Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Approach Chinese Incentives with Caution

Posted by: Rod Kurtz on February 2, 2009

For years, foreign investors took advantage of the various incentives local and central Chinese government authorities used to attract investment. But with the passage of new tax laws, this landscape changed dramatically. Investment incentives now are more restricted. Nevertheless, local governments in China can still provide some inducements to foreign investors. It is important for companies to carefully evaluate these lures, some of which may come in the form of exemptions from certain taxes or regulatory obligations.

Overall, exemptions granted at the local level are much less tenable than those granted at the central level. It is also essential to understand who is making the guarantees for exemptions and how transferable they are from leader to leader or agency to agency.

Companies have also reported that investment incentives have been retracted in the past, and that there is generally little they can do if incentives are lost—although local governments do have little reason to reduce incentives if an investor is bringing great value to the locality through local tax revenue, job creation, or production. Local governments are constrained by central policy, though, and can always point to other local agencies or central policies beyond their control to justify elimination of an incentive.

While investors should still pursue incentives aggressively, they should ultimately choose a business venture based on the strength of the business strategy, as incentives can change and have changed significantly over time.

Julie Walton
Director, Business Advisory Services
The U.S.-China Business Council
Washington, D.C.

Post a comment



Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.

To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.

BW Mall - Sponsored Links

Buy a link now!