1. 1 Doing Business in Shenzhen, China July 24, 2007 Los Angeles Andrew M. Pan North American Representative Office of Shenzhen, China (NAROS)

2. 2 China Regional Economy

3. 3 Shenzhen in Pearl River Delta (PRD)

4. 4 Shenzhen in 1982

5. 5 Shenzhen in 1985

6. 6 Shenzhen in 1998

7. 7 Shenzhen Today

8. 8

9. 9 Facts and Figures City established in 1979, became China’s first SEZ in 1980 About 10 million population, average age less than 30 GDP in 2006 reaches USD 76.5 billion, ranks 4 th among mainland China cities. GDP per capita in 2006 is USD 8,815, ranks 1 st in China Shenzhen Port is the world’s 4 th largest container port, 18.5 million TEUs in 2006 Shenzhen Bao’an International Airport is the 4 th busiest passenger airport in China Shenzhen Stock Exchange is one of two stock exchanges in China 120+ Global Fortune 500 companies have operations in Shenzhen The corporate headquarters for Huawei, ZTE, China Merchant Bank, Ping’an Insurance and many other local China private companies

10. 10 Facts and Figures Major Industries –Traditional consumer products manufacturing –High-tech products manufacturing and R&D –Import/export city in mainland China –Logistics center for Southern China, especially Pearl River Delta –Regional financial center A young, vigorous migrant city with the culture of creativeness and entrepreneurship China’s first SEZ with the most open market economy and a pro- business government Much lower operation cost compared with Shanghai, Beijing and Hong Kong One of the best living cities in mainland China (air quality, green space, foods and entertainment) 10+ five-star hotels, 10 world class golf courses. Mission Hills Golf Club is the biggest golf club in the world with 216 holes.

11. 11 Foreign Investment Regulatory Framework Principal Laws Applicable to Foreign Investment (Company Law, Wholly Foreign-Owned Enterprise Law, Equity Joint Venture Law, Contractual Joint Venture Law ) Industry Regulations Government Department Regulations Economic Zone/Local Government Regulations “Administrative Measure for Free Trade Zone” “Administrative Measure for Export Processing Zone” … “Foreign Investment Enterprise Income Tax Law” “Rules of the PRC on Foreign Exchange Control” … “Catalogue on Guiding Foreign Investment ” “Administrative Measure for Foreign Investment in the Commercial Sector” …...

12. 12 Foreign Investment Regulatory Framework Forms of Doing Business in Shenzhen –Direct Investment Forms Equity Joint Venture (EJV) Contractual Joint Venture (CJV) Wholly Foreign-Owned Enterprise (WFOE) Investment Holding Company (CHC) Joint Stock Company –Indirect Investment Forms Direct purchase and sales Toll/Contract manufacturing Representative office Licensing Financing Foreign Investment Enterprise (FIE) Foreign Enterprise (FE)

13. 13 Foreign Investment Regulatory Framework Shenzhen Municipal Government Shenzhen Administration of Commerce and Industry (AIC) District BTI Shenzhen Local Taxation Bureau Shenzhen Bureau of Trade and Industry (BTI) EJV, CJV, WFOE Government Approval Representative Office, Company Name Certificate, Business License District AIC Other Follow-up Registrations Shenzhen State Taxation Bureau Shenzhen State Administration of Foreign Exchange (SAFE) Shenzhen Customs……

14. 14 Procedures for Setting Up Representative Office Submitting Application –Submit to Shenzhen Administration of Industry and Commerce (AIC) –Address: Window #23, #24, East Hall of Building B, Shenzhen Civic Center, 3rd Fuzhong Rd, Futian District, Shenzhen 518035, China –Registration Fee: 600 RMB –Processing Time: 5 business days –Contact: 86-755-8210 7493, 86-755-8210 7494 Getting the Certificate –Valid Term: One year Documents to be submitted can be found at AIC website www.szaic.gov.cn

