由大衛Hunter

成長在中國在過去10年是史無前例的。 中國仍然是最普遍的目的地為外國製造業投資在地球。 2007年它吸引了超過$80十億在外國直接投資(FDI)。 中國經濟繼續到「熱」。 而人均國民生產總值成長是9.2%由於人口增長， 2002-06平均每年國民生產總值成長是10.3%。

這「癌」成長來以非常高費用根據質量、效率、銀行業務或者安全控制和地緣政治的放射性微塵。 為了冷卻經濟，中國政府實施一些應急措施在過去18個月。 在中國的衝擊美國公司已經做生意的某些關鍵措施是薪水、交換率和稅。

薪水

在廣東省，安排某些最低的薪水在the PRC人工費率增加了在過去五年從463元， 577元， 676元從2002年2004年2006年，分別。 平均薪水增加了25%從2002年到2004年和17%從2004年到2006年，是46%這時期。 這不包括任何負擔，例如醫療，飯食、住所等等。

2006年總薪水為雇員在中國根據統計到達了2.34兆元從1.32兆元(US$309百萬) 2002年(減通貨膨脹)， (NBS)全國局。 The average annual wage of an employee reached 21,001 Yuan in 2006, up 70% by real terms from 12,422 Yuan in 2002, after deducting price hikes. In other words, the largest resource in this country has increased its cost to 25% per year in almost every industry.

Exchange Rate

The China RMB or Yuan was historically pegged to the US dollar at a rate of 8.2865. In 2005, the currency was allowed to free float and as of May 31, 2008 the exchange rate to the dollar was 6.9348 or a 19.5% increase in value since the adjustment in foreign exchange policies. This translates to a 1% decrease in profits of a local Chinese company for every 3% devaluation of the dollar.

Taxes

According to official statistics, as of the end of 2005, there were about 500,000 companies with foreign investment registered in China. Of those, about 330,000 had started operating. About 55% of the foreign companies operating reported losses between 2001 and 2004. In 2005, the figure dropped to 42.96%. It is interesting that while Chinese enterprises, including state-owned, joint-stock and private companies, have been making profits in recent years, nearly half of all foreign-invested businesses have been losing money. Yet while so many foreign enterprises claim to be losing money, China witnesses a continual rise in its FDI. According to a research report by the National Bureau of Statistics on foreign companies claiming to be making losses in China, two-thirds of them have “extraordinary losses.” Chinese officials believe many of these foreign companies are in fact using transfer pricing and other ways to reduce taxable income. In reaction, China is phasing out its practice of charging lower corporate tax rates for foreign-owned companies.

Another key impact on the tax is Value Added Tax (VAT) which is paid when goods are used or made in country. This VAT is then refunded if the goods are exported. However, this is not a 100% refund. In fact, there have been three rounds of VAT rebate reduction since 2005. China’s rates of VAT rebate for exports comprise five levels, i.e., 5%, 9%, 11%, 13% and 17%. On 1 July 2007, China adjusted the VAT rebate rates for certain exports. The most recent China reduction of the export VAT rebate in July 2007 has further impacted profitability of most companies. An example of this would be a company that has two plants in China: Assuming Plant A has >90% local content and Plant B has >35% local content, a reduction in VAT rebate by as little as 2% means Plant A’s profit margin will been reduced by over 3% and Plant B’s by over 1%. This is based on the value added portion of work “in-country.”

Risk Mitigation

These are some of the key economic effects that are a natural progression for a developing nation. However, as the policies change the consequences have a rippling effect on many companies. In order to maximize on the cost advantages and mitigate the risks of a one-country strategy, as the PRC continues to make policy changes, we offer the following alternatives.

• Cost Optimization
One of the major advantages of China’s development and influx of FDI is the maturity and depth of supply chain infrastructure that has been established. Many Western organizations are perhaps not “localized enough” to be able to optimize these supply chains. In difficult times, relationships become a critical factor to ensure one takes advantage of supply chain processes. Collaboration rather than individual activities brings greater purchasing leverage by optimizing the supply chain relative to costs, lead times, and freight. Local knowledge is to know how to classify your products. Perhaps changing from fully built to “semi-finished goods”, with finishing taking place closer to the end customers will allow the company to optimize on the VAT rebates.

• Two Countries, One Strategy
Companies that are already established in the PRC or are in the process of doing so, need to have a “multi-country” Asia strategy. This means moving or establishing a presence in other parts of Asia, i.e., Vietnam, India, while keeping the same strategy for lower costs and or proximity to markets. It is estimated that over 40,000 Hong Kong based enterprises have done just that.

• Time To Bring It Home
Maybe the strategy you set three to five years ago did not come to fruition or conditions have changed so much that it is time to bring some of the operations/activities home and minimize the investments. Although China has intoxicated investors throughout history, it is neither the only nor the right answer for everyone. North America and parts of Europe (Eastern) are still very viable business investments for manufacturing and sourcing, depending on the margin sensitivity of the business. However, this strategic change should not be taken lightly, since investments in time, capital and resources have been established. The winds of economic change will shift again and to re-establish in the PRC will be very costly.

David Hunter works for International Innovations and is Managing Director of Logic Procurement Asia LTD