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January 2024

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How will the Wuhan coronavirus affect China’s economy? Which industries will be most affected, and which assets will usher in a bottoming rebound?

This article is translated and republished from China Investment Network       

1 Feb 2020: In the early morning of January 31, the World Health Organization (WHO) announced that the Wuhan coronavirus 2019-nCoV was listed as an international health emergency. However, WHO does not recommend the implementation of travel and trade restrictions.  The Wuhan coronavirus outbreak that has started in Wuhan has lasted for more than a month, and is still spreading. According to the National Health and Health Committee, as of 24:00 on January 30, a total of 9692 confirmed cases of new-type coronary pneumonia were reported, of which 1,527 were severe cases, 213 were fatal cases, and 171 were cured and discharged; 1982 confirmed cases were newly added on the day.

In the stock market, class A shares are in the period of lunar new year market break, thus the impact of the coronavirus on A-shares has yet to be seen. However, it is undeniable that the impact of the epidemic on macroeconomics cannot be ignored. The impacts on overseas capital markets and commodity markets are showing with the Asia-Pacific, European and American stock markets all falling across the board.

With the severe coronavirus scare, people’s mobility are reduced, businesses and production sites have been forced to close or delay opening. At the same time, many cities have announced plans to delay their start work dates. The series of actions will weaken economic activities at large and affect the macroeconomic development. Service demands and local consumption are inhibited; production, investment, and exports have been hampered; unemployment may have risen; and GDP growth has slowed.

The first to be impacted is local consumption. Due to the concentrated outbreak of the coronavirus during the traditional Chinese New Year holidays, the industries most affected in the short term are the service industry, especially the transportation, tourism, catering, and entertainment industries. The growth rate of the tertiary industry will be impacted, eventually lowering the growth of consumption. During the SARS period, consumer consumption fell by nearly 6 percentage points year-on-year.

Taking the transportation service industry as an example, on January 28, the Ministry of Transport announced that on January 27, railways, roads, waterways, and civil aviation nationwide sent 16.267 million passengers, a decrease of 68.3% over the same period last year. Among them, the number of passengers sent by railway was 3.463 million, down 62.2%; the number of passengers sent by road was 11.46 million, down 70.3%; the number of passengers sent by water was 283,700, down 83.6%; and the number of passengers sent by civil aviation was 1.006 million, down 42.8%.

The impact of the coronavirus on dining and entertainment is also very significant. In Beijing, the KTV entertainment venues represented by Mai Song are temporarily closed. Beijing ’s most famous food street, the Qiong Street is usually crowded especially during the public holidays. In stark contrast, it has only few pedestrians now. Restaurants are forced to temporarily suspend their business to prevent the spread of the epidemic. These impacts will be reflected at the macroeconomic level, that is, GDP and growth rate, and even employment.  The consequences of the Wuhan coronavirus on the secondary industry should not be underestimated. While restricting the movement of the population, the operations of companies are also affected, resulting in chained consequences of lower productivity and industry performance.

In addition, China is the world’s largest exporter of merchandise. Some countries and regions will reduce or suspend the import of goods considered as connected to the epidemic. This will have a certain negative impact on China’s export commodity manufacturing industry.

The Wuhan coronavirus has disrupted China’s already-opened industrial expansion and economic progression. Zhang Ming, chief economist of PingAn Securities, believes that the outbreak may affect both the supply and demand of consumer goods. On the other hand, considering the adverse impact of the pneumonia epidemic on industrial enterprises, the restocking cycles of industrial enterprises may be delayed, or become lesser, which means that the recovery of PPI (industrial price index) growth may be delayed.

As for the impact of the epidemic on GDP growth, Li Xunlei, chief economist of ZhongTai Securities, believes that the main impact of the new crown epidemic on the Chinese economy is in the tertiary industry, and the annual impact is estimated to be about one percentage point. The negative impact of GDP growth may exceed 0.5 percentage points.

Zhang Ming believes that if we do not consider further development of macroeconomic policies, the economic growth rate in the first quarter of 2020 may be about 1 percentage point lower than the previous forecast. The GDP growth rate in the first quarter of 2020 may be around 5.0%, and the possibility of less than 5.0% is not ruled out. The annual economic growth rate may be around 5.7%.  In Tianfeng Securities (6.400, -0.18, -2.74%), the macro team believes that if the epidemic situation cannot be effectively controlled in the short term, lowered consumption and productivity may affect economic stabilization in stages, and the real GDP growth rate may fall below 6 in the first quarter.

In addition, rating agency Standard & Poor’s made a “preliminary assessment” that Wuhan coronavirus could reduce China’s GDP by 1.2 percentage points.

However, some domestic economists have expressed optimistic views. Wei Shangjin of Fudan University believes that the impact of the pneumonia incident on China’s GDP will be about 0.1%.

Huang Yiping, a professor at the National Development Institute of Peking University, believes that these shocks happened at a sensitive time. Economic growth has clearly declined in 2019, but GDP was still maintained around 6%. With the new Wuhan coronavirus, the downward pressure on economic growth in the first quarter of 2020 will increase again, which will inevitably directly affect the Chinese people’s day-to-day living (73.500, -0.54, -0.73%) and investor confidence. Therefore, while the government is working hard to control the epidemic, it should also consider adopting some policy responses.

Regarding the government’s response, Li Xunlei said that in order to deal with the negative impact of the new crown epidemic (the black swan) on the economy, it is necessary to re-adjust the established fiscal and monetary policies in 2020. Assuming that the epidemic will drag down GDP growth by 1 percentage point under pessimistic expectations, then about 500 billion yuan of investment and consumption will need to be hedged to achieve a steady growth effect.

Li Xunlei suggested that the scale of fiscal expenditure should be expanded, and the proposed fiscal deficit rate should be increased from 2.8% in 2019 to 3%, that is, increase fiscal expenditure of about 200 billion yuan; in terms of monetary policy, a stable and loose monetary policy should be implemented. It is necessary to consider cutting interest rates quarterly, and to increase the target for lowering the interest rate throughout the year to promote new investment or local consumption.

There are also many economists calling for tax cuts for SMEs to reduce corporate burdens.

Capital and Commodity Markets: Slump and Retracement

In response to the epidemic, the General Office of the State Council decided to extend the Spring Festival holiday to February 2 and February 3 to officially resume work. Subsequently, the Shanghai Stock Exchange and the Shenzhen Stock Exchange announced on January 27 that the 2020 Spring Festival will be closed until February 2 (Sunday), and February 3 (Monday) will be opened normally.

It is worth noting that on the last trading day before the Spring Festival (January 23), the market experienced a panic-stricken sell-off, with 9.3 billion funds flowing out of Beijing, and the Shanghai Stock Index and Shenzhen Stock Exchange Index falling by 2.75% and 3.52% respectively. From a global perspective, peripheral stock markets and commodities outside the market are generally worried that the epidemic will cause the Chinese economy to plummet.

The most direct impact on the Chinese stock market and investor sentiment is naturally the Hong Kong stock market. On January 29, the Hong Kong stock market opened for trading. The Hang Seng Index plunged 2.82% on the day and continued to plunge 2.62% on the 30th. Over two days it plunged to 1500 points, a decline of 5.37%.  Another important index future that Chinese investors pay special attention to is the FTSE A50 futures, the index futures trading most active February contracts ‘performance were very bleak. Following a 5.64% plunge on January 27, it plunged 3.28% again on January 30.

In terms of US stocks, the three major US stock indexes, the Dow Jones Industrial Index, the Nasdaq Index, and the Annotated Poole Index, each experienced varying degrees of decline. On January 27 (Monday), US stocks opened sharply lower. At the close, both the Dow Jones Index and the S & P 500 fell by 1.57%, and the Nasdaq also fell by 1.89%. Under the weak market, China’s stocks fell, Alibaba closed down 3.87%, JD.com closed 4.8%, Baidu closed down 2.86%, Weibo fell 0.96%, Pinduoduo fell 2.01%, Weilai Automobile fell 13.95%, NetEase fell 1.84%. Large U.S. technology stocks also fell across the board, with Apple down 2.94% and Amazon down 1.79%.

Although European stock markets have not been hit as much as US stocks, from the perspective of German DAX, British FTSE 100, and French CAC index, they have all declined by about 3 percentage points.

The economic slowdown will also affect commodity markets. However, the demand for the commodity market has different performances due to economic impact. Specifically, from January 19 to January 29, 2020, crude oil and industrial metals fell more than the stock market, of which ICE cloth oil and LME copper dropped 10% and 9.77%, respectively. The market performance of crude oil and industrial metals is highly dependent on economic expansion.

