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Latest news:Local bond issuance backed in FTZs

China will encourage local governments to issue bonds in free trade zones this year, the Ministry of Finance said yesterday.

Governments of regions with mature conditions can "actively" issue bonds in FTZs, according to a circular released by the ministry.

Local officials were also told to attract more foreign-funded financial institutions to participate in underwriting.

To rein in rising debt risks, China overhauled the management of government bonds in 2014, streamlining fundraising channels for local authorities while putting a cap on annual bond issues.

New local government bonds cannot exceed the annual caps, the ministry said.

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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.

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Latest news:Perform Your Obligations Upon Employee Termination

When a China employer and one of its employees end their employment relationship, one of the most important things the employer must do is provide the former employee with a Proof of Termination of Employment Relationship document.

This employer obligation is stipulated in the PRC Labor Contract Law (and in many local regulations as well). The Law says that if you as employer fail to perform this obligation, you can be subject to both administrative corrective orders and to damages.

Let’s consider an actual recent case in Beijing (simplified a bit for this post). An employee and employer entered into a contract for a 3-year term and it came to a natural end on May 3, 2014. Employee’s base salary was 16,000 RMB/month. The parties terminated the employment relationship on May 5, 2014. Employee alleged that Employer refused to provide a Proof of Termination of Employment Relationship document. Employee began working for a different employer (Employer B) on May 7, 2014. Due to the Employer’s failure to provide a Proof of Termination document, Employer B issued a termination notice on May 27, 2014 and the parties formally terminated their contract on May 30, 2014. On July 29, 2014 Employee received a job offer from a prospective employer. However, on August 8, 2014 Prospective Employer provided a notice of its decision not to extend employment due to Employee’s failure to provide a Proof of Termination of Employment Relationship document. Employer B paid Employee 22000/month and Prospective Employer offered the same rate.

Employee brought a labor arbitration claim and Employer was ordered to provide a Proof of Termination document. There was some disagreement as to whether Employee contributed to the non-issuance of this document. Employer still refused to provide a Proof of Termination document. Employee sued in court and asked for RMB 113,034.48 in damages or almost 6 months of salary.

Beijing Chaoyang District People’s Court sided with Employee and found the Employer’s failure to provide a Proof of Termination document caused Employee damages but did not agree that the amount of damages should be RMB 113,034.48. Without providing much analysis the Chaoyang court awarded the employee RMB 40,000. Employee appealed and the appellate court (Beijing Third Intermediary People’s Court) affirmed the lower court’s decision. It held that the damages Employee claimed were not actual, definitive, or inevitable losses and after considering the total circumstances of the case and the parties’ fault, the lower court’s decision was appropriate.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news:China Customs Vows More Reforms in Free Trade Zones

The Chinese government will carry on reforms in the country’s pilot free trade zones, said Li Guo, deputy director-general of the General Administration of Customs, at a press conference last week.

A series of customs supervision innovations have been introduced in Shanghai Free Trade Zone and other pilot zones. Shanghai FTZ also implemented some 50 of the 60-plus trade facilitation agreements.

An AmCham Shanghai survey found that 52 percent of the polled companies believe customs innovations in Shanghai FTZ will benefit them with higher efficiency and lower clearance costs, Li said.

About 88 percent of the companies welcomed the declaration-after-entry procedure as Shanghai Customs adopted new measures to encourage honesty and simplify clearance.

Li said his administration introduced the bonded supervision system to support new businesses, such as bonded repair services, bonded exhibition and trade, cross-border e-commerce, bonded future delivery, bonded financial leasing, and bonded cultural trade.

He said bonded imports totaled 22.95 billion yuan (US$3.32 billion) in China’s free trade zones last year. They came in 145 million consignments.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news: China Eyes Breakthroughs in SOE Reform

Mixed-ownership reform is expected to help China make breakthroughs in state-owned enterprise (SOE) reform, despite remaining challenges.

The state-owned China National Petroleum Corp (CNPC) announced on Wednesday it has passed guidelines to promote market-oriented and mixed-ownership reforms, according to a statement on its website.

China said it will take substantial steps in mixed-ownership reform in the electricity, oil, natural gas, railway, civil aviation,telecommunications and military industries.

"Piloting mixed-ownership reform in heavyweight industries indicates China's resolve and confidence to push forward SOE reforms," said Liu He, deputy head of the National Development and Reform Commission, China's top economic planning body.

