Orientation China Guidebook: Leading You to Business Success

About AmCham Shanghai

The American Chamber of Commerce in Shanghai, known as the Voice of American Business in China, is the largest and fastest growing American Chamber in the Asia-Pacific region. Founded in 1915, AmCham Shanghai was the third American Chamber established outside the United States. As a nonprofit, nonpartisan business organization, AmCham Shanghai is committed to the principles of free trade, open markets, private enterprise and the unrestricted flow of information.

Vision: The American Chamber of Commerce in Shanghai strives to be the leading international business association in China.

Mission: To support the success of our members by promoting a healthy business environment in China, strengthening U.S.-China commercial ties and providing high-quality business information and resources.

Join AmCham Shanghai

AmCham Shanghai can help you...

Get connected with more than 3,700 members from the international business community at 300 events annually in Shanghai and the Yangtze River Delta area

Learn about the best business practices from 22 industry committees

Enjoy expedited non-immigration U.S. visa application services through the Corporate Visa Program for your direct employee, family members and business partners

Stay informed about business trends and updates of doing business in China by reading various business reports and publications

Link with both the Chinese and U.S. governments through government relations programs

Grow professional and working skills by participating in a series of training sessions

Seek suitable business partners and suppliers at the Chamber’s SME Center

Build and enhance your brand image through all kinds of sponsorship and marketing platforms and opportunities

Benefit from multiple international health insurance options with quality customer support and substantial savings off standard market rates suitable for individual members, family members and employees

There are 11 categories of membership in AmCham Shanghai. Please read below to see which would be most appropriate for you and your company.

AmCham Shanghai members at an event

Sustaining Membership

RMB55,000

(with 30 Associate Members)

For companies which qualify for U.S. Corporate Membership, U.S. Associated Corporate Membership, Small Business Membership and Corporate International Affiliate Membership.

Additional employees of the member company can be added as Associate Members at RMB1,600 per person (standard rate: RMB2,000 per person)

U.S. Corporate Membership

RMB7,450

For companies whose parent company is incorporated in the United States and are established in or at least have a regional representative office in China (must be a foreign invested enterprise).

U.S. Associated Corporate Membership

RMB7,450

For companies whose parent company is incorporated outside of the United States and have substantial investment in the U.S. (productive assets of U.S. subsidiary no less than US$1 million or more than 50% of productive assets worldwide). Must be established in or at least have a regional representative office in China (must be a foreign invested enterprise).

Corporate International Affiliate Membership

RMB7,450

For companies whose parent company is incorporated outside of the United States and are a non-U. S./non-China company. Must be established in or at least have a regional representative office in China (must be a foreign invested enterprise).

Small Business Membership

RMB6,450

For companies whose parent company is incorporated inside/ outside of the United States and with fewer than 50 employees in China or less than US$1 million annual revenue in China. Must be established in or at least have a regional representative office in China (must be a foreign invested enterprise).

Educational Membership

RMB4,550

For U.S.-accredited universities or institutions of higher education.

Non-Resident Corporate Membership

RMB5,450

For companies which otherwise qualify for U.S. Corporate or U.S. Associated Corporate Membership, Small Business or International Affiliate Corporate Membership but do not currently have operations in China.

Associate Membership

RMB2,000

For direct hire employees of Corporate Member companies. There is no limit to the number of Associate Members who may join. AmCham Shanghai actively encourages member companies to list additional associate members for networking opportunities.

Individual U.S. Citizen Membership

RMB2,650

For U.S. citizens resident in China (at least 21 years of age).

Non-Resident Individual Membership

RMB1,950

For persons who hold foreign passports and reside outside of China.

Individual International Affiliate Membership

RMB2,650

For international citizen residents in China (at least 21 years of age)

Call us at (86-21) 6279-7119 or visit www.AmCham-Shanghai.org to find out which membership category suits you the most and what AmCham Shanghai can offer.

AmCham Shanghai Corporate Visa Program

The AmCham Shanghai Corporate Visa Program (CVP) is administered by AmCham Shanghai in cooperation with the U.S. Consulate General in Shanghai. The program allows selected AmCham Shanghai companies to apply for expedited U.S., travel visas for their employees, clients and family members.

