Recent changes to the CFC regime will enhance the UK’s position as a holding company location. The Finance Director looks at this year’s Finance Bill and examines the key of changes that the government hopes will encourage multinationals to set up operations in the UK and help promote the country’s standing as a competitive holding location for international business. Click here to read the article.

India is relaxing its rules on inward investment, opening its doors to British retailers.

British retailers stand to gain as India relaxes its rules on inward investment. In a big policy change, the Indian government is allowing single-brand retailers that already operate in the country to do so without an Indian partner for the first time.

This means that brands such as Marks & Spencer, Debenhams or The Body Shop could benefit from India’s booming middle class and economic growth. The Indian retail market is valued at $450bn and is expected to rise to $825bn by 2015.

Both existing players and new entrants will now be able to acquire, invest or increase their shareholding up to 100 per cent – beyond the previous limit of 51 per cent on Foreign Direct Investment in the sector, which has been in place since 2006.

This presents a huge opportunity for UK retailers and global brands already operating in India to increase their investment, and also presents an opportunity for retailers such as Next, Ikea, Tesco and John Lewis to enter the market before the multi-brand retail sector officially opens up.

Jason Hesse, Real Business

Viplavi Mahendra, head of the India team at law firm Shakespeares, says the opportunity for British retailers is unprecedented: “It’s a significant opportunity when you bear in mind that the country has a growth rate of around ten per cent – much higher than in the UK or in other more traditional export markets, such as Europe and North America.

“The country has a thriving consumer base, which is expected to exceed 300 million by 2015 – equivalent to the entire population of the US. As a result, demand for luxury and international branded goods is growing.”

Expansion into India isn’t without its challenges though. Among the conditions for single brand retailers is the need to ensure that at least 30 per cent of their goods are sourced from small or village industries in India, which are branded at the point of manufacture.

By Ni Gong

If you are willing to invest in China, you must consider the subsequent procedures for setting up a company in China.

Firstly, you need to find out if perhaps the proposed enterprise will run a company authorised by the Chinese government. For instance, until now, China banned privately owned organisations from attempting to engage in foreign trade. Almost all export trade was managed by several big state-owned trading firms. China fairly recently discontinued this particular program, and currently both foreign and local corporations can establish trading companies. Limitations on foreign trading companies have fundamentally been removed, however you will find adjustments on import oriented trading companies that can increase expenditure and costs. Since these regulations were merely lately altered, the native regulators who ought to agree to these plans do not have much practical experience with the attendant difficulties. This may result in certain postponement in the approval procedure. It additionally leads to a remarkably cautious method when it comes to sufficient capitalisation possibly even for foreign trading companies.

Secondly, you must figure out if the overseas trader is an approved trader. Generally, any legitimately organised foreign business entity is approved to put money into a foreign company in China. China particularly welcomes investment that encourages the export of Chinese produced merchandise. The merchants have to offer documents from its home country, proving that it is a validly formed and present company, together with information demonstrating that the person who is qualified to carry out files is on behalf of the investor. And the investor should present documentation proving the growth capital adequacy in his state of incorporation as well. Numerous traders established extraordinary objective businesses to work as the entrepreneur in China. The Chinese government bodies have turned out to be familiar with this practice. Nevertheless, the Chinese regulators will continue to seek out to track the property of the foreign investor back again to a feasible and running corporation. Investor privacy seriously isn’t a choice in China. Nonetheless, the register for the Chinese corporation will simply point out the name of the foreign investing company as the proprietor. Exactly where general public disclosure is involved, the investor secrecy might be preserved. The international investor also needs to realize that this searching course of action will combine several time and cost to the China company formation procedures.

Thirdly, in China, in contrast to the majority of countries with which Western firms are inclined to be recognisable, agreement of the project by the relevant authority is a primary part of the incorporation procedure. If the project is not permitted, no incorporation is authorised. Both of them are connected. In addition, it often takes three to six months for governmental authorisation, subject to the place of the project and its scope and range. The investor must pay a variety of incorporation fees, which is based on the location, the quantity of registered capital and the specific permits demanded for the special project. Normally, these fees equal a little over 1% of the original capital.

