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TABLE OF CONTENTS 1, Investment Background 2, Illustration of the Area Condition 3, Industries Guidance 4, Preferential Policies 5, Cost of Investment 1.1 Henan Province Status
Henan Province is located in the mid-east of China, to the middle and lower reaches of Yellow River. It is the most populous province and the fifth province for economic aggregate in China with the total area of 167,000 square kilometers and a population of 97 million.
Henan Province is one of the main birthplaces of Chinese ancient civilization, historically called as "Zhong Zhou" and "Yu" for short. Henan had been the whole nation's political, economic and cultural center for a long time, more than 20 dynasties and 200 emperors set up capitals here successively. It ever had the saying in the ancient times "those who control Central Plains will win the country".
Situated in Central China, Henan Province plays an important role in connecting east & west and linking up north & south. In the meantime, Henan serves as national important transportation and communication center, the transport passageway as well as the hub of national railway and highway net. The total length of highway putting into use is more than 2,500 kilometers, which is the fourth in China; that of telecom cable is 190,000 kilometers, which is also the fourth, while the total length of local railway is 1,311 kilometers, which holds the first place.
With rich resources, Henan Province is an important producing and processing base of agricultural and livestock products, as well as the base of energy raw material in China. The total output of grain ranks the second in the country; that of wheat ranks the first; the output of raw coal is 144 million tons, which holds the third place; and the gross installed generation capacity reached 24.37 million KW, which is the sixth in China. Meanwhile, Henan has the nearly infinite supply of high quality labor-force with lower cost than the national average.
Henan has a complete industrial system and the industries such as coal, electric power, equipment manufacturing, information, in-depth processing for agricultural and livestock products, and aluminum etc. have strong competitive advantages. Market share and overall competitiveness hold the first place for the products of meat, quick frozen food, glass kinescope for color TV, tire cord fabric, glass, tractor, coach, protection equipment for electric power, aluminum oxide and electrolytic aluminum.
1.2 Zhengzhou City Status
Zhengzhou City, the capital of Henan Province, adjoins Yellow River in the north and Mt. Songshan in the west. With a long history and picturesque landscape, Zhengzhou is a national historical and cultural city and the famous tourism city. Moreover, it is one of the eight ancient capitals in China and an important birthplace of Chinese nation.
Situated in the hinterland of China, center of central plains and passage of ten provinces, Zhengzhou serves as an important national communication center as well as transportation hub of highway, railway and aviation, and is a logistics distribution center in China. Beijing-Guangzhou Railway and Lanzhou-Lianyungang Railway are crossing here, and Beijing-Zhuhai Highway, Lianyungang-Huoerguosi Highway, State Highways of No. 310 and No. 107 are passing through. The 4E Grade Xinzheng International Airport is one of the five biggest air harbors in China, so that passengers can take non-stop flight to more than 30 international and domestic cities. Zhengzhou has the biggest marshaling yard in Asia and the largest transfer station for less-than-carload freight in China. It also has a first-class railway port and a first-class aviation port. For the freight transport, goods can be inspected and sealed in Zhengzhou and cleared by the Customs to arrive abroad directly.
Zhengzhou plays an important role in connecting east & west and linking up north & south in the national economic development structure. It is a central city in the term of China's region, a core city in the "Central Rising Strategy" and a leading city among the cities in the Central China with broad market coverage. Zhengzhou is acclaimed as "No. 1 Market in China" for its developed commerce. The trading prices of grains in Zhengzhou Commodity Exchange influence on the domestic dealing prices, and even on the world prices.
Zhengzhou is an important energy base of China. 36 minerals have been proved up. The future reserves of coal is 30 billion tons, and the reserves of aluminum bauxite is 0.1 billion tons. Hence, it is the largest industrial base for coal, electric power and aluminum industry. The gross installed generation capacity of the whole city is 3.15 million KVA in 2004 and daily water supply capacity reaches 1.07 million m3.
As an inland city of China opening to the outside world, Zhengzhou optimizes the investment surroundings and its economy develops sharply. The city is one of the State's top 50 cities in comprehensive strength and top 40 in investment environment. Furthermore, Zhengzhou, recommended by World Bank, becomes one of the top 10 excellent cities for its investment environment among Chinese cities.
Zhengzhou, the opening city to the outside world with a broad vision and unique glamour, has attracted more than 2,600 foreign-invested enterprises from over 40 countries on five continents to come and settle down. More than 30 Fortune 500 companies such as Coca-Cola, Wal-Mart stores, Carrefour, DuPont, LG Electronics and so on invested here.
