that can develop the manpower and resources of central and western China.

Restricted categories of foreign investment include the following:

  • Projects already developed in China, where the technology has already been imported and where capacity can meet market demand
  • Projects with an adverse effect on the environment and energy conservation
  • Projects involving exploring for and/or extracting rare or precious mineral resources, and
  • Projects in industries requiring central planning by the state

Prohibited foreign investments include the following:

  • Projects that endanger state security or harm public interest
  • Projects that pollute the environment or endanger human health
  • Projects that occupy large tracts of farmland or endanger the security or efficient use of military resources
  • Projects that use manufacturing techniques or technologies unique to China, and
  • Other projects prohibited under state laws and administrative regulations

In more concrete terms, the catalog does not enumerate gems and jewellery manufacturing among the encouraged, restricted or prohibited categories; thus, it is a permitted category. Thus, if an Indian gems and jewellery manufacturer exports 100% of its produce, it can qualify as an encouraged category in terms of investment approval. Exploration and mining of precious metals (gold, silver and platinum etc.) and precious non-metallic ores (like diamond), on the other hand, are included in the restricted category.

Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
south sea pearls wholesale

For Questions and answer you can contact & chat with us on:

  • Phone : +6287865026222
  • Facebook Massager click below :
  •  facebook.com/mutiaralomboktourpearlwholesale
  • Twitter : @abdurrachim
  • WhatsApp : +6287865026222
  • Email to: abdurrachim@gmail.com
  • Telegram id : mutiarapearl
  • LINE id : chatinmyline
  • wechat id: chatwechat

We send your parcel via FedEx

abdurrachim miss joaquim pearl send via fedex 1
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

abdurrachim pearl fedex
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

This is my name, my phone number and my address, as a sender (written by FedEx)
This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

one sample of inside the box of parcels abdurrachim missjoaquim pearl
one sample of inside the box of parcels

Related Articles:

Posted on

Gems and Jewellery Trade between India and China

Gems and Jewellery Trade between India and China

wa mj ar pearls wholesale
Gems and Jewellery trade between India and China has shown a rising trend over the years, the main features of which are given in the following:

Observations about Gems & Jewellery Trade between India and China:

  • Precious stones/gems & jewellery under HS Code 71 were the fifth largest item of export from India to China in 2003. Overall export volume stood at US$ 164 million, with an increase of 62.1% over the previous year. China’s global import under HS Code 71 was US$ 1846 million. Imports grew at 38.40% during this period.
  • wholesale pearls south sea pearls wholesale
    If you looking for Wholesale Pearls & South Sea Pearls Wholesale, please contact us on phone or whatsapp +6287865026222 (Miss Joaquim Pearls Indonesia)
  • Diamond (Under HS Code 7102) is the principal commodity in gems & jewellery trade between India and China. This is the leading sub-category of China’s global import under HS 71 (import volume of US$ 1242 million, accounting for 67.27% of China’s import of all HS 71 items), and also the leading sub-category of India’s exports to China (export volume of US$ 162.2 million, accounting for 98.77% of India’s exports to China under HS code 71). Thus, there are demand-supply complementarities in diamond trade between India and China. India is the third largest exporter of diamond (HS 7102) to China, occupying a 13.06% share of China’s imports.
  • Diamond export from India to China has increased fast, registering a 64.02% increase over export volume last year, while Chinese global import of diamond has increased slower at 24.55%. Thus, the share of India in China’s import of diamond has increased in 2003.
  • Within diamond, China’s top item of imports is unworked non-industrial diamond (HS 71023100), with a volume of US$ 790.6 million, and accounting for about 63.65% of total diamond imports of the nation. India exported miniscule amount of this item to China in 2003. India’s main item of export is non-industrial diamonds under HS 71023900, which is no. 2 item of China’s global imports under HS 7102, with import volume of US$ 423.7 million (34.1% of China’s total diamond imports). Of this, India supplies US$ 161 million.
  • China’s global diamond imports under HS 71023900 increased by 40.24% in 2003 over 2002, while imports from India increased higher at 65.43%. Thus, India’s share of this item in China’s imports has increased in the above period.
  • India’s export of unsorted diamond (HS 71021000) to China has declined from US$ 2.62 million in 2002 to US$ 1.07 million in 2003, a fall of 59%. However, this was accounted for by the decline in price, and volume actually went up by 16.36% from 51256 carat to 59642 carat.
  • Platinum (HS 7110) is the second largest item of import into China (import volume US$ 260.2 million), accounting for 14% of all imports under HS 71. The share of platinum in China’s imports has been increasing in recent years. India’s share in this segment is a miniscule 0.03%. Thus, there is potential for trade in this growing segment.
  • Gold jewellery and parts (HS 71131919) account for over 89% of India’s exports to China under HS 7113 (jewellery with precious metals), the second largest 4 HS Code item exported by India to China. Export volume for this item stood at US$ 0.81 million in 2003 and has registered a huge increase of 222% over the same period last year.
  • Other stones, not strung (HS 7103) are India’s number three item of export to China under HS 71, next only to diamond and precious metal jewellery. However, trade in this segment has fallen by 13.74% in 2003 compared to 2002, and stand at US$ 0.91 million. This fall can be traced to the fall in the value of India’s export of rubies, sapphires & emeralds under HS 71039100 by 34.12% (China’s global imports in this item also showed a decline by 19.24%). The fall in value in turn is attributable to the fall in price, even as quantum rose. Jadeites exports from India under HS 71039910 have increased at over 105% in this period, in both value and volume, though volumes still remain small.
  • Other items of India’s exports to China under HS Code 71 are small in terms of value and volume.
  • India’s imports from China under HS Code 71 stood at 33.4 million in 2003. The growth has been very small at just over 2%. Thus, in terms of jewellery trade, India enjoys advantage in trade with China. The main items of China’s exports to India are silver, pearl, dust and powder, synthetic stones, imitation jewellery etc.