On complicated plans, the acceptance process frequently involves considerable discussions with diverse regulating authorities whose approval is necessary. One example is that a large manufacturing plant might have severe land use or environmental problems. Therefore, the time period for approval of incorporation is certainly not sure. It relies on the sort of project and the area. Foreign investors should be well prepared for this uncertainty from the beginning.

Ni Gong is a China-based freelance writer who writes on a wide range of topics on doing business in various jurisdictions. For more information on topics discussed in this article, refer to China company formation and China company incorporation.

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With the overriding focus on the eurozone, some positive news from China had less impact than might normally have been expected. Data showed that the country experienced its biggest fall in inflation since early 2009. This looked enough to allow authorities to ease both monetary and fiscal policy – a good move for encouraging growth, which currently stands at 9.1%. So, with China doing well in relative terms to the eurozone, where is the aid that was suggested some weeks ago? According to independent sources in the Chinese government, it is tied up in a political deadlock after Europe spurned all of Beijing’s demands. According to the sources, Beijing wanted either more influence in the International Monetary Fund, market economy status in the World Trade Organisation, or the lifting of a European arms embargo. With this political impasse, a circa $100 billon cash injection for the eurozone looks unlikely. Of course, China will have to weigh up the fact that without a stable eurozone it may lose its biggest trading partner.


St James’ Place

Whilst the Western world struggles with too much debt and too little growth, the Orient and other fast developing economies represent the flip side: too much growth and little or no debt. China is the classic example. Currently, the country’s leaders have the opposite problem to the West – how to stop their economy from roaring ahead too quickly. China’s premier, Wen Jiabao, said last week that reining in soaring consumer prices remained Beijing’s priority – as it has been for most of this year – and that China’s macrocontrol and adjustment direction cannot be changed. Reading between the lines, most economists see this as a signal that Mr Wen is unlikely to unleash another enormous stimulus package, similar to the one seen in 2008, and that China’s leaders feel the economy is robust enough as it is. After a year of monetary tightening, the economy has responded in the way expected, with growth slowing from around 10% to closer to 9% (the US and UK might achieve growth of 1.3% this year). So it is likely that China will achieve a ‘soft landing’ rather than a sharp setback. Indeed, China’s PMI climbed 0.2 points to 50.9 in August after falling for four consecutive months.


St James’ Place

However, infrastructure deficits, a lamentable security situation and inclement policies have combined to deter overseas companies from venturing into Africa’s second largest economy. The installation of a democratically elected government in 1999 paved the way for radical reforms calculated to reverse this trend and boost both domestic and international investment in the country. For the business savvy though, Nigeria is a country teeming with business opportunity and potential.

According to TradeInvest Nigeria, a non-government agency that provides access to business opportunities in the country, the extent of its trade potential is unparalleled in the entire African continent. Lucrative investment opportunities exist across multiple sectors, including healthcare, tourism and leisure, agricultural and agro-processing, banking and infrastructure. The Nigerian Investment Promotion Commission Decree of 1995 allows foreign companies unrestricted ownership of businesses except in the petroleum sector, where investment is limited to production-sharing or joint-venture arrangements.

The range of prospects that Nigeria holds out for global investors is significant, especially considering the nation’s long-term goals of accelerated economic development and inclusive growth.

Health Care

One of the most profitable business opportunities Nigeria offers is in the healthcare services industry. TradeInvest Nigeria especially highlights the private-sector investment potential in secondary and tertiary healthcare services involving research, capacity building, health management and information technology, all of which are currently lacking. The industry offers the added benefit of serving a social cause, which is significantly relevant in a country with deplorable human development indices. In this context, Nigeria’s economic capital Lagos, a city of 17 million people, is a veritable gold mine of unexplored dimensions.

