I have had a very busy time this week. This is a short note to indicate what I've been doing. I will try add some detail to this entry later, but I there is a >50% probability that I will never get around to do doing so.
I have been staying in Zhuhai from Monday to Saturday. The main objectives of this week are as follows:
- Set up my wholly-owned foreign enterprise, provisionally called Ying Wei Trading (Zhuhai),
- Meet with some useful China/HK-based contacts such as Fung Kam Wing and David Harris, and David Rawlings,
- Make contact with a developer who might be interested in allowing Herts Lettings/Ming Wei Ltd to act as an agent for UK investors
- Investigate the property market in Zhongshan, Tan Zhou, Dongguan, and Guangzhou, Chongqing and Chengdu,
- Get an update on the state of the Zhuhai market,
- Find out more about the overall China real estate market
- Try to understand more about the rules for operation and taxation of Chinese companies,
- Find some local factories with good, exportable products, but with no export licence.
- Visit and make use of the new office for the company,
- Enjoy the weather and the food
On the first task I haven't yet had confirmation that the name is not already registered, but I have found that my first choice (Ming Wei Trading, based on the 'given' part of my Chinese name) is not available. The basic registration of the company is complete, with the necessary forms having been signed by me, the authorised translations of the various documents relating the investor (Freshfield Analysis Ltd.) having been made, the fees paid etc. etc. Inevitably in these matters, communication has been less than 100% successful, with the result that the final registration of the company will be delayed. The main problems were that (a) the capital should have been retained in the UK until the company was ready to go, rather than having been transferred to China, to my account, in anticipation of this and (b) that the company registrar requires a bank reference from my bank. Unfortunately the latter is available in response to a request in writing, signed by the directors, and therefore will take weeks to be prepared.
I have met David H, a very interesting and knowlegdable guy. He gave me a lot of information about the market. He is very well informed about business in China generally and has a lot of contacts here. Lua and I were very impressed by his command of Mandarin.
I met Kam Wing. He has done a huge amount of analysis of investment opportunities in the China market. Like David he is very bullish about opportunities here, and has some very specific ideas about exactly how to maximize his risk-adjusted returns. He was particularly bullish about HK, which certainly has some excellent characteristics: mature market, constrained supply, China proxy, premier league status, common law system based on use of English as a business language.
I have visited plenty of developments, but have not had any discussions with individual developers.
I have visited Tanzhou, Zhongshan, Guangzhou. These are interesting places with some impressive developments - especially Guangzhou - but are a sufficiently compelling proposition for me that I regret my decision to start my China investing in Zhuhai. I am travelling to Chongqing later today, and going to Chengdu the following day.
My light-reading while waiting around here has been
Why China? Why Now?It is a fairly mammoth work, and certainly corrects the impression that I might give occasionally that everything in the China real estate world is rosy. It's conclusions are consistent with my, much more impressionistic, ones, for what that's worth.
I have been given some details of the taxation status of China enterprises. As long as they engage in export-linked activity they seem to get large subsidies. A profit tax is payable, but at a low rate. I have an expert who can give more detail. I suspect that the taxation is municipality-specific, and likely to change without notice.
I have decided to try to act as an export agent for local producers. I have registered licences in quite a variety of activities. I have not yet found any suitable suppliers, unfortunately. This can be done much more efficiently by my Chinese-speaking colleagues anyway.
Ying Wei Trading has a cosy office in an industrial estate very near the new 'Gree Development' iin (I think) Xiangzhou, Zhuhai. It has a nice Gateway PC with a fast broadband connection. If you are every in ZH you are welcome to borrow it! You can even take a nap on the sofa!
I have, as ever, been extremely well-fed in China. One of the better meals was taken at my hotel, the Paradise Hill Hotel, in Jida. I cannot recommend this highly enough. Visit its website, which is much less impressive than the hotel itself.
Interestingly, Zhongshan is the headquarters of Agile Property Holdings, one of the more interesting HK-listed property stocks. Its shares have recently slumped from about 2.5 to 1.8 and look as though they are heading back down to 0.8 where they were a year ago. I suspect that if they hit 1.5 they will be a strong buy.