A senior commodity practitioner said to China Investment Network that the Wuhan epidemic has a very direct impact on commodities because commodities are located upstream and midstream of the entire industry chain, also the commodity market has strong global linkages. The short-term negative impact of this epidemic on commodities is relatively large, and it is typically represented by commodities such as iron ore, rubber, and copper.

Taking iron ore as an example, the SGX Iron Ore 2002 contract started to decline on January 23, and fell more than 12% in six trading days as of press time. The above industry experts believe that the core reason for the decline is the short-term stagnation of economic activity affecting the demand for commodities, such as iron ore as a raw material for steel. If the start work time after the Spring Festival is further delayed, and the construction activity lags, then traders and steel mills will face great pressure with their ready stocks. When there is stock dumping, the price of iron ore will be further reduced. “But then demand will gradually rise as the epidemic eases. The best indicator of observed demand is the number of newly diagnosed patients. When the figure turns downward, demand and the price of various assets will rise, probably in March-April. The conclusion is that demand will not disappear, the epidemic will have a smaller impact on the economy as a whole, but a greater impact on the momentum of growth. “

Hedge assets such as gold are different. Against the background of economic slowdown, it is possible to usher in loose monetary policy. As safe-haven assets, gold and U.S. Treasury bonds saw price increases over the same period. From January 21st to 29th, the New York Mercantile Exchange gold futures rose 1.37%; during the same period, the yield on 10-year U.S. Treasury bonds fell by 24bp to 1.60% (the rise in the price of Treasury bonds represents a decline in yields).

The external market performance will eventually be reflected in the performance of class A shares, affecting investor sentiment and behavior. Many investors expressed concerns over market movements after the holiday. However, institutional perspectives are not pessimistic. Yang Delong, chief economist of Qianhai Open Source Fund, said that after the holiday, the trend of the class A shares depends on the spread of the epidemic, but in the medium and long term, the epidemic will not change the market dynamics of class A shares. He thinks that if the market pulls back a lot after the holiday, it is precisely the time to buy in undervalue high-quality stocks.

Anxin Securities believes that the short-term negative impact on the stock market may be less than 10%, or even lower; the medium-term impact on the stock market is small; the market trend is closely related to the number of cases, and the inflection point of case decline will be the inflection point of market repair.

Everbright Securities (12.400, -0.48, -3.73%) said that historically, the emotional impact of epidemics has been short-term. For class A shares, although the adverse news of the epidemic may cause the market to fall in a short period of time, the continuous decline of the market often does not exceed one or two weeks, and then rebounds often occur. Even if SARS had a short-term impact on the economic growth of Q2 in 2003, it did not change the cyclical upward trend determined by fundamentals. For the moment, we should pay close attention to the fundamentals’ trends without excessive panic.

Some investors directly compared the impact of the Wuhan coronavirus incident on the capital market with the 2003 SARS. However, most agencies say this is inappropriate. Although the two incidents directly affected industries such as transportation, tourism, and consumption, the current Chinese economy is not structurally the same as in 2003.

Li Xunlei said that in 2003, China’s economy was in a high-growth stage with heavy industrialization, urbanization, and consumption upgrade. There was with sufficient upward momentum back then. Today, China is in a critical period of supply-side structural reform and economic transformation, and the impact of the Wuhan coronavirus may lead to new problems.

The Wuhan coronavirus will significantly impact dining, tourism, and consumption. From the perspective of economic structure, consumption has contributed more than 60% to China’s economic growth. The consumption and service industries also support China’s employment. The impact of the pneumonia incident on the economy, especially on the capital market, is not completely comparable to 2003.

How does the Wuhan coronavirus affect industry performance?

Under the epidemic, medical stocks were on a binge. The Hong Kong-listed China Medical Group surged 18 times in two trading days because its affiliates could produce products to suppress the pneumonia epidemic. Since the outbreak, Lukang Pharmaceutical in the class A-share market (11.390, 1.04, 10.05%) has exceeded 70% in value. Anti-virus mask concept manufacturers stocks are soaring above stock market value.

There are also organizations that are optimistic about the future of China’s “home” economy, which will ultimately affect the performance of express delivery, games, and online education. New Oriental Online announced that it will provide 1 million New Oriental Online Spring Class live broadcast courses to primary and secondary school users nationwide for free. There are also several educational institutions offering free online courses for Wuhan students.

However, some brokers have expressed concerns about the recent rise in the pharmaceutical sector, which has been affected by the epidemic. The research report of Zheshang Securities (10.570, -0.65, -5.79%) wrote that the outbreak or the catalyst of a phased turn in the market for the medical and biology sectors is good in the short term, but it will not be continuous. Looking back on the several stages of the SARS epidemic that rose from the outbreak to the fall, the market for medical organisms only appeared in the outbreak period, and lasted less than a month in April.

From a wider industry perspective, the adverse impact of the epidemic will eventually affect the capital markets, which includes consumption (accommodation, tourism, catering, etc.), infrastructure (construction machinery, transportation investment, power heating, etc.), transportation (railway, airplane, road transport, etc.), film and television, etc.

Aviation Industry

Due to peoples ‘reduced mobility, the major epidemic has had a greater impact on the aviation industry.  In terms of airports, looking back to the SARS period, when the epidemic broke out, the passenger throughput and take-off growth rate of airports across the country significantly decreased. Taking the Capital Airport as an example, the passenger throughput in May 2003 fell by 86.54% year-on-year. The number of flights dropped by 65.51% year-on-year.

Compared with airports, the epidemic situation has a greater impact on airlines. At present, the Civil Aviation Administration has required that airlines and its ticket sales agency provide refunds to passengers who have previously purchased civil aviation tickets starting at 00:00 on January 24, 2020. Refunds shall be processed free of charge. At present, many airlines have suspended flights to and from Wuhan and gradually reducing the capacity of international flights.

With reference to the SARS period, the passenger traffic of civil aviation in China in the second quarter of 2003 decreased by 48.9% year-on-year. In May of that year, the number of domestic flights, international flights, and Hong Kong and Macao regional flights decreased by 59.3%, 69.7%, and 80.6% respectively. The impacts of SARS on airlines: Air China (8.250, -0.38, -4.40%) Cumulative loss in the first three quarters of 822 million yuan, China Eastern Airlines (5.100, -0.18, -3.41%) Net loss in the first three quarters of 1.193 billion yuan, China Southern Airlines (6.430, -0.25, -3.74%) Net loss in the first three quarters was 783 million yuan.

Aviation stocks fell significantly within two trading days from January 20-21, Air China (00753.HK) plummeted 12.58%, China Eastern Airlines (00670.HK) plummeted 12.15%; China Southern Airlines ( (01055.HK) plunged 11.24%, while Cathay Pacific (00293.HK) fell 5.98%. In addition, when the Hong Kong stock market opened on January 29, aviation stocks fell across the board.

Bank of America Securities issued a report saying that in response to the outbreak of Wuhan coronavirus, the mainland aviation industry will be affected in the short term. Both Air China and China Southern Airlines ’investment ratings were downgraded to “underperform”, reducing Air China ’s target price from HK $ 9.25 to HK $ 6.15. China Southern Airlines’ target price has dropped from HK $ 6.15 to HK $ 4.4.

After the SARS epidemic ended, the aviation sector picked up significantly. Take China Southern Airlines Hong Kong shares as an example. Since the first SARS case broke out on November 16, 2002, China Southern Airlines Hong Kong shares have shown a downward trend, falling to HK $ 0.82 on April 28, 2003, a drop of 29%. However, when the epidemic situation was under control, the stock price rose to HK $ 2.58 on February 23, 2004, an increase of 121%, with a considerable rebound.

China Merchants Securities (18.750, -0.77, -3.94%) believed that the current market sentiment has reflected in the airport aviation industry. Historical experience has proven that the related shares rebounded significantly after the epidemic was eliminated. As of now, it has investment value for long-term investors.

Tourism Industry

With the gradual development of the Wuhan coronavirus, the mobility of domestic travellers has reduced. At the same time, the suspension of visas to Chinese citizens in many countries will reduce the number of tourists and the total tourism revenue. During the outbreak of SARS in 2003, domestic tourist arrivals fell by 0.9% and total tourism revenue fell by 11.2%.

The above impacts are reflected in the stock price: Fosun Cultural Tourism (01992.HK) and Ctrip (TCOM) both fell sharply during the outbreak. Ctrip started to fall sharply on January 21, and fell 7.91% and 6.89% on January 24 and January 27, respectively, and then rebounded on January 27. The latest trading day closed at 32.86 yuan. The closing price before the outbreak was 38.94 yuan, which fell more than 18% in just 7 trading days.