2 Illustration of the Development Area 2.1 Brief Introduction to the Area Zhengzhou National Economic Technological Development Area (hereinafter referred to as "ZEDA") is located to the southeast of Zhengzhou, Henan Province. To its north is Lanzhou-Lianyungang Railway, to its east is Beijing-Zhuhai Highway and it borders on Airport Highway in the west. The planned area is totally 12.5 square kilometers, with the actual jurisdictional area of 53 square kilometers. ZEDA was established in April 1993, and was approved to be a state-level economic technological development area by the State Council of the People's Republic of China in February 2000. Three national policy parks including Henan Zhengzhou Export Processing Zone, Henan Pioneering Park for Returned Students, Zhengzhou High-New Tech Incubation Center and some leading industrial parks such as Automobile Industrial Park, IT Industrial Park, High-Tech Industrial Park as well as Henan Public Bonded Center which is the sole bonded center in the Midwest of China planned and established in ZEDA. ZEDA is the sole state-level economic technological development area in Henan Province. By the end of 2005, ZEDA has realized the infrastructure facilities covering 12.5 square kilometers and the so-called "Nine Connections and One Leveling" such as the supplies in water, electric power, natural gas and thermal power, the construction of drainage, the connections of postal service, telecommunication, road and cable television and the leveling of land have been completed. As a result, more than 1000 investment projects have been accumulatively introduced into ZEDA, and the Fortune 500 companies such as Philips from Netherlands, MAN from Germany, LG from Korea, Formosa Plastics Group, and famous domestic enterprises including China Aluminum Group, Ancai Group, Yutong Group, New Hope Group and Robust Group had come and settled down. ZEDA is gradually playing a leading role in the industrial development of Zhengzhou and also of Henan Province, becoming a base for modern manufacturing industry, a window of opening to the outside world and a new modern urban district. 2.2 Investment Advantages
Lanzhou-Lianyungang Railway, Beijing-Zhuhai Highway, and Airport Highway situate ZEDA in the southeast economic area, which is the most active economic area in Zhengzhou, and within the golden triangular zone formed. ZEDA has obvious superiorities in investment because of its considerable advantages on convenient transportation both in land-way and aviation, unhindered commercial logistics, preferential investment policies, rich human resources, sufficient energy supply, exquisite living environment, enormous market potentials and broad market coverage.
2.2.1 Advantages in Traffic To the north of ZEDA is Lanzhou-Lianyungang Railway; to its east is Beijing-Zhuhai Highway. It is 22 kilometers away from the 4E Grade Xinzheng International Airport with only 20 minutes by car, 2 kilometers away from Zhengzhou Eastern Railway Freight Station-a national first class railway port, 1.5 kilometers away from Zhengzhou Highway Freight Transportation Center, 3 kilometers away from Putian Station along Lanzhou-Lianyungang Railway, and 3 kilometers away from the CBD of Zheng Dong New District-the city center in the near future. ZEDA surrounded by Beijing-Guangzhou Railway, Lanzhou-Lianyungang Railway, Beijing-Zhuhai Highway, Airport Highway, No. 107 State Highway and High Speed Passenger Transportation Railway has convenient transportation in land-way and aviation.
2.2.2 Advantages in Market Coverage Taking Zhengzhou as the center of a circle, the scope of freight delivery to a radius of 500km may cover the area of 0.36 billion population within 6 hours, and that to a radius of 1000km may cover the area of 0.79 billion population within 12 hours. By highways, it only takes 3 hours or less to arrive all the major cities in Henan Province. By railways, it takes at most 8 hours to arrive in Tianjin, Qingdao and Liangyungang ports. Furthermore, High Speed Passenger Transportation Railway in the central China, which directly arrives in Beijing, Wuhan, Xi'an as well as Shanghai via Nanjing, will pass through ZEDA, and will be joined up completely in 2010. On the occasion, a 3-hour economic circle with Zhengzhou as the core and covering more than 2/5 of the national economic aggregate will be formed. Making investment in ZEDA can cover the broad market in China.
2.2.3 Advantages in Human Resources ZEDA has set up a rich reserve in human resources, which can meet demands for qualified talents of various enterprises. Moreover, 48 colleges and universities and 118 vocational and technical schools in Zhengzhou City can provide about 230,000 qualified talents every year for enterprises in ZEDA to choose and recruit.