Mixed-ownership reform through diversifying the shareholding structure of SOEs is a pioneer for overall SOE reform, according to a statement issued Friday following the Central Economic Work Conference.

Pilot reforms for state-owned asset investment companies, designed to make the state a stakeholder rather than a manager, would raise management and operational efficiency, according to the statement.

The prime aim of mixed-ownership reform is to create a flexible and efficient market-oriented mechanism to improve management of SOEs, according to China Enterprise Research Institute researcher Li Jin.

Methods to introduce SOE mixed-ownership reform include non-state-owned capital investment, SOE investment in private companies and employee stock ownership plans.
Progress has been made in this respect: 68 percent of all SOE-funded firms in 2016 were mixed-ownership, in contrast with 66 percent registered in 2014.

Results of the SOE reform are also emerging. Combined SOE profits returned to growth in October after dropping since the beginning of the year, the Ministry of Finance said. In the first ten months, SOEs made a combined profit of 1.92 trillion yuan ($276 billion).

China has about 150,000 SOEs, which hold more than 100 trillion yuan in assets and employ over 30 million people.

Although significant in stabilizing GDP growth and employment, the blind expansion of SOEs despite the cooling market in recent years has compounded nationwide overcapacity and risk from corporate debts.

Though plagued by a slowdown, China is pushing for mergers and acquisitions (M&As) of its larger SOEs to enhance efficiency. A 350-billion-yuan national fund was established three months ago to speed up the process.

From power supply to tourism, consolidation in a number of sectors has accelerated at an unprecedented pace this year. Food giant Sinograin was approved to acquire China National Cotton Reserves Corporation last month, and two building material producers initiated their merger in August.

Ongoing large-scale restructuring is just part of an ambitious program to push government-funded businesses to the market.

Guidelines on SOE reform were issued in September last year, promising mixed-ownership pilots, opening up more industries to private capital, and a modern enterprise system.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news: China's VAT Rates To Be 'Streamlined'

Chinese officials have discussed the progress made this year in replacing business tax with value-added tax (VAT) and future measures to simplify the latter's ongoing implementation.

First, it was said that the extension on May 1 this year of China's VAT pilot scheme to the construction, real estate, finance, and life services sectors is "going well and up to expectations."

The briefing confirmed that replacing business tax with VAT "is a major part of [the Government's] supply-side structural reforms," and that the tax reduction from the introduction of VAT "will effectively lower costs for enterprises and stimulate market supply."

According to official estimates, 10.64 million businesses have been involved in the four new VAT sectors during the period from May to October 2016. VAT paid amounted to RMB555.4bn (USD74.3bn), a RMB96.5bn reduction compared with business tax payments. All 26 sectors now operating under the VAT system have received a tax burden reduction averaging 14.8 percent.

At the policy briefing, Vice Finance Minister Shi Yaobin confirmed that the Government would now concentrate on simplifying how the tax operates. In particular, it has been noted that there are too many rates of VAT: 17 percent, 13 percent, 11 percent, and six percent. It was said these are too numerous and need to be streamlined.

It was explained that "the tax rate for the service industry is six percent, as its main provider is labor, while the tax rate for manufacturing industry is 17 percent, as its input tax is very high." However, it has also been noted that having different rates for different sectors could impede fair competition and have a negative impact by complicating the operations of some businesses involved in more than one sector.

Shi indicated that China would next look to reform VAT rates and simplify procedures for VAT invoices and e-commerce.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news:Lujiazui continues to attract world's biggest names

Nearly 1,500 institutions with their names on file with the Asset Management Association of China have set up offices in Lujiazui in Pudong New Area. The 6.89-square-kilometer section has become home court for world-renowned asset management institutions to carry out business in China.

Private equity firms flocked to Lujiazui in Pudong New Area amid the rise of hedge funds in China. Nearly 1,500 institutions with their names on file with the Asset Management Association of China have set up offices in the 6.89-square-kilometer section of Pudong.

Those who lead the industry have expanded their business to the global market. Lujiazui has also become home court for world-renowned asset management institutions to carry out business in China.

Since Aberdeen Asset Management opened its Shanghai subsidiary last September, prestigious asset management agencies from countries including the United States, France and Japan have or planned to establish their Shanghai branches in Lujiazui.

Lujiazui Financial City is gradually becoming an important platform for financial cooperation between China and the United Kingdom to promote convergence between the domestic and overseas markets, said Ren Kaifeng, Director, Finance and Shipping of Shanghai Lujiazui Financial City.