Benefits of the CVP:

Expedited appointments for visa interviews

A high success rate for obtaining a U.S. visa

Assistance in applying for all non-immigration visa types

A simplified application process coordinated through AmCham Shanghai

Assistance in applying for business and/or tourist visas for direct hires

Assistance in applying for tourism and/or student visa for immediate family members

A channel for applying for business visas for your customers, suppliers and vendors

The ability to apply for business visas for direct hires

For more information about expedited visa processing through the AmCham Shanghai CVP, please visit the Corporate Visa Program page at the AmCham Shanghai website: www.amcham-shanghai.org.

Medical Benefits Program

AmCham Shanghai’s Medical Benefits Program (MBP) is administered through a leading insurance broker to provide high quality multiple coverage options and premium flexibility to meet the specific needs of our broad membership.

To find our more, please contact:

Sandra Sun, Marketing Manager

Tel: (86-21) 6279-7119 ext.5670

sandra.sun@amcham-shanghai.org

Stretch Your Marketing Dollar

With a wide range of platforms and programs - from traditional publications and events, to website, email and exciting new digital media promotions - AmCham Shanghai offers a full spectrum of sponsorship opportunities to promote your services and products to the largest and most active international business association in China! Consider the following options:

Platform Sponsorship

Monthly Insight magazine

Chamber publications

Official website

Email marketing

Event Sponsorship

Annual Charity Gala

Independence Day Celebration

Annual Government Appreciation Dinner

Industry conferences

Target Sponsorship

Spotlight Session

President’s Circle

In-kind Sponsorship

Membership programs

Business surveys

Special member-only offers

For inquiries on how to become a sponsor of AmCham Shanghai, please contact:

Patsy Li, Director, Business Development & Marketing

Tel: (86-21) 6279-8966

patsy.li@amcham-shanghai.org

Zoe Zhang, Sponsorship Manager

Tel: (86-21) 6279-7119 ext. 5667

zoe.zhang@amcham-shanghai.org ■

The American Chamber of Commerce in Shanghai

上海美国商会

Orientation China

Guidebook

THIRD EDITION

DIRECTOR OF COMMUNICATIONS & PUBLICATIONS David Basmajian

EDITOR Bryan Virasami

COPY EDITORS Ryan Balis and Erika Wang

AMCHAM SHANGHAI

PRESIDENT Brenda Foster

VP OF PROGRAMS & SERVICES Scott Williams

VP OF ADMINISTRATION & FINANCE Helen Ren

DIRECTORS

BUSINESS DEVELOPMENT & MARKETING Patsy Li

COMMITTEES Stefanie Myers

COMMUNICATIONS & PUBLICATIONS David Basmajian

EVENTS Jessica Wu

GOVERNMENT RELATIONS & CSR Steven Chan

MEMBERSHIP & CVP Linda X. Wang

YRD CENTER Jonathan Shyu

Shanghai Centre, Suite 568, 1376 Nanjing West Road, Shanghai, 200040 China tel: (86-21) 6279-7119 fax: (86-21) 6279-7643 email: editor@amcham-shanghai.org www.amcham-shanghai.org