The hotel giant Huazhu (HTHT) also recorded a huge drop of 10.56% on January 21; Fosun Cultural Tourism also did the same: three consecutive trading days since January 24, with a cumulative decline of 13.9%.  Subsequently, Fosun Travel News announced that based on the progress of the current epidemic situation, it is expected that the Group’s revenue from the operation of resorts and tourist destinations in Mainland China, as well as tourism and leisure services and solutions, will be greatly affected in the near future. The revenue from tourism operations outside China is expected to account for about 87% of the company’s total tourism operating revenue in 2019. It still maintains a good momentum and impacts of the Wuhan coronavirus is expected to be limited.

Ctrip co-founder Liang Jianzhang said in an interview with the media that SARS almost stopped the entire industry in that year, but the impact came quickly and disappeared quickly. In December 2003, one month after the end of SARS, the tourism industry bounced back tremendously. Ctrip’s business volume rebounded sharply. He believes that the epidemic may mainly affect the first quarter. In fact, the first quarter of the tourism industry is relatively off-season, especially in February and March after the Spring Festival, which is not the most critical operating stage. Therefore, the impact of the whole year is expected to be relatively controllable.

Film and Television Industry

As the outbreak occurred during the Spring Festival, and due to the decrease in entertainment activities and the simultaneous announcement of the closure of movie theaters, this meant a “failure” of the Spring Festival for major movie companies across the country. This which would have a huge impact on annual performance. .

In 2019, the box office of Mainland China’s movies was 64.149 billion yuan. During the Spring Festival that year (the first day of the new year from February 5th to the fifteenth day of February 19th), the box office in just 15 days reached 9.484 billion yuan, more than 1/7 of the annual box office.

In 2020, the Chinese New Year film blockbuster films include “Chinatown Detective”, “Manslaughter”, “Jiang Ziya”, “Aunt”, etc., involving many producers and distributors. The list includes major listed companies Wanda Television, Light Film, Happy Media, Hengdian Film (15.970, -0.48, -2.92%) Wentou Holdings (3.300, -0.07, -2.08%) , Huaqiang Fangte, Happy Blue Ocean (6.790, -0.36, -5.03%) and so on.
Previously, the entertainment companies had expected the box office of the Spring Festival film to grow significantly year-on-year. Everbright Securities expects that the box office at the Spring Festival in 2020 will achieve high growth under a “low base”. The box office year-on-year growth is expected to be in the 25% -35% range. Spring festival movies returns are expected at 7.62 billion yuan, an increase of 29.8% year-on-year. But the sudden outbreak of the Wuhan coronavirus made the above figures disappeared.

According to Cat’s Eye data, on January 24th (New Year’s Eve), the total box office in the mainland movie market was only 3.29 million, compared with 41.75 million at the same period last year, a 92% year-on-year decrease. On January 25 (the first day of the Chinese New Year), the box office was only 1.81 million, and the box office in the same period of 2019 was as high as 1.458 billion.

Within two trading days from January 20-21, Huanxi Media (01003.HK) plunged 13.99%, Cat’s Eye Entertainment (01896.HK) plunged 15.63%, and Ali Pictures (01060.HK) plunged 10.51%. Subsequently, in the first trading day of Hong Kong stocks, the film and television entertainment sector led the decline.

Food and Beverage Industry

There is no doubt that the epidemic will hit the food industry. The reduction of parties and eating out directly led to a decline in industry. Many food related companies have announced closures.  An investor told China Investment Network that there were few pedestrians on Beijing’s most famous food street, which is completely different from the booming business and crowds during previous holidays. Many restaurants have now announced that they have suspended their business.

From the perspective of listed companies, Haidilao (06862.HK) announced on Sunday (January 26) that all its stores operating in the Mainland were suspended until Friday (January 31). According to statistics, as of the end of June last year, Haidilao operated nearly 550 restaurants in the Mainland, accounting for nearly 93% of the total number of restaurants operated by the company. Data shows that Haidilao’s stock price has fallen sharply since January 20 by nearly 17%.

For Jiu Mao Jiu International (09922.HK), which has been listed in Hong Kong for less than half a month, its main brand Taiji Sauerkraut Fish also announced that all its stores have been closed until Thursday (January 30). “Tai Er” is the largest pickled fish restaurant in the Mainland, with a total of 121 stores.

Jiu Mao Jiu International’s stock price has fallen sharply since January 17. Since January 20, it has fallen more than 17%.
In addition to the above industries, the epidemic will also affect clothing, retail and other industries. From an economic perspective, the impact of the epidemic on the economy is ultimately reflected in the value of the RMB. During the Spring Festival, offshore RMB quotes depreciated by 1,400 BP, a decline of 1.75%, which will ultimately affect the market value performance of listed companies in China’s import and export industry.

Translated by Lingyun Gao (Professor of Law, Fudan University)

Chapter I General Provisions

Article 1

This Regulations is made under the Foreign Investment Law of the People’s Republic of China (hereinafter referred to as the “Foreign Investment Law”).

Article 2

The State encourages and promotes foreign investment, protects the lawful rights and interests of foreign investors, regulates foreign investment administration, continues to optimize foreign investment environment, and advances a higher-level [market] opening.

Article 3

The “other investors” mentioned in items 1 and 3, paragraph 2 of article 2 of the Foreign investment Law include the natural persons of Chinese nationality.

Article 4

The negative list for foreign investment entry (hereinafter referred to as “the negative list”) is formulated by the department under the State Council in charge of investment, jointly with the department under the State Council in charge of commerce and other relevant departments, and submitted to and issued by the State Council, or issued by the departments there under in charge of investment and commerce after being approved by the State Council.

The State adjusts the negative list in a timely manner to satisfy the needs for furthering the opening up [policy] and economic and social development. When adjusting the negative list, the procedure provided in the preceding paragraph shall apply.

Article 5

The departments under the State Council in charge of commerce and investment and other relevant departments there under work closely, co-cooperatively, and jointly to accomplish the promotion, protection, and administration of foreign investment according to division of their responsibilities。

The local people’s governments above the county level shall strengthen their leadership in promoting, protecting, and administering foreign investment, support and urge the relevant departments to develop, in accordance with law, administrative regulations, and the division of the responsibilities, the promotion, protection, and administration of foreign investment,and timely coordinate and resolve the major issues arising therefrom.

Chapter II Promotion of Investment

Article 6

The government and its relevant departments shall equally treat foreign-invested enterprises and domestic enterprises in funds arrangement, land supply, tax abatement or exemption, qualification licensing, standard setting, project application, or human resource policies.

The policies adopted by the government and its relevant departments supporting the development of enterprises shall be publicized in accordance with law. Where the implementation of a policy involves a matter that the enterprises need to apply for, the government and its relevant departments shall publicize the condition, procedure, and time limit for such application,and treat the foreign-invested enterprises and domestic enterprises equally when reviewing their applications.

Article 7

When issuing an administrative regulation, a departmental rule, or a regulatory document concerning foreign investment, or when the government and its relevant departments are drafting a law or a local regulation concerning foreign investment, the drafters shall, as applicable, seek comments from foreign-invested enterprises, the relevant chambers of commerce, and the relevant associations through various forms including inviting written comments and convening seminars, demonstrating meetings, or public hearings. For those comments and suggestions shared by most people or concerning an issue involving the major rights and obligations of foreign-invested enterprises, feedback on the adoption of the comments or suggestions shall be given in a proper manner.

The regulatory documents concerning foreign investment shall, in accordance with law, be timely publicized, and those not publicized shall not be cited as the basis for administration. A regulatory document closely related to the production and operation of foreign-invested enterprises shall, based on the actual situation, reasonably determine a time frame between its issuing and its implementation.

Article 8

The people’s governments at various levels shall, in accordance with the principle of government-domination and multiparty-participation, establish and improve a system serving foreign investment, and constantly improve the ability and standard of such service.

Article 9

The government and its various departments shall, through its official website or a nationally unified online government-service platform,specify the laws, regulations, departmental rules, regulatory documents, policy measures, and information on investment projects concerning foreign investment,and emphasize publicity and explanation thereof through various methods, to provide consultation, guidance, and other services for foreign investors and foreign-invested enterprises.

Article 10

The “special economic zone” mentioned in article 13 of the Foreign Investment Law refers to a specific area approved and established by the State in which more liberal policy measures of opening for foreign investment are adopted.

The pilot policy measures on foreign investment which are adopted by the State in certain regions and are proved to be feasible, are to be adopted, as applicable, in other regions or nationwide.

Based on the national economy and the needs for social development, the State makes a catalogue of the sectors that foreign investment is encouraged to invest in specific industries, sectors, and regions listed therein. The catalogue for the sectors that foreign investment is encouraged is drafted by the department under the State Council in charge of investment jointly with the department under the State Council in charge of commerce and other relevant departments, and issued thereby after being approved by the State Council.