The next step for Lujiazui is to further integrate financial resources in the region, attract and support more renowned international and domestic asset management institutions to settle down and develop their businesses in Lujiazui to promote China's asset management industry to go to the global market, according to Ren.

As the core area to implement the construction of Shanghai's international financial center and the financial reform of Shanghai free trade zone, Lujiazui Financial City has become the most comprehensive financial market system in the region and will become a strategic highland in international capital management, Ren added.

At present, China's hedge fund industry is developing rapidly. A recent seminar jointly held by Lujiazui Financial City and Hedge Fund Standards Board extensively studied the feasibility of domestic fund managers going to the global market and overseas managers developing their Chinese businesses.

The HFSB is a standard-setting body for the hedge fund industry and acts as custodian of the Hedge Fund Standards.

The HFSB and the Standards are supported by Hedge Fund Managers accounting for over US$1 trillion in American Utility Management. In addition, the HFSB's Investor Chapter includes over 60 major international investors, including pension and endowment funds, sovereign wealth funds and funds of funds.

The standards are established and updated through a collaborative process that brings together managers and investors to agree on practical, responsible standards of practice in areas such as disclosure, valuation, risk management, fund governance and shareholder conduct.

In this case, the seminar aims to build an exchange platform for domestic and foreign asset management institutions to dock international rules and continuously improve the influence and overall competitiveness of Lujiazui Financial City.

During the seminar, Misha Graboi, partner and general manager of the Irvine, California-headquartered Pacific Alternative Asset Management Company, indicated that current regulatory costs were getting higher and higher.

“Information technology not only brings the opportunity but can also bring the danger,” Graboi said.

“It is necessary to establish industry standards, set a higher access threshold,” he said. “Because the HFSB's resources can be touched and shared, so that it can help some small businesses to know how to enter the market.”

The number of US hedge funds is 10 times larger than in Asia. But as international cooperations have become closer, in the long run, there are many opportunities in Asia, particularly in China's mainland, according to Graboi.

Lujiazui Financial City is commited to promoting international exchange and cooperation. A roundtable in June between policy heads and financial bosses from Lujiazui and City of London aimed to enhance Shanghai's financial cooperation with the UK.

In September, a discussion with International Capital Market Association focused on the integration of China's capital market and international market. The “Cyber Risk and Secure Finance” forum last month promoted the understanding of cyber risk and facilitated communication and cooperation in combating cyber risk for the financial and insurance industries.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news:Green Card Rules Help Overseas Students

A slew of new measures to further ease green card rules for foreign professionals in Shanghai was announced by city authorities yesterday.

People working for companies and universities at Shanghai Zhangjiang National Innovation Demonstration Zone and Shanghai Free Trade Zone will be the main beneficiaries.

The new measures will give foreigners working in these zones a fast track to apply for the Chinese green card.

Under the new rules, "top foreign talent" - highly skilled professionals - can now apply for the card with a letter of recommendation from the administration committees of the two zones.

They will receive a reply from the city's exit-entry administration authorities within 50 working days. Previously applicants had to wait up to six months to get a card.

No longer will these applicants have to work for at least three years before they can apply for the card.

Ma Wengang, an official of the administration committee at Shanghai Zhangjiang National Innovation Demonstration Zone, said "top foreign talent" covered award winners, professionals imported via state programs, "well-known" experts, scholars and entrepreneurs. The new measures will also ease visa rules for highly skilled professionals with at least a master's degree or those who are employed or invited by companies, research institutes and higher education institutions in the two zones.
These people will be allowed to apply for a "talent visa" on arrival in Shanghai and a work permit afterward.

This rule, which also applies to Yangpu District and Shanghai Jiao Tong University, significantly increases the availability of China's talent visa. Yangpu and Jiao Tong are considered national "demonstration areas for entrepreneurship and innovation."

Ma said the measures took effect from yesterday, but further details are pending approval by the Ministry of Public Security and are expected to be published within a few days.

There are about 45,000 foreigners working and studying at Shanghai Zhangjiang National Innovation Demonstration Zone, which has 22 sub-zones distributed across Shanghai.

Foreigners with a working residence permit applying for a green card can have their spouse and children under 18 apply for the card at the same time.

Foreign pupils admitted to elementary and middle schools in Shanghai can apply for a study visa on arrival and a study permit afterward if they don't have time to apply before leaving their home countries.

