On June 5, 2009, with the approval of the China Securities Regulatory Commission, Shenzhen Stock Exchange formally released the Growth Enterprise Board Rules of Shenzhen Stock Exchange ("Growth Enterprise Board Rules"), paving the way for small and private companies to raise funds publicly, something authorities had been promising for several years.
Continue Reading...The Wall Street Journal reports that "Leveraged finance is down 82% this year, while announced M&A is down 64% and fee income from private-equity firms is down 74%, according to data from Dealogic and Banc of America Securities analyst Michael Hecht."
Private equity and venture capital deals have screeched to a halt, with no clear signs of improvement.
It is always dangerous to try to make long-term forecasts during volatile times – and there hasn’t been a more volatile time in the Chinese private equity and venture capital market since it began opening to foreign investment in the last decades than that of the last several months.
Continue Reading...Since 2006, China has implemented a string of policies designed to restrict foreign investments in the real estate industry. Recent actions, such as the State Council Order No. 546 promulgated at the end of 2008, which repealed the rigorous treatment of the urban real estate tax, have curbed some of the most onerous of these restrictions; however, the Chinese real estate market remains heavily regulated. As a result, China's attitude toward foreign investment in local real estate may be best characterized as conservative.
Continue Reading...So you’ve heard of the global recession. What are you doing about it? It’s not really an unusual question—your PE and VC colleagues are asking the same thing and waiting for someone else to answer it. Most have sat on the sidelines to see when others will jump into the market and start putting money to work. Given the highly uncertain outlook for the immediate future, Chinese PEs and VCs are understandably anxious about their survival and potential for growth against the backdrop of the economical meltdown.
Continue Reading...On March, 27, 2009, China’s Ministry of Finance (“MOF”), State Administration of Taxation (“SAT”) and General Administration of Customs jointly issued Notice of Some Issues related to Taxation Policies on Supporting the Development of Cultural Enterprises (the "Notice"). The Notice extends a series of tax benefits for cultural and media enterprises through December 31, 2013.
Continue Reading...On April 30, 2009 the PRC Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) jointly issued Notice of Some Issues Associated with Income Tax Treatment of Enterprise Restructuring (Cai Shui [2009] No. 59) (“Notice 59”) relating to China's tax treatment of certain corporate restructuring transactions. The rules introduced in Notice 59 have retroactive effect to January 1, 2008.
Continue Reading...New tax rules relating to the tax treatment of certain corporate restructuring transactions are expected to be finalized soon by the PRC Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”).
Under China’s pre-2008 foreign enterprise income tax (“FEIT”) regime, the SAT issued guidance on the tax treatment of corporate restructuring transactions, including Guo Shui Fa [1997]. No 71 (“Circular 71”) and Guo Shui Han Fa [1997].No 207 (“Notice 207”). Circular 71 provided detailed guidelines on the tax treatment of corporate restructuring transactions, including mergers, spin-offs, asset transfers and share restructurings. Notice 207 confirmed that a foreign investor could transfer its equity interest in a Chinese enterprise to a 100% related enterprise at cost, provided a commercial-purpose test could be satisfied. The guidance provided in Circular 71 and Notice 207 was interpreted by many foreign investors as indicating preferential tax policies under the FEIT regime.
Online games are big business in China and they're only getting bigger. The China Annual Game Industry Report 2007 underlines the explosive growth in this industry. As of 2007, the online game user population reached 40,170,000 and has rapidly expanded since then. As the market for online games has increased, so too has the market for virtual property trading. According to The Seventh China Online Game Survey 2007, 83.7% of the users traded items for cash, 46.8% of the users hired third parties to obtain virtual properties on their behalf. These activities amounted to an estimated 4 billion in RMB in 2007.
Continue Reading...A recent agreement by the People's Bank of China ("PBC") has expanded a critical process for conducting business in China: currency settlement. On March 12, 2009, the PBC declared a foreign exchange payment arrangement (hereinafter referred as to the “Arrangement”) between mainland China and Hong Kong in conformity with the Memorandum of Foreign Exchange Payment Arrangement between achieved by the PBC and the Hong Kong Monetary Authority (“HKMA”). The Arrangement was executed on March 16, 2009.
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