China

General Information Banking
Business Etiquette Tips Embassy Locations and Registration
Employment-Legal Requirements Entry and Exit Requirements
Intellectual Property Legal and Registration of a Business Entity
Safety and Crime Taxes

General Information

ChinaThe People's Republic of China was established on October 1, 1949, with Beijing as its capital city. With well over 1.3 billion citizens, China is the world's most populous country and the third-largest country in the world in terms of territory. It is now also the world's fastest-growing major economy and the world's largest exporter and second-largest importer of goods. Political power remains centralized in the Chinese Communist Party. Modern tourist facilities are available in major cities, but many facilities in smaller provincial cities and rural areas are frequently below international standards.

China covers approximately 3.7 million square miles. It has a diverse terrain, with forest steppes and deserts in the dry North and subtropical forests in the wet South. In the West the landscape is rugged and elevated, with mountain ranges such as the Himalayas and Tian Shen. China's mainland eastern seaboard is low lying, with 9,000 miles of coastline.

The largest ethnic group is the Han Chinese, who constitutes about 91.9 percent of the total population. The remaining 8.1 percent are Zhuang, Manchu, Hui, Miao, Uygur, Yi, Mongolian, and Tibetan. (There are also Buyi, Korean, and other ethnic minorities.)

There are seven major Chinese dialects and many subdialects. Over 70 percent of the population speaks Mandarin (or Putonghua), the predominant dialect, followed by Wu, Cantonese and Min (i.e. Taiwanese). Mandarin is taught in all schools and is the medium of government. About two-thirds of the Han ethnic group are native speakers of Mandarin. The rest of the Han, concentrated in southwest and southeast China, speak one of the six other major Chinese dialects. Non-Chinese languages spoken widely by ethnic minorities include Mongolian, Tibetan, Uygur, Korean (in the northeast), and other Turkic languages (in Xinjiang).

Religion plays a significant part in the life of many Chinese. Buddhism is most widely practiced, with an estimated 100 million adherents. Traditional Taoism also is practiced. Official figures indicate there are 20 million Muslims, 5 million Catholics, and 15 million Protestants. Unofficial estimates are much higher.

There may be political unrest and/or targeted crime against visitors to the country.  Travelers should check with the U.S. State Department's Web site for current travel safety information.

Major Cities Capital: Beijing (estimated population 19.6 million). Major cities: Shanghai, Tianjin, Shenyang, Wuhan, Guangzhou, Chongqing, Harbin, and Chengdu.
Official Currency Chinese renminbi (RMB) and the units of currency are the Yuan, Jiao and Fen. 1 Yuan = 10 Jiao = 100 Fen (Fen have almost disappeared).
Time Zone
UTC/ +8 GMT, or 12 hours ahead of Washington, D.C. during Standard Time. China has only one time zone and does not adjust for daylight savings time.
Language Mandarin (official), Wu, Cantonese, Min (i.e. Taiwanese), and others.


Legal System and Government

Type of Legal System

The Chinese legal system is an intricate blend of traditional Chinese approaches and Western law.

Form of Government

China is a Communist state, with a president as the head of state. The Communist Party rules China, and its power is embedded in the country's constitution. There are other political parties, known as "democratic parties," which participate in the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC).  The NPC is the highest state body and the only legislative branch in China.  The CPPCC includes delegates from a variety of political parties and organizations and independent members in China.  Both groups meet each year and are referred to as "Lianghui" (Two Meetings).  They make national level political decisions.

^Top

Banking

Structure

The Chinese government still maintains control of the banking industry, though banks gained more independence in recent years. The People's Bank of China is China's central bank, and it sets and implements monetary policy. The China Banking Regulatory Commission  is responsible for "the regulation and supervision of banks, asset management companies, trust and investment companies as well as other deposit-taking financial institutions."

Foreign financial institutions have been allowed to provide foreign currency services to Chinese businesses and individuals since 2001, when China joined the World Trade Organization. They are also able to provide local currency business to Chinese clients.

Operations

Many Chinese banks offer automatic teller machines (ATMs).  In most of the banks in China, there also are a few English-speaking employees. They typically work in the foreign exchange section of the bank.

China generally requires legal registration prior to opening an account, though one can open a preliminary bank account to deposit funds during the registration process. (See the "Legal and Registration of a Business Entity" section for further information.)