The new measures have also eased visa rules for home helpers of foreign professionals with a residence permit or green card.

The permit for hiring foreign home helpers is no longer restricted to holders of the green card and five-year work permit. Now anyone with a work permit in China can hire them, and if the home helpers don't have time to apply for a visa abroad, they can apply on arrival in Shanghai.

Furthermore, foreign applicants for green cards who need to produce papers, such as showing a clean criminal record and marital status, can now get those papers, if available, via their home country's embassy or consulates in China.

Ji Minghua, vice president of the Semiconductor Manufacturing International Corporation, which has about 500 foreign professionals, said he expected the new measures would enable up to 100 foreign employees at his company to get a green card every year, up from 50 currently.

"The convenience for getting a green card for their family members is very attractive," Ji said.

Chen Wei, vice president of Hua Hong Semiconductor Co, said the reforms were good news for long-term foreign employees at his company whose family members don't have green cards.

The new measures also enable high-tech companies in Shanghai to hire foreign interns from higher education institutions abroad.

Students from foreign universities listed on the website of China's Ministry of Education can apply for an internship visa on arrival in the city or do it while in Shanghai if they are already in the city.

Meanwhile, foreign students studying in universities in Shanghai can now start a business at Zhangjiang National Innovation Demonstration Zone, Shanghai Free Trade Zone and Yangpu District under the recommendation from the universities by applying for a study permit allowing "entrepreneurship."

The reforms have largely eased visa and green card rules for overseas Chinese, by definition former Chinese citizens, and their foreign-born heirs or foreign-born heirs to Chinese citizens.

According to the rules, they can apply for a green card as long as they have a doctorate degree or have worked at Zhangjiang National Innovation Demonstration Zone, Shanghai Free Trade Zone, Yangpu District or Shanghai Jiao Tong University for a consecutive four years and have lived in China for at least six months every year during that period.

The visa duration for business, study or visit purposes for this category of people has also been extended.

The new measures have also eased the regulations for investors who want to apply for a green card.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news:China Employers: Are You Ready for January 1’s Big Changes?

Earlier this year, the PRC Ministry of Human Resources and Social Security (“MOHRSS”) issued a set of Measures for Evaluating Compliance and Integrity of Employers’ Labor Protection (《企业劳动保障守法诚信等级评价办法》). These Measures are set to take effect on January 1, 2017 and will apply to all China employers, domestic and foreign. So if have employees in China and you have not already done so, NOW is the time to ask yourself, do you feel ready?

Under these new measures all employers in China will be evaluated annually, and based on their legal compliance and any violation, they will be divided into 3 categories: A, B and C, with C being the lowest category. In conducting its evaluations, the relevant human resources and social authorities will consider all of the following

* whether the employer has formulated its internal labor protection rules and regulations
* whether the employer has executed employment contracts with every employee
* whether the employer is in compliance with labor dispatch laws
* whether the employer is in violation of the child labor laws
* whether the employer is in compliance with laws regarding female workers and underage workers
* whether the employer is in compliance with laws on working hours, rest time and leave
* whether the employer is in compliance with laws regarding employee remuneration and meets the applicable minimum wage standard
* whether the employer contributes all mandatory social insurance
* whether the employer is otherwise in compliance with labor protection laws and regulations

For employers in Category A, the frequency of administrative checks by the local labor authorities will be reduced, while the frequency of inspections for employers in Category B will be increased appropriately (whatever that means) and employers in Category C will become subject to the most scrutiny. Also for employers in Category C, the person-in-charge will be required to schedule meetings with labor authorities to be reminded of the importance of following labor protection laws. The evaluation results will be kept on file for a minimum of three years. You do not want to find yourself in Category C, or even B!

Also taking effect on January 1, 2017 is MOHRSS’ Measures of Public Disclosure of Significant Violations of Labor Protection Laws (《重大劳动保障违法行为社会公布办法》). Under these Measures, if a China employer commits a serious violation of Chinese labor and employment laws, it may be made public by the labor authorities. The following rulings/decisions on employer violations of China’s labor laws may become public:

* Failing to pay “substantial” employee remuneration
* Failing to pay employee social insurance and the circumstances are “serious”
* Violating the laws on working time or rest or vacation and the circumstances are “serious”
* Violating the special rules on protecting female workers and underage workers and the circumstances are “serious”
* Violating any child labor laws
* Causing significantly bad social consequences due to violations of labor laws
* Other serious illegal conduct

When publishing these labor law decisions, the following information will be released to the public (with exceptions for national security, trade secrets or individual privacy):

* The employer’s full name, integrated social credit code/registration number, and address
* The name of the legal representative or the person-in-charge
* The main facts of the violation
* The decision made by the authorities

This information will go into the employer’s credit file on integrity and legal compliance and may be shared with other governmental departments. China’s local human resources and social security bureaus will be responsible for clarifying and implementing these rules.

