CPAs: Cross-border opportunities with China are expanding

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					                                                                                                       Finance
CPAs: Cross-border opportunities with China are expanding
N.J. company looks to overseas




                                                       Christina Mazza
partner for savings in business
              By Martin C. Daks
wHeN JAMES FLANNERy was in Harbin,
China on a business trip, he saw a roomful of
workers in a manufacturing facility feverishly
plucking pills from a conveyor belt and pack-
ing them into bottles by hand. Leaning against
a wall was an unused, high-speed machine
designed to do that very task.
      “I asked the manager why he was using
manual labor when the machine could do the
job a lot faster,” said Flannery, managing prin-
cipal of MSPC, a Cranford-based CPA firm, who
went to mainland China this summer. “He told
me that the machine kept breaking down and
in China, at least, maintenance costs would be
greater than the cost of manual labor.”
      with a population of about 1.3 billion, labor
is cheap in China. Flannery is working with a New
Jersey-based consumer goods manufacturer that
wants to partner with a China-based company to
take advantage of the relatively low costs.
      But the Asian giant has been steadily trying
to diversify its industries, branching out into high
tech and other segments; and New Jersey busi-
nesses could benefit from the move, according to                   Certain businesses in China receive incentives, depending on location, says Wanru Xue, director with Jiangsu Suya Jincheng CPAs, left, and fellow director Wang Yijun, in Franklin Township.
Flannery and CPAs from China who were in New
Jersey this month to exchange ideas and drum                                                                                       plan. Besides offering federal and state corporate               “During the time I’ve been here [in the United
                                                                                   Accounting
up some cross-border business. U.s. companies                                                                                      income tax rates that are lower than those in the                states] I’ve seen many kinds of software applica-
that want to do business in China, however,                        exchanges in the United states.                                 United states — China’s blended top tax rate is 25               tions that would make my job easier,” Xue said.
must meet certain requirements and have to cut                            “China’s gross domestic product [a mea-                  percent compared to 39.1 percent in the United                   “Our country needs this kind of technology.”
through some red tape, they said.                                  sure of a nation’s economic output] grew [at an                 states — China revamped its Value Added Tax,                           Despite some regulatory loosening, Chi-
      “The [Chinese] national government has                       annualized rate of] more than 7 percent for the                 or VAT, a kind of national consumption tax that’s                na’s economy is still dominated by the cen-
reduced corporate income taxes and is offer-                       first three quarters, and is expected to increase               similar to state sales taxes in the United states.               tral government, which means there’s a lot of
ing incentive plans to businesses in targeted                      by a total of more than 8 percent by the end of                       “For income tax purposes, companies                        bureaucracy, Flannery said. “we’ve got two
industries and geographic locations,” said                         2009,” Xue told NJBIZ in an exclusive interview                 could only deduct from sales the VAT assessed                    full-time employees in Hong Kong that help
Wanrue Xue, a director with Nanjing, China-                        at the paper’s headquarters in the somerset                     on their raw materials purchases,” Xue said.                     our U.s. clients that want to expand into China,
based Jiangsu Suya Jincheng CPAs, speaking                         section of Franklin Township. “Until now, much                  “Now though, companies can also deduct VAT                       and Chinese firms that want to move into the
through a translator. Xue and fellow direc-                        of that growth has been pushed by government                    assessed on their fixed-asset purchases.”                        U.s. market,” he said. “There’s a lot of opportu-
tor, Wang yijun, were in the United states to                      spending, but the national government is now                          Companies with expertise in telecommu-                     nity, but as in any cross-border deal, you need
meet with MsPC, which has helped China-                            trying to spur consumer spending.”                              nications and information technology support                     people on the ground who know the ropes.” u
based companies to get listed on public stock                             Attracting new businesses is part of the game            will get a particularly warm reception in China.                                            E-mail to mdaks@njbiz.com




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DOCUMENT INFO
Description: Attracting new businesses is part of the game plan. Besides offering federal and state corporate income tax rates that are lower than those in the United States- China'sblendedtoptaxrateis25 percent compared to 39.1 percent in the United States - China revamped its Value Added Tax, or VAT, a kind of national consumption tax that's similar to state sales taxes in the United States.
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