By Shaun Rein
This commentary is based on an article published in Business Week

While U.S. private equity investment is expected to remain flat in 2008, China should register 30%-plus growth for the next three years. With the current credit crunch roiling financial markets, private equity firms in the U.S. and Europe are finding it hard to tap the credit they need to fund their acquisitions. According to Dealogic, the value of buyouts dropped almost 90% in the U.S., from $216 billion in the second quarter of 2007 to only $22.1 billion in the final quarter. In contrast, private equity in China continues to boom. China received $12.8 billion in private equity investment in 2007. In 2005, investors allocated only $5 billion to the country. Capital under management hit $20.5 billion last year, an increase of 40% over 2006, according to Beijing research firm Zero2IPO.

My firm, the China Market Research Group, conducted interviews with managers at several dozen leading private equity firms in the U.S. and China to see if China is likely to remain a hot market for private equity, or if the credit squeeze will hit the region, too. Our findings showed optimism for investment in China. The vast majority of respondents felt that U.S. private equity investing will remain flat or drop in 2008 while China will post 30%-plus annual growth for the next three years. Read the rest of “China’s Private Equity Boom” or post a comment

With China’s opening of its market and recent succession into the WTO, it has undergone rapid development in the past two decades. Due in part to such growth and in combination with its massive 1.3 billion population (330 million in its middle-class alone as compared to America’s total population of 300 million), it represents the world’s largest yet ‘untapped’ consumer market. For many franchisors seeking to market reliability associated with…
 
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By Johnny Zhao

Under the current tax system in China, there are 26 types of taxes, which, according to their nature and function, can be divided into the following 8 categories:

• Category of turnover taxes. It includes three kinds of taxes, namely, Value-Added Tax, Consumption Tax and Business Tax. The levy of these taxes are normally based on the volume of turnover or sales of the taxpayers in the manufacturing, circulation or service sectors.

• Category of income taxes. It includes Enterprise Income Tax (applicable to such domestic enterprises as state-owned enterprises, collectively-owned enterprises, private enterprises, joint operation enterprises and joint equity enterprises), Income Tax on Enterprises with Foreign Investment and Foreign Enterprises, and Individual Income Tax. These taxes are levied on the basis of the profits gained by producers or dealers, or the income earned by individuals.
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By Frank Mulligan

The push to get out of high-cost offices, factories and warehouses in city center locations, continues at a pace in China. A combination of rising real-estate prices for Grade A buildings, 18% average salary increases year-on-year, and a push for a cost-down corporate strategy, ensures that there are few other choices. The China Plus 1 strategy takes you only so far because the strategy always includes at least one location in China.The cost of renting a new office or factory in a suburban location in any city in China is generally lower, but the cost of staff attrition has to be factored in to any move. Staff losses can be very high, but when you consider that the move may be inevitable, the cost of these losses has to be accepted as part of the normal cost of doing business.
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The growth in China in the past 10 years has been unprecedented. China is still the most popular destination for foreign manufacturing investments on the globe. In 2007 it attracted more than $80 billion in Foreign Direct Investments (FDI). The China economy continues to “over heat.” The average annual GDP growth in 2002-06 was 10.3%, while per capita GDP …

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