In China, documents required to open a bank account in the university's name include (but are not limited to):

Both Citigroup and Bank of America hold alliances with the major banks in China, and they provide banking services for local and foreign corporations. Citigroup has branches in Shanghai, Beijing, Tianjin, Guanghzou, and Shenzhen, and representative offices in Chengdu and Xiamen. Bank of America has branches in Shanghai, Beijing, Guanghzou, and Hong Kong. 

When opening a bank account in one of China's banks, it is advisable to compare commission rates for money transfer to and from China. 

Available Banking Services

ATMs
Mobile banking

Bank Holidays

New Year's Day
Chinese New Year
Labor Day
Communist Party of China (CPC) Founding Day
Army Day
National Day
U.S. and Other Major Banks in Country

(Note: Addresses and contact information subject to change.)

Citigroup
Level 23, Citigroup Tower
33 Huayuanshiqiao Road, Shanghai
Pudong 200120
Phone:  +86 21 6101 0000
Fax:  +86 21 6101 0110
Web:  http://www.citigroup.com/citi/about/countrypresence/china.html

Bank of America (Shanghai Branch)
G/F Ai Bo Mansion, 758 Nanjing Xi
Lu, Jing'an district
Phone: +86 21 5228 8833

^Top

Business Etiquette Tips

Business Attire

Suits should be worn for business visits. Women should dress conservatively.

Business Negotiations

The Chinese believe that prospective business partners should build relationships and, if the relationships are successful, business transactions will follow. Typically all successful transactions in China come from careful cultivation of the Chinese partner by the foreign one until a relationship of trust is established.

Proper Greetings

The proper way to greet a person in China is to use their family name only. The family name comes first and is typically one syllable. It is acceptable to call someone by their family name along with their title.

In China, formality is a sign of respect. You should not become too friendly too quickly and not insist that the Chinese use your given name.

The Chinese greeting is a nod or slight bow. But when greeting Westerners the Chinese  usually shake hands. 

Scheduling Appointments

Business appointments should be made in advance, and punctuality is important.

^Top

Embassy Locations and Registration

Americans living or traveling in China are encouraged to register with the nearest U.S. embassy or consulate through the State Department's travel registration Web site so that they can obtain updated information on travel and security within China. Americans without Internet access may register directly with the nearest U.S. embassy or consulate. By registering, American citizens make it easier for the embassy or consulate to contact them in case of emergency.

(Note: Addresses and contact information subject to change.)

U.S. Embassy in Beijing
No. 55 An Jia Lou Lu 100600
Beijing, China
Phone:  +86 10 8531 3000 
Web: http://beijing.usembassy-china.org.cn/

Embassy of China in Washington, D.C.
3505 International Place, N.W.
Washington, D.C.  20008
Phone:  001-202-495-2268
Fax:  001-202-495-2138
Web:  http://www.china-embassy.org/eng/

^Top

Employment-Legal Requirements

China has multiple laws and requirements for employment. There are also separate requirements for foreign nationals working in China. Most of the time, foreign entities cannot directly hire Chinese citizens. Foreign nationals must receive permission from local labor authorities to work in China, and they are required to obtain an employment certificate. In most instances, employees need to have proof of residence in the city where they intend to work.

Terminating Employees

China's labor law requires that all regular employees have employment contracts.  Termination of employment contracts are either termination with notice or termination without notice. Termination without notice includes such circumstances as when an employee violates company discipline policy and/or employment rules or if the employee does not meet the requirements specified during the probationary period.

Termination is prohibited by law under the following conditions:

When an organization terminates an employee, it is required to notify the applicable labor unions (though it is not required to obtain the union's approval). The employer must provide the employee with "proof of termination" or expiration of the employment contract along with documentation of the last day of work and final payments.

Severance

Severance pay is required under the law if a "fixed-term" employment contract expires and is not renewed (Note: The PRC Labour Contract Law was enacted in 2008 and specifies that workers who have been employed for ten consecutive years or completed two fixed-term contracts have the right to be employed under an "open-ended" contract.  However, the circumstances for terminating open-ended contracts are the same as for  fixed-term ones, except on the basis of expiration). Employers are obligated to provide severance pay for termination with notice and with layoffs. Severance pay is not required in cases where an employee's contract is terminated with "just cause", without notice (i.e. if they violate company discipline or employment rules, are convicted of a crime, etc.)