2.2.4 Advantages in Energy Supply Henan Province is an important energy base of China with rich coal reserves and sufficient electric power supply. By the end of 2004, the gross installed generation capacity of the whole province reached 24.37 million KW. The future reserves of coal of Zhengzhou City are 30 billion tons, the annual mined quantity is 40 million tons, and the gross installed generation power capacity of the whole city is 3.15 million KW. Because transmitting natural gas from the west to the east and south-to-north water diversion project pass Zhengzhou, sufficient power and energy supply can be obtained if investing here.
2.2.5 Advantages in Investment Policies For the foreign-invested enterprises, ZEDA has the most preferential policies in investment. These enterprises can not only enjoy the basic rate of 15% enterprise income tax, but also draw support from some state-class policy platforms including Henan Pioneering Park for Returned Students, Zhengzhou High-New Tech Incubation Center and Henan Public Bonded Center, which can provide serial preferential policies such as tax exemption, tax reduction, tariff bonded, subsidy and rewards. In addition, ZEDA is the first one of implementing the system of zero rates for administrative fee in Henan Province.
2.3 Infrastructure Facilities
By the end of 2005, ZEDA has finished the construction of the infrastructure facilities covering 12.5 square kilometers. The "Nine Connections and One leveling" such as the supplies in water, electric power, natural gas and thermal power, the construction of drainage, the connections of postal service, telecommunication, road and cable television and the leveling of land have been realized. The railway special line can reach ZEDA directly.
2.3.1 Transportation At present, a pattern of netlike roads with 12 longitudinal roads and 12 transverse roads has been formed and the total length of road is more than 50 kilometers in ZEDA. The railway special line connected to Putian Station along Lanzhou-Lianyungang Railway can reach ZEDA directly. The network of public transportation is gradually improved, and people can get to the urban directly by bus including No. 33, 35, 46, 59, 117, and 307. Public transport terminal and the internal system of public transportation in ZEDA will also been constructed and put into use soon.
2.3.2 Water Supply Two water sources can be provided for water supply in ZEDA. The capacity of water supply from the city reticulated water to ZEDA is 200,000 tons per day, while the water supply network of underground well group in ZEDA is used as auxiliary water supply with the daily supply capacity of 73,200 tons.
2.3.3 Drainage ZEDA practices split-flow treatment for sewage and rainwater. Enterprise sewage should be reached the standard for discharging after being treated, and then be charged to Wangxin Village Sewage Treatment Plant through the municipal pipe network with daily treatment capacity of 400,000 tons.
2.3.4 Power Supply Power supply has been fulfilled the double circuit feeding in ZEDA. One substation (Baohu Substation) was built with capacity of 110 KVA. Four special circuits for power supply of 10 KVA each have been put into use, and other three substations with capacity 110 KVA are in preparation. It is estimated that the end of 2006 can realize power supply with capacity of 440 KVA.
2.3.5 Heating Supply ZEDA implements the central heating supply and the first thermal source factory in ZEDA has been put into use with the heating supply capacity of 84 steam-tons per day.
2.3.6 Natural Gas The trunk pipe network of natural gas in ZEDA has been connected. The gas with daily supply of 0.30 million m3 is mainly supplied by Zhongyuan Oilfield and transmitting natural gas from the west to the east, which can provide sufficient gas for production and living of enterprises stationed in ZEDA
2.3.7 Post and Telecommunication The post office and telecommunication bureau in ZEDA have been built and put into operation. The capacity of programmed telephone is 100,000 sets, and the broadband of Internet reaches 1000M.
2.3.8 Logistics ZEDA is the most important part of Putian Logistics Circle. A batch of logistics facilities such as Railway Freight Container Terminal, Public Bonded Center, Tuopu Railway Logistics etc. will be built and put into use, which can offer a series of modern logistics service including railway logistics, highway logistics, bonded goods logistics and commercial logistics.
2.4 Service System
ZEDA has a perfect social service system. Functional departments such as Public Security, Administration for Industry and Commerce, National Taxation, Local Taxation, Technical Supervision, Fire-fighting, Customs, Commodity Inspection, Administration of Justice, and so on have been stationed in ZEDA successively. The service organs of finance, insurance, intermediary and investment consulting such as commercial bank, insurance company, accountant office, law office, notaries office and tax executive office are all here. Jinshahu Golf Course, Tennis Center, Jinlu Pleasance, Hanghai Stadium are ideal recreation and rest places in your free time. Meanwhile, Heli Nursery, the Central Primary School of ZEDA, Zhengzhou No.85 Middle School, and Zhengzhou No.11 High School can provide high-quality education for your children. In the light of the service aim of "Business Canvassing First, Enterprise Being Supreme", all functional departments in ZEDA can provide free commission service in the whole course for introduced projects and stationed enterprises.
