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17 abril 2024

Li Ding: “The Chinese province of Hainan is a very good opportunity to invest”

He is dedicated to advising Spanish companies or investors who want to enter the Chinese market. He also carries out the opposite process: he advises Chinese entities that want to arrive and establish themselves in Spain.

Li Ding is dedicated to helping Spanish companies that want to invest in China and vice versa. She got her law degree because she saw that her Chinese family and friends needed legal help. She sees it as a way to give back to her community. Currently, he works for Grandall Law Firm, a law firm present in both China and Spain, and collaborates with Ecija Abogados.

He is one of the speakers of the first day of the Asia Business Opportunities Cycle, organized by Go Aragón.

What are your main tasks?

I am mainly dedicated to investment and coordination of new projects with China, both in Spain and the rest of the countries, especially in Latin America. Our main task is to coordinate the different projects: investment projects, purchase and sale of companies… corporate and corporate law issues.

And also what I do a lot is to assist Chinese investors who want to come here in Spain during the whole process: negotiation process, sale and purchase, social management… I am secretary of the board of directors of two mixed capital companies, that is to say, there is Chinese capital and Spanish capital. There are both Chinese and local directors on the board.

I help them with the management of the board. I also help them with a very important aspect, which is the issue of communication and coordination, because Chinese and European businessmen have a very different social management mentality. My job is also to ensure that there is understanding between both parties and that it can work well because the biggest challenge for Chinese companies investing in Spain is the issue of post-purchase management.

And the other way around, what is the biggest problem for Spanish companies that want to invest there?

There are many problems with languages. When a Chinese company comes to Spain it needs their advice. Also when a foreign company goes to China, it also needs legal advice in all matters. There is a way of negotiating and doing things that is very much in their style. They are two environments, two very different cultures.

Regarding the business culture, in China they move very agile and very fast. In Europe we are more legalistic. There are a lot of rules and a lot of regulations. China is more flexible and rules are changed a lot. New opening policies are constantly coming out there. Sometimes it’s hard for them to understand that.

“THE AREA WHERE I WOULD SAY THERE IS THE GREATEST POSSIBILITY OF INVESTMENT, BOTH FOR THE FINANCIAL SECTOR AND FOR THE TOURISM AND BUSINESS SECTOR, IS THE HANAIN AREA”.

Do you collaborate with lawyers who are based in China?

I have been collaborating for many years with one of the main law firms in China, Grandall. I have a very good relationship with them. They have offices practically all over China.

In the case of companies coming from China to Spain, how do they usually enter?

There are two ways to enter: one is through acquisition, with the collaboration of local companies. We help them in the whole purchasing process. And then there are companies that want to create their own company. There I advise them on bidding, on the day-to-day process and then day-to-day advice.

Li ding lawyer ChinaWhat kind of companies do you consult most?

Medium-sized companies, listed companies, even state-owned companies consult us. There is everything. For example, they are interested in the Golden Visa, which is the residence authorization. They are private investors. My client portfolio is mainly private investors who consult us on residency issues, and medium and large listed companies.

And on the other hand, which are the sectors that invest the most in Spain to enter the Chinese market?

There is everything. During the ten years that I have been in the legal field I have seen everything: from sports companies to manufacturing companies, from energy to construction. There is a bit of everything.

What are the main legislative difficulties in entering the Chinese market?

First, there is a list of prohibited and restricted sectors, which cannot be entered. But except for this, at the beginning, any entry into China is free because there are rules. Formerly, there were three rules made in the 1980s, but as of January 1, 2020, the three previous investment rules were unified into a single foreign investment rule.

The entry and operation is the same with a local company. The biggest difficulty for foreign companies is not so much in legal matters of entry. Rather, it is the day-to-day business of finding a local partner who can manage them well, who knows how to deal with public institutions. In China, this is very important.

I have to admit that in the different communities there are still many discrepancies. There are provinces where they are very used to working with foreign companies. There are provinces where they don’t have as much experience and you may find it more difficult.

But generally it is becoming more and more open, although it is very competitive. You have to take into account that you are not only competing with Chinese companies, but you are competing with all the companies in the world that are installed in China. It is a very difficult market

Foto: Alex Kwok

What are the most interesting places to invest in China?

Exactly, the area where I would say that there is the greatest possibility of investment, both for the financial sector and for the tourism and commercial sector, is the area of Hanain. What happens is that Hainain is a province of China that is an island in the south. The central government wanted to transform the whole province into a free trade zone.

They are applying many opening policies in that zone in terms of foreign exchange, residency, tax deduction for companies, Internet access… We are still in the process, but the forecast is that in 2025 the island will be constituted as a closed special zone.

And there they are going to apply many new policies. For foreign companies that want to enter it is perfect to do everything because it is still China, but fiscally the currency issue, the policy issue, the simplification of administrative procedures … everything will be more agile compared to the rest of China by far. It’s going to be a test for China’s opening-up policies.

“WHEN YOU DO TRADE WITH CHINA, IF YOU HAVE LEGAL EXPERIENCE WITH CHINA, YOU WILL NOTICE THE DIFFERENCE”.

And how long does it take to set up there? Is there a lot of bureaucracy to be able to invest there?

Not so much, but it also depends a lot on what you want to do and what kind of license. What it usually takes a Chinese company. The only thing you have to do is to translate and legalize some documents. Once you have it secured, and you are not restricted sectors, it is usually the same as a local company.

A couple of months, but it varies a lot. China is very big and although there is a common standard, I have to admit that it is not the same in Shanghai or Hainan than in a very central and very rural area of China. It can take longer, because they are not used to dealing with foreign companies, even if there is a central standard.

You are going to participate in the first Go Aragon conference on business opportunities in Asia, what will your presentation be about?

As it is a very broad topic, I have focused my presentation on three main lines. The first line is to briefly explain the legal system in China. Then I will explain the legal framework for foreign investment in China, trade with China, and finally the situation in the province of Hainan.

Is it a unique opportunity to invest there?

Many foreign companies have already set up there. When you trade with China, if you have legal experience with China, it makes a difference. It has a foreign exchange control policy, so you have to justify, in addition to their taxes. Also Internet access is restricted. That free trade zone has a lot of new policies, which is a problem, but they are opening policies.

Today in the presentation, I will explain very roughly these policies, for example, personal income tax. In Spain it can be forty-something percent. In the Hainan area, if you meet certain requirements, it is only fifteen percent. Also on corporate tax, fifteen percent, creation of a multifunctional system of free trade accounts.

Also implemented a market entry commitment system and a special negative list for the zone, unlike the rest of China. Government procurement treats local and foreign companies equally in that zone. They apply a visa-free entry policy, more comfortable. Now if a Spaniard wanted to go to China, you have to ask for a visa yes or yes. But in that area they are applying an exception of fifteen days, and it is not ruled out that in the future that exception will be greater.

It is 33,000 square kilometers, that is, it is not small. Hainan is a very good opportunity. In fact, the law firm with which I collaborate has the largest law firm in Hainan. It is like Ibiza here. It’s a very very touristy area. Spain is the tourist site of Europe. Hainan is the tourist site of all China. It has a tropical climate, it has beaches, it is not very populated, it has a lot of vegetation… It is very beautiful.

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