Japan-funded PTEs Encouraged for Transformation

Source: www.dgtoday.com.cn

On June 30 the Dongguan Bureau of Foreign Trade & Economic Cooperation (BFTEC) held a policy briefing concerning the transformation of enterprises engaged in processing supplied materials into sole-funded enterprises. About 180 representatives from 120 Japanese funded Processing Trade Enterprises (PTEs) attended the seminar.

Statistics from the BFTEC show that there are about 200 Japan-funded PTEs in Dongguan among which only three have managed to transform into sole-funded enterprises. A reason suggested is that the majority of them know little about the relative policies.

"Now that the PTEs have lost their charm,” said Liu Hang an executive from Guangdong Japanese Enterprises Management Corp., Ltd. Liu asserts that the increase of taxation on trade equipment has added to the cost of production expansion. An increase of policies that are adverse to the operation of PTE’s have also increased plant operation cost and thereby contributed significantly to reduced competitiveness. For this reason Liu concluded, “Such enterprises should transform as soon as possible so that they can enjoy favorable policies”.

Fang Chengbo vice Director of BFTEC added that non-independent-legal-entity enterprises can not enjoy all the favorable policies released by the government. For example, they cannot join the 1 billion yuan funding program for small and medium enterprises (SME) and PTE, and the 1 billion yuan funding program for transformation and upgrading of PTEs. In addition, they can not apply for National Hi-tech Enterprises Schemes. And they cannot make use of both domestic and overseas market to purchase materials and run domestic business.

Liu Hang specifically outlined the process for transformation of PTEs during the seminar. The fore planning includes issues such as the treatment of the devices, the taxation system, the treatment of materials after production, the amount of employees to be laid off and the compensation to be paid.

After that, as Liu said, the enterprises can consider when to start enating the procedures in which three main factors should be taken into consideration: the tax needed in the treatment of equipment, the time and tax it will cost in coping with the material difference, and the schedule of domestic sales. Enterprises should choose the best time for their businesses to proceed with their transformation planning, added Liu.

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Editor: Zhu Yanshan