3 Industries Guidance
3.1 Demands for Projects
ZEDA would like to mainly introduce the following projects according to the development orientation of "improving the quality of absorbing the foreign investment, focusing on developing the modern manufacturing industry, optimizing the export structure, devoting to developing high and new technological industry, being committed to developing high value-added service industry, promoting the change of a national economic technological development area to be a multi-functional integrated industrial area".
(a) Foreign-invested projects, mainly introduce foreign-invested industrial projects encouraged by the state
(b) Projects of earning foreign exchange through exports mainly introduce processing trade projects of purchasing raw materials and export the products in oversea market
(c) Modern manufacturing projects, mainly introduce large manufacturing industrial projects such as electronic information, equipment manufacturing and biological medicine conforming to the State industrial policy and needed by industrial development of ZEDA
(d) High-new technological projects, mainly introduce high-new technological enterprise, high-new technological products, and projects for high-new technological achievements authenticated by provincial level or higher competent department in charge of science and technology, medium and small-size technological enterprises founded by the returned students from overseas, other medium and small-size technological projects and incubation projects
(e) High value-added service industrial projects, mainly introduce other service enterprises such as modern logistics enterprises, all kinds of service outsourcing enterprises, software enterprises, financial enterprises, insurance enterprises etc.
(f) Projects suitable for the development of ZEDA, such as construction of infrastructure facilities, construction of standard workshop and development of entire-block land
(g) Projects of establishing company headquarter, research and development center, procurement center, regional headquarter and sale center for Fortune 500 enterprises, multinational companies, domestic renowned enterprises and top 50 enterprises in the line of business
3.2 Key Industries
3.2.1 Electronic Information Industry
- Mainly introduce design, manufacturing, packaging enterprises of integrated circuit of 8 inches and the above - Mainly introduce manufacturing enterprises of computer complete appliances, components and peripheral equipment - Mainly introduce software development enterprises, Internet service enterprises, and telecommunication service enterprises - Mainly introduce development and manufacturing enterprises of liquid crystal products, plasma products and other advanced display products
3.2.2 Equipment Manufacturing Industry - Mainly introduce projects of complete automobiles and spare parts, electronic products for automobiles, special complete automobiles and spare parts, the related research and development, storage and logistics - Mainly introduce manufacturing projects of a complete set of equipment for high and low voltage power transmission and transformer, high and low voltage electric equipment and electric power equipment
3.2.3 Biological Medicine Industry - Mainly introduce biological medicine engineering technology, gene technology, biological diagnosis reagent, treatment medicine for immunity, and vaccine - Mainly introduce technology for extract, separation, refinement, tiny powder of Chinese traditional medicine, technology for slow release in the body for prepared Chinese medicine, absorption of skin permeation, bull's-eye delivering medicine, and developing new pharmaceutics of Chinese traditional medicine such as capsule, injection medicines, tablet, oral liquid and dripping pills. - Mainly introduce projects of international and domestic advanced chemical pharmacy
3.2.4 Modern Logistics Industry - Mainly introduce medicine logistics, automobiles and spare parts logistics, commercial logistics, tobacco logistics and so on - Mainly develop highway logistics, railway logistics, bonded goods logistics, and the third party logistics
3.3 Establishment of the Area
3.3.1 Henan Zhengzhou Export Processing Zone Established with approval by the State Council on June 21, 2002, Henan Zhengzhou Export Processing Zone was formally accepted by nine Ministries on June 1, 2004. The Zone is located to the southeast of Zhengzhou with a planned area of 2.7 square kilometers and the first phase of development area covers 0.6 square kilometers.
Supervised by the Customs, Henan Zhengzhou Export Processing Zone adopts the management mode of "Inside the Territory but Outside the Customs". The service organs such as customs, inspection and quarantine of commodities, administration bureau for industry and commerce, tax bureau, financial institution, freight transport and storage are all here. The Zone practices a full-closed, around-the-clock clearance of "one-time declaration, one-time document examination and one-time inspection and acceptance" to supply One-Stop service for enterprises.
Preferential Policies
(i) Exemption of Import Duty Import duty and duties in the link of import will be exempted for the import of machinery, equipment, moulds, and parts for maintenance for enterprise production inside the Zone; for the import of machinery, equipment, fundamental construction materials needed for building workshop and warehouses for construction projects of infrastructure facilities for productive enterprises inside the Zone; and for self-using stationeries to be imported for the enterprises and administrative agencies.
(ii) Duty-Bonded for Import Materials All raw materials, parts, elements, packaging materials, and expendable materials needed for processing export products of enterprises inside the Zone are bonded.