For the business savvy, Lagos is as close to a dream investment destination as any in the continent. Home to some of Nigeria’s richest and strategically located on the coast, it is serviced by a large seaport and international airport that offer easy access to the entire West African region. The Lagos state government is well aware of the city’s business potential and offers investors attractive trade incentives and tax exemptions. Relative political stability over the last decade and progressive policies have resulted in a boom for private enterprises in Lagos, most of which operate outside the ambit of government regulation and as part of the informal economy. Together with the fact that Nigeria is home to 148 million people, according to revised World Bank estimates for 2009, the scope for profitable foreign investment in Lagos and elsewhere across the country are immense.

Information Technology Opportunities

One of Nigeria principal infrastructure lacking is in the field of communications and information technology, which contributes in large part to its underachieved economic potential. While the poor telecommunications network is a serious bar to business expansion and proliferation for local and foreign businesses alike, it is also a high-growth sector for potential investment by global players. A case in point is VOIX Networks Limited, a Nigerian IT and communications technology products and services provider that is looking to expand with the help of overseas investors.

The company’s mission of creating a more connected Nigeria has translated to a wide variety of products and services, including prepaid calling cards, wireless internet and cellular telephony. Despite the large-scale success of its operations, VOIX has managed to achieve only a fraction of its full potential in the absence of private investment to bankroll its expansion plans. Considering Nigeria’s ambitious plans to generate sustainable economic growth through industry-wide development, telecommunications comprise a potential boom sector for private investment with uncharted growth potential.

Solar Power

Nigeria’s most fundamental infrastructure deficit is in the field of power generation. Earlier this year, the government announced it is looking to attract $100 billion in investments for the power sector over the next five years1. Power supply is erratic and insufficient in most areas across rural and urban Nigeria, forcing businesses to operate on generators and face security concerns during frequent outages. The Lagos state government is once against at the forefront of efforts to rope in overseas investment in solar-power generation by announcing attractive terms of operation. Because of its tropical climate and equatorial location, Nigeria has tremendous potential not only to meet but overshoot its current electricity requirements through solar power generation.

For a country that has historically depended almost exclusively on non-renewable resources for revenue, this marks a substantial shift in attitude. Nigeria’s hot climate and wide plains make it the perfect location to achieve massive solar power generation. The added benefit comes by way of employment generation for hundreds of skilled and unskilled workers required for the construction and maintenance of such power plants. There is little doubt that solar power, potentially, is Nigeria’s sunshine sector.


From fertilisers to agricultural equipment leasing services, steel production to catfish farming, chemical supplies to waste recycling – Nigeria holds within its borders a virtual cornucopia of investment opportunities for global players. The country’s tumultuous history and record of outdated policies are slowly but certainly being overcome in the spirit of economic reforms and deregulation. There are still clear and present dangers that thwart substantial foreign investment from landing on its shores, the most prominent emerging out of militancy and terrorism in the Niger Delta region and civilian unrest elsewhere. Trade barriers, an investor-unfriendly tax regime and large-scale bureaucratic and political corruption still present massive challenges to any sustained effort for inclusive growth. Abuja’s ambitious 2020 plans, initiated by former president O Obsanjo to take the nation to the top twenty world economies by that year, are contingent on acquiring massive private sector investment.

The fate of Nigeria’s economic and human development goals rests primarily on its ability to create an environment that sustains foreign investment in diverse sectors. The real test of savvy, from this point of view, applies as much to the Nigerian regime as it does to the investors it desperately seeks to attract.

By Peter Osalor FCCA, CTA Partner Peter Osalor and Co Chartered Certified Accountants and President

India has a rich and complex culture that makes business deals a little challenging. In such a country, making generic conclusions can cost traders lots of money. Some of the factors taken in account include religion, regionalism, caste and language. Businessmen holding an Indian visa need to learn about the business etiquettes in India. It is important to understand that the approach, behaviour and etiquette are modified depending on who you are dealing business with.