Typically, when severance is required, the amount specified under the law is one-month's salary for each full year worked. For 6- to 12-month periods worked, employers need to round up to one year. For periods under six months, a half-month's salary is paid. The maximum total severance pay required is three times the local average monthly wage times 12 years worked.

Legally Mandated Benefits and Leave

Annual Vacation Leave  Minimum of 5 days (typically one day is added for each additional year of employment)
Sick Leave 3 months minimum/60 percent of salary, based on seniority
Holidays Approximately 10 days
Maternity Leave 90 days
Paternity Leave 3 days

^Top

Entry and Exit Requirements

A valid passport and visa are required to enter China and must be obtained from Chinese embassies and consulates before traveling to China. Americans arriving without valid passports and the appropriate Chinese visa are not permitted to enter and will be subject to a fine and immediate deportation at the traveler's expense. Travelers should not rely on Chinese host organizations claiming to be able to arrange a visa upon arrival. Chinese authorities have recently tightened their visa issuance policy, in some cases requiring personal interviews of American citizens. 

Visas are required to leave China. Persons transiting China on the way to and from Mongolia or North Korea or who plan to re-enter from the Hong Kong or Macau Special Administrative Regions should be sure to obtain visas allowing multiple entries. Permits are required to visit Tibet as well as many remote areas not normally open to foreigners.

Travelers may consult the Visa Office of the Embassy of China for information about entry requirements and restricted areas. For a list of services and frequently asked visa questions and answers, travelers can view the Chinese Embassy's Web site.

^Top

Intellectual Property

Protection of intellectual property law has been established by government legislation, administrative regulations, and decrees in the three areas of trademark, copyright, and patent. As a result, an extensive legal framework exists to protect local and foreign property. China is a member of the World Intellectual Property Organization, the Paris Convention for the Protection of Industrial Intellectual Property, and the Patent Cooperation Treaty (PCT).

Nature of Rights and Available Protection

Patents

Through the PCT, a sole patent application can be made for numerous countries, including China. In order to receive legal protection, patents must be registered through an authorized Chinese patent agency as specified by the State Intellectual Property Office.

Trademarks

Trademarks must be registered to receive protection. In cases of similar trademarks, registrations will be granted to the one who first files an application.

Copyright

In most cases the copyright term is the life of the author plus 50 years. For cinematographic and photographic publications and those generated by an organization, the term is 50 years from the first publication date.

Enforcement

The Patent Office comes under the jurisdiction of the State Intellectual Property Office.  The Trademarks Office is under the State Administration for Industry and Commerce, and the Copyright Office is under the authority of the State Administration for Press and Publication. Typically, enforcement of IPRs will be enacted by local IPR employees, with the assistance of the police from the local Public Security Bureau.

^Top

Legal and Registration of a Business Entity

Registration Formalities (Including Timing)

In order for a U.S. institution to carry on any "business activity" in China, the institution will likely need to establish a legal presence in China. 

The following are possible choices for registering in China:

The World Bank states that the estimated length of time to establish a business presence in China may be around 31 days with approximately 13 steps required to complete the process. In reality, it may take much longer to complete the registration process depending on the type of registration, which province the work will be carried out in, and the type of services provided through that business presence.

Briefly, the steps to start a business are:

  1. Obtain a notice of pre-approval of the company name.
  2. Open a preliminary bank account, deposit funds in the account, and obtain a certificate of deposit.
  3. Obtain a capital verification report from the auditing firm.
  4. Apply for registration certification "business license of enterprise legal person" with SAIC, the organization code certificate issued by the Quality and Technology Supervision Bureau and registration for both state and local tax with the tax bureau .
  5. Obtain the approval to make a company seal from the police department.
  6. Make a company seal.
  7. Pay the fee for the organization code certificate issued by the Quality and Technology Supervision Bureau at the time of pick-up .
  8. Register with the local statistics bureau.
  9. Register for both state and local tax with the tax bureau.
  10. Open a formal bank account of the company and transfer the registered capital to the account.
  11. Purchase uniform invoices.
  12. File for recruitment registration with local career service center.
  13. *Register with Social Welfare Insurance Center.

* Takes place simultaneously with another procedure.

(Source:  The World Bank, Doing Business - China)

Below are additional resources that may assist in establishing an office.