(iii) Tax Rebates for the Goods Moving into the Zone Enterprises outside the zone within China exporting their goods to enterprisesq inside the Zone can enjoy the preferential policies on VAT rebates for exported goods offered by the State. Machine, equipment, raw materials, parts, elements, packaging materials, and construction materials of reasonable quantity produced outside the Zone, when entering into the Zone for the use of internal enterprises, can be treated as export goods for VAT rebates.
(iv) Exemption of Export Duty Export duty will be exempted for the finished products made inside the zone and the leftover bits and pieces, the remainder materials, substandard products, and wasted ones when being sold to abroad, unless being stipulated by laws and administrative rules specially. VAT and consumption tax will be exempted for goods exported directly or sold to the internal enterprises, which are processed or produced inside the Zone and by the internal enterprises.
(v) Export Incentives The incentives will be given for general commodities, mechanical and electrical commodities, and high-new technological commodities with RMB0.01, 0.02, and 0.04 per US Dollar respectively according to foreign currency collected after verification, and 0.02, 0.04 and 0.08 of incentives respectively per US Dollar for the part over the basis of the previous year.
(vi) Freight Allowance Domestic freight allowance shall be practiced with RMB 0.1 per US Dollar of export.
(vii) Zero Rates All administrative and operating fee stipulated by the province shall be exempted for enterprises inside the Zone.
(viii) Insurance Allowance Enterprises in the Zone are aided with the special supporting funds of Henan Provincial Export Credit Insurance at the rate of half insurance premium actually paid by the enterprises.
(ix) Preferential Tax Foreign-invested production enterprises in the Zone can enjoy not only the above preferential policies, but also the preferential tax at a rate 15% of enterprise income tax for foreign-invested enterprises stationed in state level economic technological development area, and enterprise income tax exempted for the first two years and half reduction for the following three years. Contact usEast Hanghai Road Zhengzhou China 450016 Tel: 0086-371-66866120, 66866130, 66866100 Fax: 0086-371-66866777, 66866200 Http://www.zzepz.gov.cn
3.3.2 Henan Pioneering Park for Returned Students Henan Pioneering Park for Returned Students was founded in January 1998, and became the sole park in Henan and one of the fourteen state-level parks in July 2002 with the approval letter from the Ministry of Personnel of PRC.
Basic Functions The basic functions of pioneering park are industrialization, modeling, conglomeration and servicing.
(a) Personnel permitted to set up enterprises inside the park - Acquiring undergraduate or higher degrees in overseas universities at government scholarships or at their own expenses - Doing research work over one year in foreign universities and research institutions after obtaining undergraduate or higher degrees, or intermediate professional title qualifications in China - Studying abroad and obtaining permanent right of residence or the re-entry qualification of the country studied before - Other students in accordance with the requirements
(b) Notice for Entering the Park The returned students may set up various types of foreign-invested or domestic-invested enterprises in research, development, production, processing, trade, consultation and the sales of relevant products.
(c) Conditions of Entering the Park The returned students must either be the shareholders of the enterprise owning at least 25% of the total shares or be the senior executives of the enterprise providing the origin source of projects, technical support or managerial technology.
(d) Preferential Policies
(i) Administration of Industry and Commerce The returned students holding foreign passports or foreign long-term residence certificates with no less $10,000 can directly register foreign-invested enterprises, while those who hold Chinese ID cards with RMB100, 000 can directly register domestic-invested enterprises.
(ii) Taxation Enterprises set up by the returned students may enjoy the park support fund on a yearly basis for 5 years after being put into production. The total sum of money is equivalent to between 30% and 50 % of the retained portion from the paid-in enterprise income tax by the benefited finance of ZEDA.
(iii) Fund Supports A fund for pioneering work has been established to assist the setting up of enterprises of the returned students or doing research in a way of free aid or interest deducted of a loan. The amount of fund aid is generally from RMB50, 000 to 100,000 while the amount for interest deducted of a loan does not exceed RMB100, 000.
(iv) House renting The rental for the first three years shall be 30%, 50% and 70% of the announced price respectively when renting the office rooms offered by the park. The office rooms shall be rental-free when renting the standard workshop offered by the park. The rental of workshop for production for the first two years shall be 50% and 80% of the announced price respectively.
