Second strategy is local manufacturer on domestic sales, this apply only to wholly (外商独资) or partnership (中外合资) foreign-owned enterprise in which entitled to tax free on imports and exports, but qualify on domestics sales after 5 years of operation.
Below is the summary on tax charges for your reference:
| Descriptions | Tax rate | Remarks |
| Import tax (IT) | 5%-30% | Tax vary in different item |
| Value Added Tax (VAT) | 17% | Standardise on all item |
| Corporate Tax | 12.5% | Preferential tax policy within 3 years |
| Overseas raw material (ORM) | Imported raw materials price | |
| Unit price (UP) | Retail selling price without tax |
| Formula | ||
| (ORM X IT) X VAT = equation 1 (E1) | ||
| {(UP + E1 + (ORM x IT)} X VAT = equation 2 (E2) | ||
| (ORM X IT) + E1 + E2 = equation 3 (E3) | ||
| Selling price = UP + E3 |
Pros
-
Only difference advantages compare to trading company is exemption on business tax and tax relief on corporate tax.
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Entitled to issue VAT special invoice (增值税发票) to buyer, ease in financial affairs.
-
Better communication and control between manufacturing team and local sales team, save time and unwanted overheads because immediate response and rectification on customer feedbacks.
-
Better quality control and corrections in production base on customer feedbacks, hence providing better after sales service on long-term business.
Cons
-
Tighter supervision and control (监管) on tax-dodging, regular on-site inspection by custom to differentiate factory on tax free imports and tax imports warehousing.
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Increase additional internal workload and overheads in accounting, shipping, production and warehousing on documentation in exports and domestic sales.
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Require professionals, experience and good connections local trustworthy personnel to monitor internal progress to prevent blacklist or penalise by government sectors, especially by Tax and Custom Authority.
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More bribery attacks by government officer against company because more internal loopholes expose to public attacks.
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All company licenses like business registration must renewed hence will indirectly attract more awareness to government officers’ on-site evaluation and corruptions.
This strategy best use on expensive items like electronic, home appliance in which require mass imports on raw materials from overseas and could protect product trademark and technology. Using this methodology although could save on business tax and corporate tax but is it worthwhile to bear the risk on public attacks and complicates internal management? No risk no gain, hence eventough if your costings is more justify in this strategy my advise is “don’ try”. You can consider my next strategy on grey area, free tax domestic sales!
Copyright secured by Digiprove © 2010 Cyrus Chang
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wow, great site
hey I noticed that there is another page that is stealing all of your posts!!!! Do you want me to give you their page???
I’d have to make a deal with you here. Which is not something I usually do! I enjoy reading a post that will make people think. Also, thanks for allowing me to speak my mind!
@chels I know what you mean, its hard to find good help these days. People now days just don’t have the work ethic they used to have. I mean consider whoever wrote this post, they must have been working hard to write that good and it took a good bit of their time I am sure. I work with people who couldn’t write like this if they tried, and getting them to try is hard enough as it is.
Glad to see that this site works well on my Google phone , everything I want to do is functional. Thanks for keeping it up to date with the latest.
Hey mate, greetings from Iceland !
I have really enjoyed my visit to your video today and I will be sure to return again very soon.
I was just chatting with my friend about this the other day at Outback steak house. Don’t know how in the world we landed on the subject actually , they brought it up. I do remember having a wonderful fruit salad with ranch on it. I digress…
Hey man I just wanted to say thanks for taking the time to write something worth reading . I am all over the net and I see so much useless junk that is just written for the sake of putting something fresh on their site . It takes passion to make good stuff, thanks for caring.
Glad to see that this site works well on my Blackberry Bold, everything I want to do is functional. Thanks for keeping it up to date with the latest.
Thats some good basics there, already know some of that, but you can always learn . I doubt a “kid” could put together such information as dolphin278 suggested. Maybe he’s just trying to be “controversial? lol
Hey I was just reading your site on my Pure phone and I was thinking about how good it will work on the new ipad thats coming out. Fleeting thought…. Anyway thanks!
So not really on the same topic as your post, but I found this today and I just can’t resist sharing. Mrs. Agathe’s dishwasher quit working so she called a repairman. Since she had to go to work the next day, she told him, “I’ll leave the key under the mat. Fix the dishwasher, leave the bill on the counter, and I’ll mail you the check. Oh, and by the way…don’t worry about my Doberman. He won’t bother you. But, whatever you do, do NOT under ANY circumstances talk to my parrot!” When the repairman arrived at Mrs. Agathe’s apartment the next day, he discovered the biggest and meanest looking Doberman he had ever seen. But just as she had said, the dog simply laid there on the carpet, watching the repairman go about his business. However, the whole time the parrot drove him nuts with his incessant cursing, yelling and name-calling. Finally the repairman couldn’t contain himself any longer and yelled, “Shut up, you stupid ugly bird!” To which the parrot replied, “Get him, Spike!”
Thank you for the advice. I’ve found your first point to be most effective.
Just blowing some time on Stumbleupon and I found your post . Not normally what I prefer to read about, but it was definitely worth my time. Thanks.
Hey, I just hopped over to your site via StumbleUpon. Not somthing I would normally read, but I liked your thoughts none the less. Thanks for making something worth reading.
He ist dieses ein großer Pfosten. Kann ich einen Teil auf ihm auf meinem Aufstellungsort benutzen? Ich würde selbstverständlich mit Ihrem Aufstellungsort verbinden, also konnten Leute den vollen Artikel lesen, wenn sie zu wünschten. Dankt jeder Weise.
Well, I don’t know if that’s going to work for me, but definitely worked for you!
Excellent post!
¡Gracias!
So not really on the same topic as your post, but I found this today and I just can’t resist sharing. Mrs. Agathe’s dishwasher quit working so she called a repairman. Since she had to go to work the next day, she told him, “I’ll leave the key under the mat. Fix the dishwasher, leave the bill on the counter, and I’ll mail you the check. Oh, and by the way…don’t worry about my Doberman. He won’t bother you. But, whatever you do, do NOT under ANY circumstances talk to my parrot!” When the repairman arrived at Mrs. Agathe’s apartment the next day, he discovered the biggest and meanest looking Doberman he had ever seen. But just as she had said, the dog simply laid there on the carpet, watching the repairman go about his business. However, the whole time the parrot drove him nuts with his incessant cursing, yelling and name-calling. Finally the repairman couldn’t contain himself any longer and yelled, “Shut up, you stupid ugly bird!” To which the parrot replied, “Get him, Spike!”
Well, I don’t know if that’s going to work for me, but definitely worked for you!
Excellent post!
Grande alberino! Ringraziamenti per richiedere tempo scrivere qualcosa che sia realmente degno lettura. Trovo troppo spesso l’Info inutile e non qualcosa che sia realmente relativo. Ringraziamenti per i vostri duri lavori.