Research & Analysis

Not so long ago, it was common for organizations in China to share input data for their monthly payroll with their payroll processing vendors through corporate email. It was also not unusual for those vendors to process their clients’ payroll using Excel sheets. Nowadays, the advent of secure FTP links to upload and download sensitive HR information has eliminated confidentiality concerns relating to data transmission. Payroll processing companies have also developed sophisticated systems to make payroll calculations and produce the reports their clients require. However, gathering input information remains a significant challenge.

To operate at their best, global cross-border companies require clear and effective regional-reporting lines for senior leaders. This is particularly true for multinational companies (MNCs) operating in China given the country’s size and complexity as a market, as well as its importance as a source of revenues and future growth.

Scarce—and in some cases, unprepared—management talent hampers some multinational companies’ growth ambitions in Asia. Therefore, it is vital for companies to develop a pipeline of prospective leaders. Failing to plan in advance could leave critical positions temporarily unfilled, something that causes uncertainty and could damage the company as a whole. As a result, simply turning to the pre-existing talent pool to plug leadership gaps is not a sound strategy. Worryingly, there are signs that the talent pipelines of some multinational companies in Asia are inadequate for the challenges ahead.

China’s value-added tax (VAT) reform on May 1, 2016 was China’s biggest tax overhaul in 20 years. The reform changed the tax rate on representative offices’ (ROs) business activities, reducing the rate from five percent to three percent. The reduced tax liability on ROs may cause foreign investors to restructure their business practices to capitalize on the reform’s benefits. This article provides a brief introduction to China’s taxation rules on ROs, and looks at the VAT reform’s potential impact on ROs’ tax structure.

Due diligence is the process of investigating the background of a company or individual before entering a formal business relationship. This traditionally focuses on financial, legal, and reputational aspects of the subject company and its principals. Reputational (or integrity) due diligence addresses questions about the subject’s background and business track record, who controls the decisionmaking process, and how the company wins business. In China and many other emerging markets, the extent to which due diligence helps companies make better decisions and manage risk often depends on the quality and depth of answers to such questions.

Exporters trying to sell to the lucrative Chinese market, with or without a physical presence in the country, are well aware of the country’s booming cross border e-commerce industry, which grew over 30 percent in 2015 despite the slowing of international trade. It is predicted that cross border e-commerce trade will exceed RMB6.5 trillion in 2016, accounting for 20 percent of total trade volume.