(v) Land When buying land to build a factory in ZEDA, enterprises of the returned students may enjoy the preferential policy of land transference, which is same as foreign-invested enterprises. Contact usNo. 1096, East Hanghai Road Zhengzhou China 450016 Tel: 0086-371-66786288 Fax:0086-371-66786588
3.3.3 Zhengzhou National High-New Tech Incubation Center Founded in May 1998, Zhengzhou National High-New Tech Incubation Center was approved as a state-level incubation center by the Ministry of Science and Technology of PRC. The center is a service institution for public welfare science and technology work in light of the principal of encouraging and supporting the scientific and technological research, promoting the transformation of scientific and technological achievements into productivity, fostering the outstanding high and new technological enterprises and entrepreneurs. The incubation center has a hatching place with more than 20,000 square meters and more than 500 scientific and technological enterprises have been incubated.
(a) Scope of Service - To provide incubators for research, production and the relevant realty management - To provide scientific research and official business service - To provide training programs in economic management, finance, tax, law, and high and new technology - To provide services of personnel exchange, recruitment and professional title appraisal - To assist the incubated enterprises to apply for the conferring of high-tech products and the authentication of high-tech enterprises - To assist the incubated enterprises to apply for various planned scientific projects and scientific and technological funds - To provide the latest international and domestic development information of science and technology, various economic information and consultation service on scientific and technological polices of the state and local government - To assist the incubated enterprises to develop domestic and overseas economic and technological cooperation, technical exchange and products show - To assist the incubated enterprises to apply for venture fund and commercial bank loan
(b) Preferential Policies - Approved high and new technological enterprises enjoy the preferential policy of enterprise income tax exempted for the first two years and half deducted for the following three years, which is implemented in ZEDA. - With the examination and approval of the relevant authorities, enterprises that are engaged in the R&D and the production of the high-tech industry but are not confirmed can be granted with proportional capital support. - VAT shall be levied on the computer software products developed and produced autonomously by software companies at the rate of 17%. The part of actual tax burden exceeding 3% shall be refunded promptly after levied. - The enterprises of research, development or production in the Incubation Building shall be fully or partly exempted for their house rents, subject to the approval, in case of achieving good profit. Contact usNo. 1096, East Hanghai Road Zhengzhou China 450016 Tel: 0086-371-68273001, 68273005 Fax:0086-371-68273010
3.3.4 Henan Public Bonded Center Approved by the General Administration of Customs, Henan Province Import Materials Public Bonded Center was the sole bonded center in the Midwest of China with the planned area of 814 MU (approximate 542,667 square meters). Relying on bonded storage and making e-commerce as the method, the Bonded Center takes bonded storage, bonded commodities display, bonded logistics, import and export business agency, and inspected and cleared by customs as a whole. Hence, the center can not only provide inter-industrial, inter-regional, multi-functional, standard and excellent services for the developing Chinese market of foreign enterprises, but also provide overall business extension and business agency services for domestic and foreign enterprises.
The international logistics park of Henan Province Import Materials Public Bonded Center will gradually complete the following five functions in five years.
(a) Concentrative Storage Function Decreasing total stock by concentrative storage, realizing efficient stock dispatching and zero stock of enterprises
(b) International Conference Function Goods in the warehouses of bonded center can be displayed in the show hall and the so-called "shops in the front and warehouses behind" is formed. At the meantime, the goods can be fictitiously displayed and traded on the website of the bonded center.
(c) Futures Function Realizing commodity sale in multi-direction, wide field and best time by utilizing the regional difference, price difference and time difference in international market
(d) Unified Function Unifying all kinds of logistics mode and logistics pattern, which can deal with the work including package, load and unload, storage, moving, processing in circulation, transform in a different transport way, information and dispatching
(e) Transship Function Realizing the most efficient transform of unified transportation and multimode transportation by integrating railway, highway, water transport and air transport efficiently 4 Preferential Policies 4.1 For Foreign-invested Enterprises
(a) Productive foreign-invested enterprises in ZEDA shall be levied an enterprise income tax at the rate of 15% upon their income from production, sales and other business. To those with their operation period exceeding 10 years (including 10 years), the enterprise income tax of the first and second year of profit making shall be exempted after being approved, and it shall be deducted to the half from the third to fifth year.
(b) Foreign-invested enterprises engaged in infrastructure construction projects of energy, transportation shall be levied an enterprise income tax at the rate of 15% subject to approval. With the application of the enterprises and the approval of the tax authorities, enterprises with operation period exceeding 15 years shall enjoy the exemption of the income tax from the first to the fifth year since the year of profit making and half of that from the sixth to tenth year.
(c) After the expiration of tax exemption on the export enterprises owned by foreign investors according to the tax laws, the enterprise income tax shall be levied at the rate of 10% in the case that their export value reaches 70% of the total production value in the same year. After the expiration of tax exemption on the advanced technology enterprises according to the national rules, the enterprise income tax shall be levied at the rate of 10% for another three years in case they are approved to be advanced enterprises once again.