Article 12

A foreign investor or foreign-invested enterprise may, in accordance with law, administrative regulations, or the rules made by the State Council, enjoy preferential treatments in areas such as finance, tax, financing, and land usage.

A foreign investor who applies income accrued from its investment within China to expand its investment in China shall enjoy, in accordance with law, the corresponding preferential treatment.

Article 13

Foreign-invested enterprises shall equally participate, in accordance with law, in setting and revising the State standard, industry standard, local standard, and group standard with domestic enterprises. Foreign-invested enterprises may, based on needs, make industry standards on its own initiative or jointly with other enterprises.

A foreign-invested enterprise may propose to the administrative department in charge of standard-setting, and may propose comments and suggestions during the periods of approval of the standard-setting project, drafting of the standard, technology examination, and the feedback and evaluation of the implementation of the standard, and engage in standard drafting, technology examination,and other relevant works as well as the translation of the standard into foreign languages.

The department in charge of standard-setting and the other relevant administrative departments shall establish and improve a relevant working system to improve the transparency of and promote the complete publicity of the information on standard-setting and revision.

Article 14

The mandatory standards made by the State shall equally apply to foreign-invested enterprises and domestic enterprises, and [the relevant departments of the government] shall not impose on the foreign-invested enterprises a standard for the technology higher than the mandatory standard.

Article 15

The government and its relevant departments shall not obstruct or restrict a foreign-invested enterprise from freely entering into the government procurement market in the local area or in a specific industry.

The purchaser of government procurement or its agency shall not adopt differentiated or discriminated treatment on foreign-invested enterprises when publicizing procurement information, determining and reviewing the qualification of suppliers, and determining the standard for review thereof.  Neither shall they restrict suppliers through imposing unreasonable conditions, such as restricting the suppliers’ ownership type, organizational form, equity structure, the nationality of the investors, or the brand of product or service, nor differentiate the product manufactured or service provided within China by a foreign-invested enterprise from those manufactured or provided by a domestic enterprise.

Article 16

A foreign-invested enterprise may, in accordance with the Government Procurement Law of the People’s Republic of China (hereinafter referred to as the Government Procurement Law) and its implementation regulations, inquire into or question the purchaser or its agency about a government procurement matter and lodge complaint with the department supervising government procurement. The purchaser, its agency, or the department supervising government procurement shall provide a response or make a decision within the stated period of time.

Article 17

The department supervising government procurement and the other relevant departments shall strengthen the supervision of and examination on government procurement, and correct and punish in accordance with law the activities that treat foreign-invested enterprises differently or indiscriminately in violation of law or regulations.

Article 18

A foreign-invested enterprise may, in accordance with law, obtain financing within or outside China through public offering of securities such as stocks or corporate bonds, issuing other financing securities through either public issuing or private placement, and borrowing foreign debts.

Article 19

The local people’s governments above the county level may, in accordance with law, administrative regulations, and local regulations and within their delegated authority, take policy measures to promote and facilitate foreign investment, such as abatement of fees, guarantee of land-use quota, and provision of public services.

The policy measures purported to promote and facilitate foreign investment taken by the local people’s governments above the county level shall be oriented to promote high quality development, shall be beneficial for improving economic, social, and ecological benefits, and for constantly optimizing the foreign investment environment.

Article 20

The relevant departments in charge shall make and publicize a guideline for foreign investment to serve and facilitate foreign investors and foreign-invested enterprises. The guideline for foreign investment shall include introduction to foreign investment environment, procedure guide lines for foreign investment, information on investment projects, and the relevant data, which shall be timely updated.

Chapter III Protection of Investment

Article 21

The State does not expropriate foreign investors’ investments.

Under special circumstances where the State expropriates the investment of foreign investors for public interests, it shall be proceeded in accordance with the legal procedure and in a non-discriminatory manner, and compensation shall be made timely based on the market value of the expropriated investment .

Article 22

The capital contribution made by foreign investors within China, and the profits, capital gains, proceeds of asset disposal, intellectual property rights’ licensing fee, indemnity or compensation legally obtained, or proceeds received upon liquidation by foreign investors within China, may be freely remitted inbound and outbound in RMB yuan or a foreign currency, and no entity or individual may impose restrictions on the currency, amount, or frequency of inbound or outbound remittance in violation of law.

The salary and other lawful income of foreign employees or employees from Hong Kong, Macau, and Taiwan of a foreign-invested enterprise may, in accordance with law, be freely remitted outbound.

Article 23

The State reinforces punishment on infringement of intellectual property rights, constantly strengthens enforcement of protection of intellectual property rights, promotes the establishment of a fast-track co-ordination protection system for intellectual property rights, improves a diversified system for resolving disputes on intellectual property rights, and equally protects the intellectual property rights of foreign investors and foreign-invested enterprises.

Where a standard-setting involves a patent owned by a foreign investor or foreign-invested enterprise, the relevant provisions on the standard involving the patent shall be applied.

Article 24

An administrative agency (including an organization authorized bylaw or administrative regulations to administer public matters, similarly hereinafter) and its staff shall not compel directly or in a disguised form a foreign investor or a foreign-invested enterprise to transfer technology through implementing administrative licensing, inspection, penalty, coercion,or other administrative methods.

Article 25

Where it is necessary for an administrative agency that is performing its duties to request a foreign investor or foreign-invested enterprise to provide materials or information involving a trade secret, [the materials or information required to be provided] shall be constrained within the scope necessary for the administrative agency to perform its duty, and the access to the materials or information should be strictly controlled and people irrelevant to performing such duty shall not access to the relevant materials or information.

The administrative agencies shall establish and improve an internal administration system and adopt effective measures to protect the trade secrets owned by the foreign investors or foreign-invested enterprises which are obtained during performing of their duties; where the information is required by law to be shared with other administrative agencies, the trade secrets contained in the information shall receive confidential treatment to avoid leakage.

Article 26

The regulatory documents made by the government and its relevant departments concerning foreign investment shall go through compliance review in accordance with the regulations made by the State Council.

Where a foreign investor or foreign-invested enterprise believes that a regulatory document made by a department under the State Council or made by a local government and its departments based on which an administrative activity was conducted is not in compliance with law, it may, in accordance with law, request for a compliance review of such regulatory document when it applies for administrative review of the administrative activity or initiates an administrative litigation.

Article 27

The “commitment on policies” mentioned in article 25 of the Foreign Investment Law refers to the written commitments made by the local people’s governments at various levels and their relevant departments within their legally delegated authority concerning the supportive policies, preferential treatment, and facilitation conditions that apply to foreign investors and foreign-invested enterprises who invest in the local area. The content of such commitments shall comply with law and regulations.

Article 28

The local people’s governments at various levels and their relevant departments shall perform their commitments on policies made in accordance with law to foreign investors and foreign-invested enterprises, and the various contracts entered into therewith in accordance with law, and shall not breach or cancel such a contract on the ground that the administrative division is readjusted, the government officials are re-elected, the agencies or their functions are adjusted, or the relevant persons in charge are changed, etc.  Where the commitment on policies or contract needs to be changed as required for social public interests, it shall be done in accordance with the legal authority and legal procedure, and the damage thus suffered by the a foreign investor or foreign-invested enterprise shall be fairly and reasonably compensated in a timely manner.

Article 29

The local peoples’ governments above the county level and the irrelevant departments shall, according to the principles of publicity,transparency, efficiency, and facilitation, establish and improve a mechanism for foreign-invested enterprises to lodge complaints, in order to timely resolve the issues presented by foreign-invested enterprises or their investors, and to coordinate and improve the relevant policy measures.

The department under the State Council in charge of commerce establishes, with the other relevant departments under the State Council, an inter-ministry joint-conference system concerning the complaints filed by foreign-invested enterprises to coordinate and promote the work concerning complaint made by foreign-invested enterprises to the central government, and to guide and supervise the work concerning complaint made by foreign-invested enterprises to the local government. The local people’s governments above the county level shall designate a department or agency to accept complaints filed by the foreign-invested enterprises or their investors within the local area.

The department under the State Council in charge of commerce and the department or agency designated by the local people’s government above the county level shall improve the rules for the complaining mechanism and the means for lodging complaints, and clarify the time limit for resolving the complaints. The rules for the complaining mechanism, the means for lodging complaints, and the time limit for resolving the complaints shall be publicized.