A majority of foreign traders with Indian visas conduct business in the major cities of India such as Hyderabad, Bangalore, Mumbai and Delhi. Most probably, these Indian visa bearers will deal with a specific socio-economic class. If you are a businessman who has an Indian visa and are bound for a business trip, it pays to read some of these basic business etiquettes. This will guide you on how to properly conduct business with associates and hopefully end up with a great deal. However, this list is not meant to summarize all the business etiquettes of India. This only serves as an introduction for all foreigners with an Indian visa.

* India visa bearers need to understand that business involves hierarchy. Only one man has the ultimate power in business, the boss. Whether you are a local or a foreigner, you need to respect this hierarchy.

* Indian businessmen prefer dealing with people they know. If a company or corporation sponsors you for a business class India visa, consider this as a show of trust and respect.

* Unlike in most other cultures, Indians prefer a long-standing personal association before entering into a business deal. For traders or investors who would like to deal with Indian businessmen, a third party introduction can provide added credibility.

* Generally, foreign investors who will travel to India require a special kind of business permit or an India visa. Make sure that you inform your business partner of the proposed meeting or make an appointment one month in advance. Wait for them to confirm the appointment or just ask them to set the schedule of appointment. Informing them a week before the appointment will make sure that both of you are still available for the meeting. Last minute cancellations are common in any business meeting.

* Just like the western culture, punctuality is considered by Indians as a sign of interest. It is highly recommended that you come earlier than the call time.

* If it is your first meeting, majority of the time will be devoted for getting-to-know each other. The culture in India dictates that business partners should, at the very least, personally know each other.

* Make sure that you address your prospect business partner by his title such as Doctor, Engineer or Professor. If your business partner does not have any professional title, Sir or Maam may do. Indians revere titles and consider them as a state in the caste.

* Generally, decision making is a slow process with the head or the authority as the final decision.

Hopefully these guidelines will help you find the reach a great business deal. Don’t waste your India Visa by simply failing with these cultural barriers.

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The risks of doing business in China are well documented, and foreign firms often find themselves leaving the country with their tails between their legs. Having said that, with booming economic conditions, the temptation to do business with the Chinese is a strong one. One of the factors that will define the success of your business relationship is risk management here are a couple of ideas to get you stated.

Conduct a Complete and Thorough Risk Analysis

It’s amazing how many companies fail to do a little planning before they run into trouble. Risk analysis is difficult in China but not impossible, you need to rely on more than local media and representatives of the firm (and local government) to understand the market position of your prospective partners. Your industry body and or your chamber of commerce will be a good help in finding out more, or you could engage a specialist consultancy to do the digging for you.

Before you enter into a relationship determine how much risk you are willing to bear and if the deal exceeds that threshold – walk away. If you have a risk management policy for other countries you should apply exactly the same high standards to dealing in China and not lower them because you are salivating at the thought of higher profits.

Develop a Problem Prevention Culture

As well as filling in lots of beautiful balance sheet predictions at the start of the project, spend some time planning around problems that may arise during the course of things.

Develop a full set of contingency plans for each and every eventuality including practical solutions to be used for workarounds. Ensure you have set milestones for each stage of the project, and an exit strategy for every place in that plan too even if you don’t intend to use one.

Never forget that business in China is based around personal relationships and Chinese suppliers may mislead or even outright lie to you if there is another personal relationship (outside of yours) that would be damaged by the truth.

Many Chinese businesses are also not unconstrained entities as they are in the West and local political issues may have a significant impact on their capacity to do business with foreign organisations. This may be very difficult to gain visibility of and enquiries in to what’s happening may be brushed off, particularly if there is any “loss of face” associated with keeping you in the picture.

Ideally you should develop contacts and relationships in local government and central government who may be able to intercede on your behalf if things look to be progressing towards failure.

The complexity of the business culture in China means that you need to spend more time and effort understanding working practices before you move into partnership and it makes a risk management strategy an essential part of managing relationships successfully.

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