An AmCham Shanghai Publication

Orientation China Guidebook

Leading You to Business Success

THIRD EDITION

CONTENTS

About AmCham Shanghai

Note from the Editor

FIRST STEPS

1    MARKET TRENDS: Keeping track of the business climate

By David Basmajian, AmCham Shanghai

2    THE BUSINESS STRUCTURE: Three approaches to entering the Chinese market

By John Leary and Sherman Deng, White & Case

3    RISK MANAGEMENT: Reading backwards to assess risk

By Kent Kedl and Neal Beatty, Control Risks

4    TAX CONSIDERATIONS: China tax and business structure issues

By Jie Liang, Angela Pan and Eric Sun, Deloitte

PREPARING TO LAUNCH

5    SITE SELECTION: Developing a facility

By John Thompson, SSOE

6    WHAT CONSUMERS WANT: The new China opportunity

By Kunal Sinha, Ogilvy & Mather

7    HUMAN RESOURCES: Finding the right talent

By Helen Tantau, formerly of Spencer Stuart and Richard Zhu, Spencer Stuart

8    REAL ESTATE: Procedures and common practices

By James Allan, Jones Lang LaSalle

9    THE WEB: Thinking social in China

By Greg Paull, R3

RULES OF THE ROAD

10   WORKING WITH THE CHINESE GOVERNMENT:

A roadmap to government entities

By Ken Jarrett, APCO Worldwide

11   EXPORTING TO CHINA: Practical advice for American SMEs

By William Brekke, U.S. Commercial Service

12   LABOR: Employment Law in China

By Gordon Feng and Erika Collins, Paul Hastings

13   TEAMING UP: Finding a business partner

By Christopher Wingo, China Sage Consultants

14   CUSTOMS IN CHINA: Understanding the regulatory environment

By Damon Ross Paling, PwC

ON THE GROUND

15   CULTURAL EQUATION: Get lost in translation

By Wendy Radtke, Goodyear

16   SMALL BUSINESS: Opportunities and challenges

By Eric Meng and Kirt Greenburg, AmCham Shanghai

17   THE Yangtze RIVER DELTA: a second home for U.S. companies

By Jonathan Shyu, AmCham Shanghai

18   BUSINESS AND SOCIETY: Not evangelizing CSR

By Bill Valentino

19   MOVING TO CHINA WITH CHILDREN:

Relocating a challenge for the whole family

By Jackson Teubert, Community Center Shanghai

U.S. Government Diplomatic Posts in China

Note from the Editor

Welcome to the third edition of the Orientation China Guidebook , a publication we hope will serve as a practical resource for newcomers to China, as well as those already here and looking to understand some of the complex topics we tend to take for granted back in the United States. While some of our more enterprising readers and AmCham Shanghai members may relish the challenges of navigating the unique obstacles that come with launching or expanding a business in China, most prefer some help and guidance, hence this book.

Outside of the corporate boardroom, the challenges of living and working in China can be a little daunting. In the first half of 2013, it felt like we were bombarded with news about food safety that made dining out feel like a gamble. And in certain cities, air quality made breathing a little more taxing. We can’t offer any solutions to these problems but we’re trying to add some perspective to other concerns. In this edition, we’ve included a few new chapters - one about bringing children to China - and another about the cultural issues that even the most seasoned executives should weigh and consider before getting off the plane at Shanghai’s Pudong International Airport.

This book wouldn’t have been possible without the contribution from AmCham Shanghai members. We’ve included content from seasoned experts in a variety of areas such as the rapidly changing field of HR, marketing to Chinese consumers, real estate, taxes and perhaps one of the more intimidating things about doing business in China - dealing with the Chinese government. We thank all of our contributors and supporters.

Bryan Virasami

Editor

FIRST STEPS

Chapter 1: MARKET TRENDS

Keeping track of the business climate

By David Basmajian, AmCham Shanghai

Chapter 2: THE BUSINESS STRUCTURE

Three approaches to entering the Chinese market

By John Leary and Sherman Deng, White & Case

Chapter 3: RISK MANAGEMENT

Reading backwards to assess risk

By Kent Kedl and Neal Beatty, Control Risks

Chapter 4: TAX CONSIDERATIONS

China tax and business structure issues

By Jie Liang, Angela Pan and Eric Sun, Deloitte

MARKET TRENDS

Keeping track of the business climate

BY DAVID BASMAJIAN

C hina — where anything is possible and nothing is easy. It may sound like a cliché but it’s also a common refrain among business people competing in the China market. Without a doubt, the opportunities for U.S. companies competing in China are truly historic. The size and diversity of the membership of AmCham Shanghai reflects that - nearly every Fortune 500 company has some presence in China and SMEs are the fastest growing segment of the U.S. business community here. Yet in conversations with AmCham Shanghai members, most share the sentiment that China is also among the most challenging markets in which they compete.

David Basmajian is director of Communications and