Article 30

Where a foreign-invested enterprise or its investor believes that an administrative act conducted by an administrative agency and its staff infringes upon its lawful rights and interests, and applies for co ordination and resolution through the complaining mechanism for foreign-invested enterprises, the relevant department may inquire into the concerned administrative agency and its staff about the specific situation while conducting coordination, and the latter shall be cooperative. The petitioner shall be notified in writing about the result of coordination.

Where a foreign-invested enterprise or its investor petitions to resolve a problem through coordination according to the provisions provided in the preceding paragraph, its ability to apply for administrative review or initiate an administrative litigation is not affected.

Article 31

No entity or individual shall suppress or retaliate the foreign-invested enterprise or its investor who lodges a complaint with or petition to the complaining mechanism for foreign-invested enterprises to resolve a problem.

A foreign-invested enterprise or its investor may complain about a problem to the government and its relevant departments through other lawful means, in addition to filing with the complaining mechanism for foreign-invested enterprises.

Article 32

A foreign-invested enterprise may establish a chamber of commerce or an association in accordance with law. Unless otherwise provided by law or administrative regulations, a foreign-invested enterprise may decide autonomously to join in or withdraw from a social organization such as a chamber of commerce or an association, and no entity or individual shall intervene.

The chamber of commerce or association shall, in accordance with law, administrative regulations, or its articles of association, strengthen the self-discipline of the industry, timely report the request of the industry,provide to its members services such as information consultation, publicity and training, market expansion, economic and trade exchanges, protection of rights and interests, and dispute resolution.

The States supports the chambers of commerce or associations to conduct relevant activities in accordance with law, administrative regulations,and its articles of association.

Chapter IV Administration of Investment

Article 33

A foreign investor shall not invest in a prohibited sector on the negative list. For a restricted sector on the negative list, a foreign investor shall comply with the special administrative measures required for entry of the restricted sector, such as the requirement for equity shareholding and qualifications for its senior management officers.

Article 34

Where a relevant department is performing its duties, it shall not grant permit,  register the enterprise,or allow the relevant matters if the foreign investor proposes to invest in a sector listed in the negative list but the corresponding requirements are not satisfied; where an application concerns approval of an investment project involving fixed assets, the approval shall not be issued.

The relevant department shall strengthen supervision and examination of the enforcement of the negative list; if it is discovered that a foreign investor is investing in a prohibited sector on the negative list, or if the investment activity of a foreign investor is in violation of the special administrative measures required for investing in a restricted sector on the negative list, the provisions provided in article 36 of the Foreign Investment Law shall be applied.

Article 35

Where a foreign investor invests in an industry or sector which requires obtainment of a license in accordance with law, unless otherwise provided by law or administrative regulations, the relevant department responsible for implementing the license shall, according to the same condition and procedure applicable to domestic enterprises, review the application of the foreign investor for the license, and shall not impose discriminatory requirements on the foreign investor concerning the conditions for granting the license, application materials, review, time list for review, etc.

The relevant department in charge of implementing the licensing shall, through various means, optimize the service for the review and improve the efficiency of approval. The licensing matters that satisfy the relevant conditions and requirements may be handled by means of making commitment upon receipt of notification in accordance with the relevant rules.

Article 36

Where the foreign investment needs to be approved to filed for the record, it shall be handled in accordance with the relevant regulations of the State.

Article 37

The registration of a foreign-invested enterprise shall be filed with the department under the State Council in charge of market supervision and administration or the duly delegated department of a local government in charge of market supervision and administration. The department under the State Council in charge of market supervision and administration shall publicize the list of duly delegated departments of market supervision and administration.

The registered capital of a foreign-invested enterprise may be represented by RMB or by a freely-convertible currency.

Article 38

A foreign investor or foreign-invested enterprise shall, through the enterprise registration system and the enterprise credit information disclosure system, report investment information to the competent departments in charge of commerce. The departments under the State Council in charge of commerce and market supervision and administration shall integrate and coordinate the relevant systems, and provide guidance for foreign investors or the foreign-invested enterprises to report their investment information.

Article 39

The content, coverage, frequency, and specific procedure of foreign investment information report are determined and announced by the department under the State Council in charge of commerce jointly with the department under the State Council in charge of market supervision and administration and the other relevant departments, based on the principles of actual necessity, high efficiency, and facilitation. The department in charge of commerce and the other relevant departments shall enhance information sharing, and if the investment information is available through the inter-departmental information sharing system, the foreign investor or foreign-invested enterprise shall not be required to submit a duplicate report.

The investment information reported by foreign investors or foreign-invested enterprises shall be true, accurate, and complete.

Article 40

The State establishes a security review system for foreign investment to conduct security review for those foreign investments that affect or may affect the State security.

Chapter V Legal Liability

Article 41

The government, its relevant departments, and the staff thereof,shall assume legal liability in accordance with law and administrative regulations if they have conducted any of the following activities:

(1) making or implementing a policy which does not equally treat foreign-invested enterprises and domestic enterprises in compliance with law;

(2) illegally restricting foreign-invested enterprises from equally participating in the standard setting and review, or imposing a technology requirement on foreign-invested enterprises which is higher than the mandatory standard;

(3) illegally restricting foreign investors from remitting funds inbound or outbound;

(4) failure to honor a commitment on policies made in accordance with law to a foreign investor or foreign-invested enterprise or failure to perform the various contracts legally entered into therewith, making a commitment on policies in exceeding its duly delegated authority, or making a commitment on policies the content of which does not comply with law or administrative regulations.

Article 42

The purchaser in government procurement or its agency, who exercises differentiated or discriminatory treatment on foreign-invested enterprises through imposing unreasonable conditions, shall assume legal liability according to the Government Procurement Law and its implementation regulations; where the bidding result is or may be affected, the Government Procurement Law and its implementation regulations shall apply.

Where the department supervising the administering government procurement has not made a timely decision on the complaint filed by a foreign-invested enterprise, the directly responsible person in charge and other responsible staff shall receive sanctions in accordance with law.

Article 43

Where an administrative agency and its staff compels directly or in a disguised form a foreign investor or foreign-invested enterprise to transfer its technology, the directly responsible person in charge and other responsible staff shall receive sanctions in accordance with law.

Chapter VI Supplementary Provisions

Article 44

A foreign-invested enterprise established before this Law takes effect under the Law of the People’s Republic of China on China-Foreign Equity Joint Ventures, the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises, or the Law of the People’s Republic of China on China-Foreign Contractual Joint Ventures may elect to transform its business form and organization structure, etc. according to the Corporation Law of the People’s Republic of China and the Law of the People’s Republic of China on Partnership Enterprises and file for registration of modification of its business form within five years since this Law takes effect; it may also maintain its original business form or organization structures.

Since January 2025, for those existing foreign-invested enterprises that have not transformed their business form or organization structure in accordance with law and have not filed for modification registration, the department in charge of market supervision and administration shall not accept their application for other registration matters, and shall publicize the relevant situation thereof.

Article 45

The specific rules on registration of modification of the business form or organization structure of the existing foreign-invested enterprises shall be made and announced by the department under the State Council in charge of market supervision and administration. The department under the State Council in charge of market supervision and administration shall reinforce its guidance on modification registration, and the departments of market supervision and administration in charge of modification registration shall,through various means of optimizing their service, facilitate the enterprises for their modification registration.

Article 46

After the existing foreign-invested enterprises have transformed their business form and organization structure, the conditions on transferring shares of stock or shares of equity and the means of distribution of income and the residual assets agreed upon by the original cooperative parties may continue to be effective.

Article 47

The relevant provisions provided in the Foreign Investment Law and this Regulations apply to the foreign-invested enterprises that re-invest within China.

Article 48

For the investors from the Hong Kong Special Administrative Region and the Macau Special Administrative Region investing in the mainland, the Foreign Investment Law and this Regulations shall be applied by reference;except that the law, administrative regulations, or the rules made by the State Council that provide otherwise shall be applied.

For the investors from Taiwan investing in the mainland, the Law of the People’s Republic of China on Protection of Investment Made by Taiwan Compatriots and its Implementation Regulations shall apply; for the matters not mentioned in the aforementioned Law or Regulations, the Foreign Investment Law and this Regulations shall be applied by reference.

For the Chinese citizens who have settled abroad investing within China, the Foreign Investment Law and this Regulations shall be applied by reference, except that the law, administrative regulations, or the rules made by the State Council that provide otherwise shall be applied.

Article 49

This Regulations takes effect since January 1, 2020. The Regulations on Implementing the Law of the People’s Republic of China on China-Foreign Equity Joint Ventures, the Provisional Regulations on the Term of China-Foreign Equity Joint Ventures, the Implementation Rules on the Law of the People’s Republic of China on China-Foreign Equity Joint Ventures, the Implementation Rules on the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises, and the Implementation Rules on the Law of the People’s Republic of China on China-Foreign Contractual Joint Ventures shall be repealed at the same time.