15. 15 Procedures for Setting Up WFOE or JV I. Obtain Government Approval Submit Application –Submit to Shenzhen Bureau of Trade and Industry (BTI) or District BTI –Address: Window #8, #9, East Hall of Building B, Shenzhen Civic Center, 3rd Fuzhong Rd, Futian District, Shenzhen 518035, China (or call for addresses of District BTI) –Registration Fee: Free –Processing Time: 5-30 business days –Contact: 86-755-8210 7471 Get the Certificate –Government Approval Certificate –Valid term: 30 years-no limit Documents to be submitted can be found at BTI website www.szbti.gov.cn

16. 16 Procedures for Setting Up WFOE or JV II. Obtain Business License Submit Application –Submit to Shenzhen Administration of Industry and Commerce (AIC) or District AIC –Address: Window #23, #24, East Hall of Building B, Shenzhen Civic Center, 3rd Fuzhong Rd, Futian District, Shenzhen 518035, China (or call for addresses of District AIC) –Registration Fee: 0.08% for registered capital less than RMB 10 million, 0.04% for registered capital more than RMB 10 million, no fee for registered capital over the cap of RMB 100 million –Processing Time: 5 business days –Contact: 86-755-8210 7493, 86-755-8210 7494 Get the Certificate –Valid term: 30 years-no limit Documents to be submitted can be found at AIC website www.szaic.gov.cn

17. 17 Procedures for Setting Up WFOE or JV III. After Obtain Business License Certificate Shenzhen Administration of Quality and Technology Supervision: Obtain National Organization Code Shenzhen Bureau of Public Security: Engrave corporate seal Shenzhen Local Taxation Bureau: Local tax registration Shenzhen State Taxation Bureau: State tax registration Shenzhen Financial Bureau: Financial registration Shenzhen State Administration of Foreign Exchange: Foreign exchange registration Shenzhen Bureau of Labor and Social Insurance: Recruitment and social insurance registration Shenzhen Customs: Customs registration (if necessary) Shenzhen Construction Bureau: Construction application (if necessary) Shenzhen Fire Department: Fire control application (if necessary)

18. 18 Opportunities in Shenzhen: Domestic Market Momentum Recent survey conducted by PwC –Survey of 1,410 CEOs from 45 countries –Projected overseas investment (2007-2010) –55% of respondents will invest in China (vs. 36% in India, 33% in Brazil) –75% of respondents are attracted by China domestic market opportunities –48% are attracted by lower manufacturing costs Source: PricewaterhouseCoopers

19. 19 5% 62% 3%3% Serve as regional headquarters Produce goods or services for other (non-China, non- US) market Export to China Produce goods or services in China for the US market Produce goods or services in China for the China market Source: 2005 AmCham-China and AmCham-Shanghai Member Questionnaire 11% 14% Q: No.1 goal of the US investment in China? A: China domestic market opportunities. (62%+ 11% = 73%) 100% = 345 companies Others Opportunities in Shenzhen: Domestic Market Momentum

20. 20 Opportunities in Shenzhen: Service Sectors Distribution: retail, wholesale and direct marketing Banking, consumer lending and insurance Telecommunication and content driven providers Logistics: transportation and package delivery service Travel, education and entertainment Construction engineering and consultation Customer service Business Process Outsourcing (BPO) and IT Outsourcing (ITO) Professional services such as legal, accounting, medical care and management consulting etc.

21. 21 Opportunities in Shenzhen: Industrial Zones Industrial zones in Shenzhen provide various opportunities for US companies with different business models Government provides incentives in many aspects –High-tech park –Free trade zone –Export processing zone –Bonded logistic park –Overseas Chinese students park

22. 22 Our Office Main offices: Shenzhen (China), Los Angeles (west coast) and New York City (east coast, coming soon) Satellite offices: San Francisco, Chicago Other overseas offices of Shenzhen: Frankfurt, Germany, Tokyo, Japan and Sydney, Australia New York City Chicago Shenzhen, China San Francisco

23. 23 Our Service We provide FREE services: Market Research / Feasibility Study Assistance Partner Identification and Negotiation Support Site Selection and Setup Facilitation Government Relations in China

24. 24 Our Network

25. 25 Thank You! For more information about doing business in Shenzhen, please contact: 350 S. Figueroa St., Suite 288 Los Angeles, CA 90071 Tel: 213-628-9888 Fax: 213-628-8383 Email: andrewpan@shenzhenoffice.org Website: www.shenzhenoffice.org