(d) Local income tax shall be exempted temporarily for the productive foreign- invested enterprises established in ZEDA.
(e) Foreign investors who reinvest the after tax profit distributed from the existing enterprise to the same enterprise or other foreign-invested enterprises or setting up new foreign-invested enterprises with operation period no less than 5 years shall have 40% of the paid income tax refunded in terms of the reinvestment part upon application and subject to approval from tax agency. In the case that the foreign investors reinvest to run or extend productive export enterprises or advanced technology enterprises with operation period no less than 5 years, the paid income tax in terms of the reinvestment part shall be refunded completely.
(f) Foreign-invested enterprises and production and sales agencies set up by foreign enterprises, when in annual deficit, may offset with the income of the next year. If no sufficient offset, the deficit shall be offset with the income of the succeeding years with no more than 5 years. The offset should be calculated continuously year by year.
(g) Foreign enterprises without agencies in China shall be levied an enterprise income tax at the rate of 10 % in case they have incomes such as dividends, interests, rents, royalties and others from ZEDA, unless stipulated to be exempted by laws.
(h) Productive foreign-invested enterprises shall be exempted from tax on urban real estate and tax on licenses of vehicles and ships and tax on farmland occupation.
(i) Foreign-invested export enterprises and advanced technology enterprises, after the day of confirmation, shall be exempted from tax on land utilization for the first five years and half deducted from the sixth year to tenth year.
(j) For the foreign-invested projects in conformity with the encouraged category stipulated in the "Catalogue of Guidance for Foreign Investment Industries" and with transference of technology, the imported production equipment within the total amount of investment to be used in the project shall be exempted from the customs duty and import increment of value duties except the commodities stipulated in the "Catalogue of Non-Exempted Import Commodities for Foreign-Invested Projects".
For the self-using equipment imported for the project of foreign government loans and loans from international financial institutions and the non-priced equipment supplied by foreign enterprises in processing trade, the customs duty and import increment of value duties shall be carried out according to the above-mentioned stipulation. The attached technology, accessories and spare parts imported together with the contract equipment, conforming to the above-mentioned stipulation, shall also be exempted for their customs duty and import increment of value duties.
(k) New project in ZEDA invested by foreign-invested enterprises from other part of China may enjoy the treatment for foreign-invested enterprises in case of the foreign capital shares exceeding 25%.
Foreign investors or the existing foreign-invested enterprises, investing the enterprises inside ZEDA by increasing capital to expand shares, merger and acquisition of equity according to national relevant stipulation and holding over 25% shares, may enjoy the treatment for foreign-invested enterprises.
(l) When the R & D Center established by foreign investors, within the total amount of investment, imports the self-using equipment and its attached technology, accessories, and spare parts which are not available in China or which the domestic products cannot meet the requirement, the import duty and import increment of value duties shall be exempted according to Document No. 37 of Guofa [1997] of Circular On Taxation Policy Adjustment Concerning Import Equipment by State Council. The sales tax may be exempted according to the domestic research institutions for transference of technology by foreign investors.
(m) In case of foreign-invested enterprises purchasing equipment, which belongs to the duty exemption category if imported, in China within the total amount of investment, the paid VAT may be completely refunded to offset the enterprise income tax according to relevant regulations.
4.2 For High and New Technology Enterprises
(a) The high and new technology enterprises inside ZEDA confirmed jointly by the Ministry of Science and Technology of PRC and the Provincial Scientific and Technological Department may enjoy the support fund of ZEDA enterprise development (hereinafter referred to as "ZEDA support fund") on a yearly basis within two years after being put into production. The total sum of money is equivalent to the retained portion from the paid-in enterprise income tax by the benefited finance of ZEDA. 50% of the retained portion shall be given as the support fund for other years.
(b) Research units and academies with "Qualification Certificate of Henan Province Science Research Units" shall be temporarily exempted from enterprise income tax when obtaining technological service income in doing technological achievement transference, technological training, technological consultation, technological service, and technical contracting.
(c) The amount of capital contribution made by sponsors in form of high and new technology achievement conforming to the relevant cooperative conditions may exceed 20% of the registered capital but no more than 35%.
(d) Accelerated depreciation of the equipment and instruments used for high and new technology development and production may be applied subject to the approval of the Administrative Committee of ZEDA.
(e) The reward given by high and new technology enterprises to the research personnel with great contribution may be converted into shares or percentage of capital contributions. Benefits of the shares or the percentage of capital contributions used as investment in high and new technology projects shall be pretax deduction subject to approval while calculating personal income tax.