If there is any discrepancy between the rules concerning foreign investment made before January 1, 2020 and the Foreign Investment Law or this Regulations, the Foreign Investment Law and this Regulations shall prevail.




28 Feb 2019:  WiseNet Asia facilitated a meeting between Chongqing Connectivity Initiative Bureau, China (CCIB) and Singapore Manufacturing Federation (SMF), the aim of the meeting is to create awareness and promote trade in the Southern Transport Corridor to members of SMF.

Chongqing Connectivity Initiative Bureau is represented by Mr Hu Jian Bo, Minister of the Transport & Logistics Promotion Department, CCI.

Singapore Manufacturing Federation is represented by Mr Poh Choon An, Vice President.  Mr Poh is also the Vice Chairman, China and North Asia Business Group, Singapore Business Federation (SBF).  Other attendees from Singapore included Mr Wesley Hui, Executive Director, WiseNet Asia, Mr Chan Fook Seng, Consulting Director, Global Trade Services and several other key figures from each of these entities.


Left: Mr Hu Jian Bo, Minister of the Transport & Logistics Promotion Department, CCI; Mr Poh Choon An, Vice President, Singapore Manufacturing Federation

The Southern Transport Corridor is an extension of the Chongqing Connectivity Initiative (CCI), the 3rd government-to-government joint project between China and Singapore.  Chongqing is the western hub of the Belt and Road Initiative due to its strategic location that connects the “Silk Road Economic Belt”, “21st Century Maritime Silk” and the “Yangtze River Economic Belt”.

The Southern Transport Corridor is a southward trade route of multimodal rail and sea logistics networks.  The Corridor consist of:
– Chongqing-Guizhou-Guangxi-Singapore rail-sea multi-modal logistics passage
– Southward cross-border road passage via the provinces of Sichuan, Guizhou and Guangxi
Southern Transport Corridor

With Southern Transport Corridor and the Europe bound north west rail route (YuXinOu), Chongqing is well positioned as the logistics hub for the western region.

Most of the members of Singapore Manufacturing Federation have set ups in countries along the Southern Transport Corridor, hence they will benefit from lower cost of goods sent, and reduced shipping time.  SMF currently has 3000 members; SBF have another 5000 members, members from both associations will be alerted on the new network and its opportunities.

As of to date, not many Singapore companies are aware of the Southern Transport Corridor.  When the faster and lower cost transport networks are fully maximized, the benefits are enormous.  Moving forward, WiseNet Asia will assist companies that intend to expand into Southern China through its strength in business matching and talents management.



12 March 2019 – Representatives from companies that operate in both sides of Chongqing and Singapore met with government officials from the Chongqing Municipal Government to discuss challenges in the course of doing business cross-border. This meeting aims to discuss business issues and possible solutions.

More and more multinationals and SMEs expand their businesses cross-border under the Chongqing Connectivity Initiative (CCI), the third government-to-government project between Singapore and China, which was set up in Nov 2015.  Four priority sectors identified for joint development under CCI are financial services, aviation, transport   and   logistics   and   Information   and   Communications Technology (ICT).

This meeting is hosted by Mr Qi Xiao Feng, Deputy Director, Chongqing Connectivity Initiative Bureau.

Other representatives from Chongqing include Mr Deng Hui Lin, Deputy Mayor of Chongqing Municipal Government; Mr Qi Xiao Feng, CCIB Deputy Director; Mr Pang Li Qiang, Municipal Public Security Bureau Criminal Investigation Corps Political Commissar; Mr He Qiang, Director of Chongqing Public Security, Chengdu Railway Public Security Bureau.  Also in the meeting are representatives from Municipal Government Port Logistics, Municipal Public Security Bureau, CCIB, YuXinOu Railway.

The Singapore based companies in Chongqing that have their representatives present are from WiseNet Asia, YCH Group, City Developments Ltd, Vibrant Group Ltd., Fooyo, Business China, FinTech Association.

The Chongqing based companies in Singapore that have their representatives present are from Chongqing International Trade Group, Zomwork, Xinyi Jimao, Shybuild, Dawn Group, Quanneng Pharmaceutical, Singapore Chinese medicine industry,Rong Teng Technology (Nova), Perfect International School, SECC Holdings, Meridian Industries.

The Singapore companies’ feedback on challenges they are facing in doing business in Chongqing, some of these include work permit validity for 1 year, which can be a hassle to renew yearly.  Other areas where the participants requested for improvements include local corporate governance with better clarity, clearer defined legal protection for overseas companies’ investment and joint ventures.

Wesley & Dep Dir CCIB

From left: Wesley Hui, Executive Director, WiseNet Asia and Qi Xiao Feng, Deputy Director, Chongqing Connectivity Initiative Bureau


Why you should consider career opportunities in Chongqing


Positioned at the confluence of Asia’s economic markets, Chongqing is the largest of China’s four municipalities. What’s more, it has seen a year-on-year double digit GDP of 11% reflecting its rapid growth and development.

A vibrant and unique city

Touted as the world’s fastest growing tourism city according to the World Travel & Tourism Council, Chongqing is the gateway to the stunning Three Gorges reservoir and home to alluring valleys.[1] Its location in the Sichuan region also makes it a great place to enjoy simmering hotpot dishes. Thrill-seekers can expect the American-owned Six Flags amusement park franchise to open an adrenaline-pumping space here in 2020.[2]

WeChat Image_201805240951225

The Chongqing region is identified as one of the focuses under China’s 13th Five-Year Plan (2016-2020) for socioeconomic development, with a mandate for greater urbanization and connectivity by strengthening its shipping centers in the Yangtze River, the longest river in Asia.

Chongqing is a key inland transportation hub for the Belt and Road Initiative which connects Western/Southeast Asia, Africa and Europe. The recent Belt & Road Chongqing Brand Expo 2018 drawing 20,000 visitors highlighted the city’s auspicious position as the intersection of the Silk Road Economic Belt, Indo-China Peninsula Economic Corridor and Yangtze River Economic Belt.


Transport options abound with Jiang-bei International Airport located in the heart of the city, over 150 trains passing through daily to connect major cities like Beijing and Shanghai, and 6 easily navigable subway lines linking Chongqing’s 9 districts, just to name a few. The huge investment in connectivity here has, in turn, attracted investment from other cities in China.[3]

Establishing a career in Asia’s largest smart city

Primed to be Asia’s largest smart city and also China’s pilot city to apply Big Data Intelligence by 2020, Chongqing hosted the Smart China Expo in 2018 which welcomed key personalities in business and tech such as Alibaba’s Jack Ma and Tencent’s Pony Ma.[4] Recently, Alibaba partnered with a local bank to develop financial service apps and Tencent announced its 1,000-strong workforce in the city, an increase from the previous figure of 400.[5] The presence of these MNCs here is testament to the growth potential of Chongqing—you certainly want to get on board this wave of progress!

 Incentives for talents

Career opportunities are impressive as the local government seeks to attract worldwide talents. The launch of the Hongyan Talent Plan in 2017 is a major factor: it offers monetary incentives based on industry classification, services around investment and financing, eligibility for resident visa and household status, medical services and more.

Hong Yan cover

Eligible talents (those who meet skillset requirements and sign an employment contract of a minimum of 3 years in Chongqing) can apply for the Chongqing Talent Service Card. This helps with household registration based on the available range of accommodation selections in expat-preferred areas, residential visa privileges, finding employment for spouse/children, schooling privileges and preferential medical arrangements. Entrepreneurs are also given support via tech initiatives, project financing, loan subsidies and more.

Those with children or looking to start a family can choose from a good variety of established international schools catering to ages from nursery to tertiary. Medical care is also just a ring away with most major serviced apartments having 24-hour call services with doctors on standby.

Achieving success

Adapting to life in Chongqing is easier than imagined with the availability of expat support networks and activities. These might include café meetups to get to know fellow expats in a relaxed setting, or even marathon races, seminars and conventions.[6]

Whether you’re a first-timer or a seasoned expat, keep an open mind and be willing to explore. Get rid of any preconceptions you may have and you might learn something new along the way!

In terms of business etiquette which can be delicate in Chinese tradition, here are some tips to follow:[7]

  • 关系 (guānxì) or strong relationships is particularly important in China—this may involve several meetups which could involve informal lunches/dinners to achieve your objectiveGuan Xi
  • If you are new, it helps to have an intermediary as most Chinese don’t conduct business with people they don’t know
  • Small talk is common and expected before meetings, instead of just getting to the point
  • Maintain composure and avoid strong displays of emotion, as losing and gaining ‘face’ is a key Chinese concept
  • Enter meeting rooms in order of seniority; the person entering first is usually the head
  • ‘Yes’ doesn’t always mean yes, and ‘no’ is only said in private

With practice and over time, these customs will naturally come to you.

