According to Wang Guozhen, vice mayor of Kunshan, the advantages of the city include:

Geographical location - Shanghai is only 50 km to the east and Suzhou 37 km to the west of Kunshan.

Labour market - Kunshan has a ready labour market, with 41,000 professionals in different fileds and 150,000 skilled workers. Most of the employees of FIEs are locals. The average monthly wage is: Rmb2,000 or above for technical staff and Rmb800-1,000 for workers.

Efficient government - Local government officials are open-minded and are ready to serve FIEs, helping them solve problems and holding regularly meetings with them once every two months.

Safe environment - Kunshan is a safe place to do business in with an impressively low crime rate.

Strategic Advantages

Foreign investors are attracted to Kunshan by its proximity to the east China market and its location in the Yangtze River Delta, the most economically developed region in China. Second, the city has sound investment software, especially the commitment made by the local government. Also, Kunshan has strong supporting industries and a sufficient supply of well-educated technical workforce.

Guangdong Encourages Small Enterprises to Participate in Foreign Trade

The Guangdong foreign trade and economic cooperation department has announced policies encouraging small enterprises to engage in foreign trade. These measures, applying also to foreign-invested small and medium-sized enterprises (SMEs), will create more opportunities for Hong Kong companies.

Large export enterprises contribute to about half of Guangdong export value. In 2000, the combined value of exports of 114 large exporters reached US$39.06 billion, accounting for 42.5% of the provincial total. Most of these large export enterprises are located at the Pearl River Delta. In view of this unbalanced situation, the new policies are specially designed to provide preferential treatment to SMEs. The new policies are as follows:

1. Export rebate - The rebate rate on the export of yarn and cloth has been raised to 17% from 15% effective from July 1. The provincial finance department has set up a Rmb60 million fund to provide interest subsidies for collateral loans obtained between July 1 and December 31 this year.
   
   
2. Technology fund - Export enterprises meeting the following conditions can apply for the fund: those with annual exports in general trade exceeding US$2 million with high-tech products accounting for a certain percentage; those with annual exports exceeding US$500,000 of high-tech products that are manufactured using proprietary intellectual property rights; those which export technologies and ancillary equipment approved by the provincial foreign trade department; those with annual exports of software products or technical services amounting to over US$100,000; those that export branded products recognised by the State and awarded with patents and trademarks overseas; those that are awarded ISO9000 and ISO4000 certification; those recognised by the provincial government as advanced enterprises exporting high-tech products.
   
   
3. Export right - Foreign-invested production enterprises with annual exports of more than US$10 million are allowed to bid for quotas to export their own products.
   
   
4. Customs clearance - Simplified customs clearance procedures, including advance customs declaration, online declaration, speedy customs transfer, on-site inspection etc, will apply to large high-tech enterprises.

Shenzhen Grants Exporters Interest Subsidy

The rules, effective on the date of promulgation, apply to all foreign trade enterprises registered in Shenzhen with independent legal entity status and foreign trade rights (including subsidiaries set up in Shenzhen by central and local enterprises from other parts of China, but not foreign-invested enterprises). Only those companies that export more than US$500,000 worth of goods annually are entitled to bank loans secured on receivable export rebates. To qualify for the subsidy for interest payments on bank loans, local exporters must complete customs clearance for their export products between January 1 and December 31, 2001, and must complete procedures for applying for loans secured on export rebates from local commercial banks between July 1 and December 31, 2001. In addition, they must repay both the principal and interest of these loans before June 30, 2002.

Firms meeting the above requirements will be able to receive from the Shenzhen finance department a subsidy equivalent to 40% of their interest payment 30 days after they repay the principal and interest on the loan. Applications for interest subsidies must be submitted first to the lending bank and then to the local foreign trade and economic cooperation department and finance department for verification and approval.

Mianyang High-Tech Zone Unveils Preferential Policies

According to Zhao Dejun, vice director of the administrative office of Mianyang High-tech Industrial Development Zone, the following preferential policies are offered to enterprises operating in the zone:

1. Newly-established enterprises in the zone are entitled to preferential policies applicable to state-level high-tech development zones, the "Go West" strategy, or Beijng's Zhongguancun High-Tech Park.
   
2. High-tech enterprises in the zone are subject to a reduced income tax rate of 15%. Those with exports reaching more than 50% of their annual output will be entitled to an even lower rate of 10%. High-tech enterprises can also enjoy the "2-year exemption and 3-year reduction by half" tax policy upon going into operation. After the five years, if they are still recognised as high-tech enterprises, they will be granted another three years of paying income tax at half rate.
   
3. Foreign-invested production enterprises with an operation period of over 10 years are entitled to the "2-year exemption and 3-year reduction by half" tax policy starting from the first profit-making year. Those with an operation period of less than 10 years and non-production enterprises with an operation period of over 10 years will, starting from the first profit-making year, be exempt from local income tax for one year and entitled to half rate in the following year. Upon expiration of the concessionary period, enterprises with financial difficulties may be granted an extension.
   
4. High-tech production projects will be given, for a maximum of 5 years, a technological renovation fund equivalent to 30-100% of the portion retained by the local authority of their value-added tax payments.
   
5. All incomes generated from technical consultancy, technical service and technical training provided during technology transfer for the development and production of high-tech products are exempt from income tax and business tax.
   
6. Expenditures under Rmb500,000 on the purchase of advanced technologies, inventions and patents from at home and abroad by high-tech enterprises can be entered into the books as one-off administrative cost; while expenditures in excess of Rmb500,000 can also be treated as administrative cost split into different entries.
   
7. Enterprises which spend over 10% more on annual R&D than the previous year can deduct an amount equivalent to 50% of the actual R&D expenses from their annual taxable income.
   
8. Enterprises can rent public bonded storage facilities for their imported materials with import-related taxes exempted by Customs.