By David Hunter

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 growth was 9.2% due to the population increase.

This “cancerous” growth comes with very high costs in terms of quality, efficiency, banking/securities controls, and geo-political fallout. In order to cool off the economy, the Chinese government has implemented some stop-gap measures over the past 18 months. Some of the key measures that impact US companies already doing business in China are wages, exchange rates, and taxes. Read the rest of “Tough Times Call For Smart Measures” or post a comment

Tax and regulatory issues

By Nick Debnam & George Svinos, KPMG

The process of importing, distributing and selling luxury goods in China raises further challenges for companies, including a number of difficult questions regarding tax treatment, customs duty, logistics and the transfer of intellectual property.

Customs duty, import VAT and consumption tax can all be charged on luxury goods imported into China. The ability of brands to mark up their goods at dramatic premiums can also prove difficult to explain to tax authorities when the time comes to file income tax returns. Companies producing or trading luxury items need to understand how to avoid unnecessary or overlapping burden of tax and other duties. For example, VAT and business tax should in theory be mutually exclusive, since both are turnover taxes. Read the rest of “Luxury Brands in China: Part V” or post a comment