With a plan dedicated to attracting world-class talents to this lively city brimming with opportunity, Chongqing is definitely a place you should consider for your next career move!



[1] Source: https://edition.cnn.com/travel/article/chongqing-china-tourism/index.html

[2] Source: https://investors.sixflags.com/news-and-events/press-releases/2018/04-24-2018-213034885

[3] Source: https://www.internations.org/chongqing-expats/guide/working-in-chongqing-18651

[4] Source: http://en.people.cn/n3/2018/0830/c90000-9495761.html; https://www.prnewswire.com/news-releases/chongqing-to-host-smart-china-expo-boosting-development-of-big-data-technology-300699414.html

[5] Source: https://asia.nikkei.com/Business/Business-Trends/China-s-top-tech-flocks-to-inland-cities-to-develop-AI

[6] Source: http://www.cqexpat.com/

[7] Source: https://www.todaytranslations.com/doing-business-in-china; https://www.cnbc.com/2017/06/27/etiquette-tips-for-doing-business-in-china.html; https://cnbusinessforum.com/chinese-business-etiquette-101-business-china/

Article Top5_3

With the rapid development in the China market, China has now become one of the world’s leading economies. This has brought more and more foreign companies to China. China’s business environment and culture are different from other parts of the world. To succeed in China, foreign companies are inevitably faced with various challenges that must be overcome.  In response to these challenges, we conducted a brief interview with Ms. Gao Xin, who has worked for many years in foreign companies.  Ms. Gao Xin has more than 20 years of experience in human resources management.  She is also the founding partner of the New Organization Development Research Institute. Ms Gao’s working experience include Director of Human Resources for Forbes500 Enterprises and Vice President, HR of listed companies in China. She is now working with Chinese local companies.

Based on her many years of experience and the observations working in foreign companies, Mr. Gao shared with us the top five challenges that foreign companies are facing while developing in China:

1. Foreign companies’ response to market changes is not timely

Due to rapid development, the Chinese market dynamics are constantly changing. Gao feels that the overall response of foreign companies to the market is obviously slower. She thinks the main reason is the inherent organizational structure of foreign companies. The headquarters of foreign-funded enterprises are all overseas, and the decision-making brain is often not in China. Many foreign companies in China are branches, and some are even divisions of the local Asian headquarters, thus, the distance from the real brain is quite far.

When the market has new developments, local companies will quickly respond with countermeasures. In the case of foreign-funded enterprises, their China’s branches need to report the new trends and counter measure plans to their headquarters. The headquarters will then go on meetings to discuss whether it can pass the proposed plans. This leads to the situation whereby when the local companies have already implemented counter programs, the foreign enterprises are still deciding which plan is better.

The congenital factors of foreign-funded enterprises to a certain extent determine that their response to changes in the market is not timely. Under the ever-changing market environment in China, the influence of this inherent problem of foreign companies is still quite substantial.

2. Foreign companies have low acceptance of new technologies in the domestic market

Gao thinks that although many advanced technologies are developed in the United States, the application of these technologies is very fast in China. She said that China does not have much historical burden on the use of new technology solutions, so it is very fast when it comes to the use of technological transformation. For example, credit card payment widely used in the West is not so popular in China, so new payment methods such as WeChat payment are widespread and fast. In the process, she discovered that many foreign companies are slower in this respect. In foreign companies, many office systems, management systems, and so on, all these technical applications need to be consistent with the headquarters for ease of management. The head office of foreign companies hopes that these systems will achieve global unity. Today, the development of information technology in China is changing with each passing day. Especially in the Internet industry, office software systems are constantly developing. For example, DingDing and WeChat Office fully realizes wireless connectivity with mobile phones, real-time office and remote office. Most local companies have begun to exercise these apps or software to improve their work efficiency. However, due to factors such as information security and global standardization, foreign-funded enterprises cannot decide whether to use the software in a short period of time, even if the software can effectively provide employees with work efficiency.

Gao also mentioned that many foreign companies have become accustomed to using e-mail to communicate, but the communication channels of local companies are relatively more diversified, and the exchange of information is very fast. To cope with fast market changes, the speed of decision-making must also be relatively fast, and the basis for the application of technology by foreign companies cannot support the pace of changes in the outside world.

3. China’s preferential policies for foreign enterprises have weakened

Gao shared that in the early days when foreign-funded enterprises entered the Chinese market, the Chinese government provided many preferential policies, such as tax incentives, industry-based preferential terms, etc. This series of policies allows foreign-funded enterprises to have a greater advantage when competing with local companies.

However, as more and more foreign-funded enterprises enter the Chinese market, coupled with the enormous development of local companies, the preferential policies for foreign-funded enterprises are slowly weakening. At the same time, the government is also supporting the development of local enterprises. This has resulted in foreign companies losing competitive advantage in the Chinese market. According to Gao’s observation, many foreign companies may not be able to cope with this change. For example, she mentioned that when a foreign company first entered the Chinese market, the company had a large preferential policy on income tax. Now that the policy has changed, the company’s expenditures and income have also changed. However, when the company reinvested in the Chinese market, it failed to take a very effective approach to deal with the weakening preferential policies.

4. Corporate culture differences

The work environment provided by foreign-funded enterprises to employees is relatively stable, comfortable and humane. Most people in Western countries are pursuing a state of balance between life and work. They hope that work and life are completely separate. Working hours are devoted to work, and at the end of the day, they should devote themselves fully to their own lives. However, in China, most people are very hardworking and aggressive, and their pace is relatively fast. Many people are willing to sacrifice their own rest time and devote themselves to work, hoping that they can achieve something in their career. Although employees of foreign-funded enterprises often have overtime, the reason for this overtime is mostly for internal communication purposes. Due to the time difference with the headquarters, most branch offices need to report work based on the time of the headquarters.

Gao feels that the rhythm of the entire society in Europe and the United States is relatively slow compared with China. Although the humane management style of foreign-funded enterprises is very attractive to most people, however, due to the fierce competition in the Chinese market, compared with local companies, foreign-funded enterprises have not developed the kind of ‘fierce’ spirit in response. In the long run, it appears that the competitiveness of foreign companies lags behind their Chinese competitors.

5. Foreign companies are becoming less attractive to talent

Mr. Gao shared that in the 90s and even the beginning of 2000, foreign companies ranked top on the list of companies favored by talents. However, today, there are more and more local companies that ranked ahead as favourable employees, such as Alibaba, Huawei, Tencent and others. In the early days, foreign enterprise talents were very popular in the market. But now, their popularity is on the decline.

Gao also analysed that foreign companies have advantages in the field of technology and industry experience, and a relatively longer market development time, this forms a more mature management model and philosophy. The advantages of foreign companies are a clear organizational framework, standardized processes, and meticulous definition of work scopes. These are some HR aspects that were highly regarded before.  However, it is also because of this, we realized that foreign enterprises employees can have depth in their work yet their scope is limited.

In addition, foreign branches in China do not have strong authority, and rely on the system from head office for implementations, consequently people feel more restrained. China start-ups often do not have a clear framework in the beginning.  People who work in there have multi-talents and are able to work beyond their scope. Ms Gao foresees that in the future, due to the continuous development and changes in the market, these multi-faceted talents are what the employment market will be lacking.

Finally, for foreign companies, many organization structures are fixed and it is difficult to make a big difference. Many times, a position can only rise up to certain level, where beyond that level are all foreigners. For Chinese people there is no path for further growth.

In China, the attractiveness of foreign enterprises to talents are gradually declining.  Talents that come out from foreign-funded enterprises are also losing their appeal in the employment market.

As a conclusion, Gao feels that when foreign companies are navigating the rapid development of the Chinese market and the aforementioned challenges, they need to reconsider their development strategy and positioning. If the Chinese market is the company’s target or future key market, then there need to be some adjustments in the management system and thinking. For example, to set the target market as priority, the headquarter can work as a resource and strategy center that supports the rapid development of the market. The frontline in the target market is given the authority and space for decision-making, while the headquarters mobilize resources for support.

The above article is the interviewee’s point of view and does not represent WiseNet Asia’s position. We are very grateful to Mr. Gao for taking the time for this interview.

About Miss Gao Xin

Ms. Gao Xin has more than 20 years of experience in human resources management, organizational and leadership development.  She is also the founding partner of the New Organization Development Research Institute. Ms Gao’s working experience include Director of Human Resources for Forbes500 Enterprises and Vice President, HR of listed companies in China.