4.3 For Software Enterprises
(a) For software enterprises confirmed by the relevant departments of State in ZEDA, which belong to VAT general taxpayer and sell the software developed and produced autonomously, VAT shall be taxed at the rate of 17% according to the law before 2010. The part of actual tax burden exceeding 3% shall be returned to the enterprises for the purpose of research of software products and expansion of reproduction promptly after tax being paid. The part of actual tax burden exceeding 3% shall be refunded promptly after being levied for enterprises to research and develop software products or expand their reproduction.
(b) The self-using equipment imported by software enterprises, attached technology (including software), accessories and spare parts imported together with the contract equipment, shall be exempted from their customs duty and import increment of value duties except the commodities stipulated in the "Catalogue of Non-Exempted Import Commodities for Foreign-Invested Projects" and the "Catalogue of Non-Exempted Import Commodities for Domestic Invested Projects".
(c) The salary and training expenses of software personnel shall be pretax deducted according to its actual amount when calculating enterprise income tax.
4.4 Preferential Measures for Land Transference
(a) Foreign-invested Projects The foreign-invested enterprises, which utilize foreign fund over US$1 million, shall be granted a discount between 20% and 70% of the announced land price.
(b) High and New Technology Projects High and new technology projects with fixed asset capital invested over RMB10 million shall be granted a discount between 15% and 50% of the announced land price.
(c) Projects Invested by Domestic Renowned Enterprises The industrial projects invested by domestic renowned enterprises with fixed asset capital over RMB10 million shall be granted a discount between 10% and 40% of the announced land price.
(d) Pioneering Projects of the Returned Students The pioneering projects invested by the returned students shall be referred to the standards for foreign-invested enterprises. (The incentive standard is based on the calculation of the invested fixed asset capital.)
(e) Projects Invested by Investors from Other Provinces The industrial projects invested by investors from other provinces with fixed asset capital over RMB50 million shall be granted a discount between 10% and 30% of the announced land price.
(f) Other industrial projects invested with fixed asset capital over RMB0.1 billion or the tertiary industrial projects encouraged by ZEDA may be granted a discount of 10% of the announced land price.
(g) If the total amount of land transference fee exceeds RMB30 million, it may be paid by installments under the condition of the investment enterprise providing effective guaranty.
(h) If the contribution per unit surface area by the industrial project reaches RMB50, 000 within four years after the date of startup of the project, i.e. the actual retained portion from the paid-in enterprise income tax by the benefited finance of ZEDA per MU (1 MU approximately equals 667㎡) reaches RMB50, 000 according to actual transferred area, one-off award of 50% of the total transference fee paid by the project unit shall be granted.
These measures are stipulated and interpreted by the Administrative Committee of Zhengzhou National Economic Technological Development Area.
4.5 Incentive Measures for Attracting Investment
(a) Foreign-invested Projects
Introducers of foreign investment in general projects shall be rewarded at the rate of 2‰ of the actually realized foreign investment between US$1 million and US$20 million (including US$20 million),and 2.5‰ if the actually realized foreign investment exceeds US$20 million.
(b) Domestic Invested Projects
(i) Basic Construction Projects Introducers shall be rewarded at the rate of 1‰ of fixed asset investment for the basic construction projects between RMB50 million and RMB500 million (including RMB500 million), and 1.5‰ if fixed asset investment exceeds RMB500 million.
(ii) Economic and Trade Projects In case the actual retained amount from the paid-in enterprise income tax by the benefited finance of ZEDA is more than RMB0.3 million (including RMB0.3 million) for economic and trade projects, introducers shall be rewarded at the rate of 5% of the amount exceeding RMB0.3 million on a yearly basis within two years (the two continuous fiscal years since registering in ZEDA).
4.6 Zero Rates for Administrative and Operating Fee
Zhengzhou National Economic Technological Development Area is a pilot area implementing the system of zero rates for administrative and operating fee in Henan Province and Zhengzhou City. The charge items implement zero rates as follows.
5 Cost of Investment in ZEDA (Subject to change Land
Electricity Rate (RMB Yuan/KW)
Water Rate (RMB Yuan/ cubic meter)
Heating
Natural Gas
Communication
Transportation Expense
The highway transportation from Zhengzhou to any other cities of China is also developed very well. The average freight fee is RMB0.40-0.45 per ton and per kilometer. Air Freight is quicker, and the average freight fee within China is RMB3 per Kg. *The above prices will fluctuate according to different seasons.
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