Bottom Line: Effective on the first day of January 2017, two important sets of rules will be implemented by MOHRSS to deter employers from violating China’s labor and employment laws and regulations. Go ahead and call these legal changes the China employment lawyers full employment act (as a couple of our clients already have), but just make sure you are in compliance and you stay in compliance,
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news:Lujiazui Looks to Strengthen Shanghai-London Finance Ties

Shanghai's financial hub Lujiazui is looking to further strengthen cooperation with the City of London, according to officials inside the local government.

Lujiazui hopes to deepen ties between Shanghai and London in a number of different areas, including pushing for the mutual opening-up of China and the UK's capital markets.

Officials also say they aim to offer more services and policy support to help UK companies to develop in China, and they are also encouraging Chinese companies to expand their businesses in the UK.

The financial zone in Pudong New Area has long been central to Shanghai's ties with London.

Lujiazui Financial City signed a cooperation deal with the International Capital Market Association on Sept 6, thanks to strong support from the City of London.

The two sides agreed to share their successful experience in exploring the international capital market, and help Shanghai reach its goal of becoming a global financial center.

The financial city also teamed up with the UK's Institute and Faculty of Actuaries to organize a financial risk management forum on Nov 7, which helped to further exchanges between Lujiazui and London.

More than 30 of Lujiazui's top financial managers also got the opportunity to visit London's leading financial institutions and industry organizations in March and September and attended financial training programs there.
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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Latest news: Check These Nine Things Off Your List

The following are some of the basic things you should have on your employer-employee review list:

Employment contracts. Do you have a written contract with every single one of your employees, including part-time employees? Are all of your employment contracts current?

Employer rules and regulations (aka employee handbook). Do you have a set of rules and regulations? More importantly, does what you have work for China? Has it been made available to all your employees? Have your employees signed a receipt proving they actually received it?

Dispatched employees. Are you in compliance with the labor dispatch laws? Do you have more dispatched workers than the statutory maximum? Are you using dispatched workers for positions that should be filled by a regular employee? Are you using dispatched workers when you could directly hire them as your own employees?

Female employees, especially those who are pregnant or nursing. Are you providing the labor protections and conditions required under relevant laws? Are you providing maternity leave in accordance with the law?

Working time, rest and vacation days. Have you made arrangements so your employees can take their vacation days? Are you making sure your employees who are designated to work under the standard working hours system do not exceed their standard working time? Are you making sure that whenever it is necessary to incur overtime, the employees follow your internal procedure and you pay the employees for their overtime? Are you current on the alternate working hours system renewal? Are you giving your employees on these systems enough rest and due consideration to their health?

Employee compensation. Are you meeting the minimum wage requirements? Note that several provinces and cities, including Shanghai, Jiangsu, Chongqing recently raised their minimum wage standards. Are you paying your employees on time? When you withhold payment from an employee, do you explain the reasons to the employee and document the situation so you will be able to show your action was reasonable and lawful?

Social insurance contributions. Are you making all mandatory social insurance contributions? In places where employers are required to make contributions for expats, are you paying into the expats’ social insurance accounts or have you otherwise made arrangements in the employee’s contract (provided it’s permissible in your locale)? The good news is that China is going to modify the base for social insurance contributions, which will ease the burden on employers. The bad news is that many of the companies we review are not in compliance with applicable rules on this.

Employee non-competes. Do you have signed employee non-competes from all of your employees who might harm you by competing with you? What about non-solicitation agreements?

Employee terminations. Are you handling all of your employee terminations according to law? Do you document your employee terminations? Do you timely transfer your terminated employees’ files and social insurance accounts?
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Elite Stage is a platform that provides One-stop business Solution for start-ups and foreign enterprises, founded by Venture Capital and Elite Stage Consulting Company, individual Lawyer Partners andDeloitte Auditors. For over 8 years, Elite Stage successfully assisted more than 800 companies from all over the world with their China market entry.
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