Master of Sustainable Leadership, University of Cambridge, UK.

MBA, Federation University, Australia

MBA, Human Resources Management, Beijing University of Science and Technology, China.

National Secondary Psychological Consultant, National Human Resource Manager, Accountant, Financial Economist, ICP Certified NLP Coach, DISC Practitioner.





1 Oct 2018:  WiseNet Asia has brought together the successful collaboration between Embry-Riddle Aeronautical University, USA and Chongqing Jiaotong University, China under the Chongqing Connectivity Initiative (CCI).

The CCI is Singapore and China’s third joint project, and a linchpin of the global Belt and Road Initiative.  The four main pillars of cooperation are in transport and logistics, aviation, information and communication technology and finance.  CCI aims to drive growth in China’s western region by improving Chongqing’s transport and services links to the region and beyond.

MOU- CQJTU and ERU (1)

Facilitated through WiseNet Asia, Embry-Riddle Aeronautical University (ERU), the world’s largest university specializing in aviation and aerospace, and Chongqing Jiaotong University (CQJTU), China’s leading university in transport engineering has signed a Memorandum of Understanding on the following:

  • Joint Degree courses starting year 2019 in Singapore
  • Short term courses
  • Exchange program for teaching staffs


MOU- CQJTU and ERU (2)

This marks a significant milestone for aviation training in China and South East Asia, as there will be more options and better access to internationally recognized aviation courses.

Boeing forecasts that Asia Pacific’s economic growth will spur a need for 240,000 more pilots, 317,000 cabin crew and other aviation jobs such as technicians by 2037.  China will need half of these new personnel.

WiseNet Asia’s Belt and Road Initiative Business Matching Unit is a division of WiseNet Asia Pte Ltd.

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WeChat is part of daily lives

With a working population of approximately 774.51 million, China’s tremendous growth cannot be understated.[1] This is largely driven by the juggernaut of constantly evolving technology, in the form of trends and companies that play significant roles in shaping how people consume news and media, discover and make purchases, communicate with others, conduct financial transactions and more.

A typical day of an office worker in China might start off by waking up to scroll and check her phone for new messages and notifications. On the way to work, she might shop at her favourite brand and buy the dress she has been thinking about. With a busy day at work and no time to step out, she orders in some lunch and it’s delivered to the office as she sends moments to her family and pays some bills. That evening at dinner with friends, they all split the meal cost using the go-dutch feature.  This is hassle-free and immediate. As she winds down before bed, watches a drama series while double screening – looking up new trends, playing games and chatting with friends at the same time.  Every single item above can be done on WeChat.

6am blue

WeChat’s user base almost touched 1 billion as of 2017, and the app has almost entirely replaced physical wallets for the Chinese.[2] WeChat forms the equivalent of WhatsApp, and also encompasses all the social media networks permitted in China, offers different channels for people to keep in touch with one another, facilitates banking transactions quickly and securely, and incorporates numerous lifestyle, retail, travel and restaurant options.

wechat Screenshot_2018-07-23-13-45-43

Picture above: Buying a bus ticket through WeChat

Tencent and its ambition for the world

Tencent, who’s behind WeChat ranks globally in the latest technologies spanning social, retail and finance, is a staple name in the daily lives of people in China.

WeChat permeates even the field of work, as it is the uniform platform for communication for most companies in China. It has comprehensive functions such as file sharing, group discussions and company updates via Moments. This makes it a direct competitor for Weibo, a wildly popular social media platform (an equivalent of Facebook, if you would) launched two years before WeChat.

WeChat Moments also provide opportunities for local advertising. Launched in November 2016, this allows brands to market and promote their activities – all within the app. This integration really changes the game for marketers as they reach a wide base of customers whose lives revolve around usage of the WeChat app.

From a global perspective, WeChat’s strategy in Europe interestingly does not target on acquiring new users. It looks at advocating WeChat’s financial transaction and marketing capabilities to enhance the connectivity and reach of various businesses to Chinese consumers. This comes as the WeChat wallet expands its options to incorporate ride hailing services, shopping and retail, books and movies and entertainment, travel and hotels, and more. It is also making use of artificial intelligence (AI) and exploring its potential with gaming as a start.

WeChat Pay revolutionizes the way payments are made. Being an e-wallet as part of such a comprehensive app that is central to everyday living, WeChat Pay presents rewarding wealth opportunities such as the provision of online loans and investments and financial management products.[3] For Tencent (and competitor Alipay in this regard), it has set its sights beyond China to bring this payment innovation worldwide. Businesses and merchants have welcomed this payment system, which makes sense with the sheer number of Chinese tourists everywhere, with their overseas tourism spending totalling a record $261 billion in 2016.[4]

wechat Screenshot_2018-07-23-16-22-19

Picture above: WeChat e-wallet

Sending each other ‘lucky money’ is another popular WeChat function, drawing on the tradition of exchanging red packets filled with cash during the Lunar New Year. Businesses can also use this as a promotional tool to offer customers various rewards when users shake their phones to reveal them.

Wechat red packet edited

Picture above: Lucky money sent with random amount

Impact on how we live, work and play

Having seamless comprehensive apps like WeChat means that people are reachable and contactable 24/7. This might further dilute the meaning of work-life balance and present a constant bombardment information, making people increasingly attached to their phones instead of paying attention to fellow friends and family in real time. It demonstrates how gadgets can ruin the appreciation of the basic things in life (such as having a good in-person conversation or watching the sun set) if a balance isn’t struck.

Our worldviews and prejudices are also very much shaped by the media we consume. Generation Z, in particular, almost entirely revolves around the digital world. A whopping 71% believe that what they do online will affect their future opportunities in career and life.[5] On the flipside, brands and companies are spending billions to build a strong and engaging presence on their socials to attract this vital crowd.

The ubiquity of the mobile phone means access to information for more people everywhere. The entry point is low: an internet search bar takes you places, and many physical locations are starting to use QR codes which can be scanned, leading users to a website. Companies are spending 75% of their digital allocation to mobile advertising, a testament to the sheer value of phone-wielding humans everywhere.[6]

Work processes are also dominated by mobile, specifically WeChat, in China. It provides collaborative working environments and convenient in-app communication channels. Employees can also follow their company’s official WeChat account for work updates. WeChat users in general can use WeChat’s wallet, play music and videos, and edit photos – do anything! – within the app.

However, there are also concerns around personal data and privacy. WeChat, for example, does not have end-to-end encryption and is monitored, as demonstrated by censored words during a period of criticism over Xi Jinping’s reign.[7]

The obsession with creating an online presence might also be unhealthy (think ‘Insta-perfect’ lives on Instagram), and there may be difficulty identifying people for who they are in real life based on their online profiles.

What this means for our future

This could mean less privacy, people being contactable all the time, being tracked through their location settings and online spending patterns.  The extent of loss in individual privacy is more so in China where personal data protection act is not as strictly regulated as other regions.  Anyone who is part of social media has the possibility of their digital footprint being exposed publicly, directly or indirectly.  Digital footprint is built throughout the years whenever a photo is uploaded or when checking in somewhere for free wi-fi, or during data roaming.

In China and for Chinese overseas, WeChat is a system for living and working.  It will continue to dominate as the platform that unifies individuals and companies.  For businesses, it’s about how to navigate the WeChat dynamics and maximize its opportunities.  This means being fast enough to tap on every new feature that is applicable, such as lucky money to encourage users’ loyalty and many more.

For individuals, perhaps the future isn’t so much about achieving work-life balance, especially in highly competitive China cities.  It is about self-discipline to regularly unplug to avoid the negative impacts from too much social media consumption.


[1] Source: https://www.statista.com/topics/1317/employment-in-china/
[2] Source: https://www.statista.com/statistics/255778/number-of-active-wechat-messenger-accounts/
[3]Source: https://www.forbes.com/sites/ywang/2017/12/06/how-chinas-tech-giants-alibaba-and-tencent-want-to-shape-how-the-world-pays/#69b9b098e6d0
[4]Source: https://www.forbes.com/sites/ywang/2017/12/06/how-chinas-tech-giants-alibaba-and-tencent-want-to-shape-how-the-world-pays/#69b9b098e6d0
[5]Source: https://www.techradar.com/news/is-your-website-ready-for-generation-z
[6]Source: https://www.forbes.com/sites/johnkoetsier/2018/02/23/mobile-advertising-will-drive-75-of-all-digital-ad-spend-in-2018-heres-whats-changing/#fe331b8758be
[7]Source: https://www.businessinsider.my/censored-words-in-china-xi-jinping-term-limits-2018-2/?r=US&IR=T; https://www.techinasia.com/outside-china-wechat-is-a-fish-out-of-water