Ministry of Commerce

http://english.mofcom.gov.cn/

Ministry of Foreign Affairs

http://www.fmprc.gov.cn/eng/

Chinese Government's Official Web Portal

http://english.gov.cn/index.htm

 
 
 ^Top

Safety and Crime

Americans visiting or residing in China should take the normal safety precautions when traveling in any foreign country.  Specifically, travelers should remain aware of their surroundings.  They should respect local police requirements to avoid travel in some areas.  Terrorism is rare in China, though in the past a small number of bombings have occured in areas throughout the country.

China has a low crime rate. Pickpockets target tourists at sightseeing destinations, open-air markets, airports, and in stores, often with the complicity of low-paid security guards. In the past, there have been incidents of violence against foreigners including sexual assaults, usually in urban areas where bars and nightclubs are located. Robberies, sometimes at gunpoint, have taken place in western China and in Beijing.  Nationalism is on the rise. Disputes among Chinese citizens or between Chinese and foreigners can quickly turn against foreigners. Caution should be exercised when visiting bar districts late at night, especially on weekends.

Travelers are sometimes asked by locals to exchange money at a preferential rate. It is illegal to exchange dollars for RMB except at banks, hotels, and official exchange offices.

Travelers should have small bills (10, 20, and 50 RMB notes) for travel by taxi. Reports of taxi drivers using counterfeit money to make change for large bills are increasingly common, especially in Guangzhou.

In the past there have been incidents of Americans falling victim to scams involving the inflation of tea and drink prices.  Americans visitors have also encountered scams at the international airports in China.

The  U.S. embassy is aware of reports of airport thefts and robberies of travelers in China, specifically in the domestic airports of Beijing, Zhengzhou, Shenyang, Dalian, Qingdao, and Taiyuan. Some Americans report being the victims of robberies while in their hotel rooms in tourist areas, and some were assaulted during these robberies.

American visitors to China should carry their passports with them out of reach of pickpockets. Americans with Chinese residence permits (juliuzheng) should carry these documents and leave their passports in a secure location except when traveling. All Americans are encouraged to make photocopies of their passport bio-data pages and Chinese visas and to keep these in a separate, secure location. They should also register with the nearest U.S. embassy or consulate general.

The loss or theft abroad of a U.S. passport or any other type of crime should be reported immediately to the local police and the nearest U.S. embassy or consulate.

Finally, Americans in China who are not staying at hotels, including Americans who are staying with friends or relatives, must register with local police as soon as they arrive. Otherwise they may be fined up to 500 RMB per day.

Traffic Safety and Road Conditions

The rate of traffic accidents in China, including fatal accidents, is among the highest in the world. Traffic is often chaotic, and right-of-way and other courtesies are often ignored. Travelers should note that cars and buses in the wrong lanes frequently hit pedestrians and bicyclists. Pedestrians should always be careful while walking near traffic. Traffic conditions are generally safe if occupants of modern passenger vehicles wear seatbelts.

^Top

Taxes

 
Most U.S. higher education institutions are exempt from paying U.S. federal income tax on revenue generated by activities directly related to the university's educational and research missions.  In addition, donors may deduct their contributions to the university from income.

It should not be assumed, however, that university business conducted outside the United States will also benefit from a tax-exempt status. While tax-exempt status is common in other countries there is a required process to apply for and obtain tax-exempt determination. Failure to do so could result in fines and penalties imposed on the university and may not qualify donor contributions as tax deductible. 

Also, tax-exempt determination received by another university program in a certain foreign country does not automatically qualify new programs for the same status. 

Please contact your legal or general counsel's office for assistance in determining tax status during the registration process.

^Top

Other Information

Medical Facilities

Western-style medical facilities with international staff are available in Beijing, Shanghai, Guangzhou, and a few other large cities. Many other hospitals in major Chinese cities have so-called VIP wards (gaogan bingfang). These feature reasonably up-to-date medical technology and physicians who are both knowledgeable and skilled. Most VIP wards also provide medical services to foreigners and have English-speaking doctors and nurses. Only a few hospitals in China will accept medical insurance from the United States.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at (877) FYI-TRIP (877-394-8747); fax (888) CDC-FAXX (888-232-3299); or via the CDC's Web site.

For information about outbreaks of infectious diseases abroad consult the World Health Organization's Web site.

^Top

Online Resources Used for this Template

^Top