040041

043

042044

046

045
Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
south sea pearls wholesaleFor Questions and answer you can contact & chat with us on:

  • Phone : +6287865026222
  • Facebook Massager click below :
  •  facebook.com/mutiaralomboktourpearlwholesale
  • Twitter : @abdurrachim
  • WhatsApp : +6287865026222
  • Email to: abdurrachim@gmail.com
  • Telegram id : mutiarapearl
  • LINE id : chatinmyline
  • wechat id: chatwechat

We send your parcel via FedEx

abdurrachim miss joaquim pearl send via fedex 1
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

abdurrachim pearl fedex
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

This is my name, my phone number and my address, as a sender (written by FedEx)
This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

one sample of inside the box of parcels abdurrachim missjoaquim pearl
one sample of inside the box of parcels

Related Articles:

Posted on

China’s Gems & Jewelery Trade with the world

China’s Gems & Jewellery Trade with the world

wa mj ar pearls wholesaleChina has emerged as a major player in world jewellery trade in recent years, both in terms of exports and imports. Her exports under HS Code 71 comprising precious stones and metals, mostly through processing of imported items, went up 15.94% in 2003, climbing to US$ 3.296 billion from US$ 2.843 billion in 2002. Similarly, her imports went up 38.40% in 2003, rising to US$ 1.846 billion from US$ 1.334 billion in 2002.

Within the gems and jewellery segment, China enjoyed a net balance of trade in 2003 to the tune of nearly US$ 1.45 billion. Of this China’s exports were worth US$ 3.29 billion and imports US$ 1.85 billion. China’s main items of export are gold and diamond jewellery, non-industrial diamond and silver jewellery, imitation jewellery and pearls etc. China mainly imports are nonindustrial unworked diamond, platinum powder, (the two of them together constituting over 80% of China’s total imports) silver, other precious and semi-precious stones, precious metal jewellery etc. In terms of proportionate value of items, China’s imports seem more diversified than her exports. However, a substantial part of this is used as raw material and finished diamond jewellery and platinum products are used for export.

wholesale pearls south sea pearls wholesale
If you looking for Wholesale Pearls & South Sea Pearls Wholesale, please contact us on phone or whatsapp +6287865026222 (Miss Joaquim Pearls Indonesia)

In terms of export trade in jewellery products (jewellery is the twenty-fifth largest item of China’s exports), China has been a major exporter of jewellery with precious metals (HS Code 7113), where, in 2003, China exported a total of US$ 1.38 billion in value terms, accounting for over 40% of the country’s total export in gems and jewellery. Gold- and diamond-mounted jewellery (HS Code 71131911) constituted almost half of China’s exports within that category, while gold jewellery and parts (HS Code 71131919) accounted for another two-fifths.

Diamond is another area where China’s exports have grown steadily, and at US$ 912 million in the whole of 2003, was the second largest category of the country’s exports in the gems and jewellery segment. Within diamonds, non-industrial diamonds, excluding mounted or set diamonds (HS Code 71023900) accounted for over 90% of total exports in this category. Another item that has grown markedly from US$ 164 million in 2001 to US$ 448 million in 2003, and occupies the third place among China’s gems and jewellery exports, is silver. Imitation jewellery (US$ 310 million) and pearls (US$ 66 million) were respectively placed at number four and five.

In imports, China’s trade is concentrated in diamonds, accounting for over two-thirds of the total value of import under the category of gems and jewellery. China has also started importing
substantial quantum of platinum in recent times. Value addition in both diamond and platinum are done locally.

In 2003, China imported diamond worth a total of US$ 1.2 billion, most of it non-industrial un-worked diamond. The main exporting nations were Belgium (supplying nearly half of China’s total import), South Africa, India, Israel and the US. Diamond registered a 24.5% growth in 2003. Comparatively speaking, the growth of platinum, the second largest category of Chinese import within the jewellery segment, was strikingly higher at 238.6% in 2003. China’s total platinum import volume in 2003 was US$ 260 million. Nearly three-fourths of it was in unwrought platinum powder. China also imports silver, other stones and jewellery with precious stones.

Table II. 1 gives an idea of the growth of China’s gems and jewellery exports under various 4 HS Categories. Table II. 2 gives a more detailed 8 HS Code break-up of China’s imports from the rest of the world. Table II. 3 lists out the major countries exporting gems and jewellery to China, and highlights India’s position and share vis-à-vis them.
027

037

036

035

033

032

031

Articles source: Gems & Jewellery Industry in China, Embassy of India, Beijing
south sea pearls wholesale
For Questions and answer you can contact & chat with us on:

  • Phone : +6287865026222
  • Facebook Massager click below :
  •  facebook.com/mutiaralomboktourpearlwholesale
  • Twitter : @abdurrachim
  • WhatsApp : +6287865026222
  • Email to: abdurrachim@gmail.com
  • Telegram id : mutiarapearl
  • LINE id : chatinmyline
  • wechat id: chatwechat

We send your parcel via FedEx

abdurrachim miss joaquim pearl send via fedex 1
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

abdurrachim pearl fedex
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

This is my name, my phone number and my address, as a sender (written by FedEx)
This is my name, my phone number and my address, as a sender (written by FedEx)

We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible
We send your purchasing parcel via FedEx, we inform you the tracking number as soon as possible

one sample of inside the box of parcels abdurrachim missjoaquim pearl
one sample of inside the box of parcels

Related Articles: