Geographic Features
Location: Located at the eastern tip of Shandong Peninsula, between 36o41＇N—37o35＇N, and 121o11＇E—122o42＇E. The city is surrounded by sea on three sides. The coastal line is 985km. long.
Area: The general area is 5436 sq. km. The downtown area is 731 sq. km.
Climate: The local weather belongs to the temperate continental monsoon climate. The annual average temperature is 12℃, the highest month average temperature is 24.6oC, and the lowest is –1.5℃. The annual average total precipitation is 800mm.
Population: 2.59 million.
Regionalization: Weihai has jurisdiction over three country level cities of Rongcheng City, Wendeng City, Rushan City, and Huancui District.
There are also three state-level development zones, Weihai Economy Development Zone, Weihai Torch High-tech Industry Development Zone, and Weihai Export Processing Zone.
Comprehensive Economy
In 2000, the domestic GDP of Weihai City was 6.782 billion RMB yuan.
Industry: Weihai is the largest production area in China of carpet, fishing tackle, and small size carpenter machines, the 2nd largest production area in China for automobile and other vehicle tires. It is also the main base for agriculture transportation trucks, connecting bars, and concentrated juices.
Agriculture: Weihai is an important production area for Chinese peanuts, fruits, and sea products. In 2000, the general output of peanuts was 235,700 tons, for fruits, it is 523,100 tons, for aquatic and marine products, it is 2,373,000 tons. The annual output of aquatic products of Weihai is the highest among all the prefecture-level cities in China.
Foreign Trade: In 2001, the total import and export value was USD 2.394 billion, including USD 0.787 billion for import and USD 1.607 billion for export.
Foreign Investment: By the end of 2001, 2,734 enterprises with foreign investment had been established in Weihai. Actually-used foreign capital as compared to planned was USD 2.134 billion. Many worldwide famous enterprises, such as Daewoo and Samsung from the R.O.K, Mitsubishi Motors and Mitsubishi Trade from Japan, and Invensys from Italy have invested in Weihai. Additionally, Merryl Lynch Emerging Funds recently invested in a major project in Weihai.
Traffic
Since Wehai’s establishment as a prefecture-level city, basic contruction in Weihai has been greatly developed.
Highways: the main frame of the highway infrastructure for Weihai is “3 vertical, 3 horizontal, and 1 circular highway in Weihai district. There are high-class highways connecting the outside such as the 1st-class automobile special highway between Yantai and Weihai and the 2nd-class automobile special highway between Qingdao and Weihai.
Ports: There are 6 specific ports and 85 wharfs in the city. There are 8 berths that will handle ships above 10 thousand tons. Currently, Weihai has opened several international passenger and cargo transportation lines, such as transportation line from Weihai to Inchon and Pingtae, Korea, from Shidao Port to Incheon, and container transportation lines from Weihai to Pusan, Korea. There is also a passenger and cargo transportation line from Dalian to Weihai. Weihai can be connected with any international cargo lines through this basic infrastructure.
Railway: The Taocun—Weihai railroad is a 1st-class local railroad, which is sponsored and constructed by Weihai City. Up to now, we have open direct passenger train service from Weihai to Jinan and Beijing. The cargo trains run to every station in China.
Airlines: Weihai Airport has opened airline service from Weihai to Beijing, Guangzhou, Changchun, Shanghai, Harbin, Xi’An, and Chengdu. Temporary international private plane services is also offered.
Human Resources
There are 100,500 people who have received a college education in Weihai. Additionally. 397,700 people have been trained up to the high school level (including secondary professional school).
There are 6 colleges in Weihai, including the Weihai Branch College of Shandong University, the Harbin Industrial University and the Motor Engineering College. In 2000, there were 6232 attending students, and 871 graduates. Besides the above listed Universities, there are 4 advanced colleges for adults which in 2000 had 1351 attending students and 261 graduates.
Until the end of 2000, there are totally 78 professional training schools in Weihai with 32,500 attending students. About 10,000 technical trained graduates enter the workforce in Weihai yearly.
Living Environment
Weihai City has been named nationally as the “Cleanest city” in China, it is also noted as being at the highest level of the “national model cities for environmental protection”. In 1998, Weihai was confirmed by the United Nation as one of “the best cities for improving the living environment of people”.
Taxation and Taxes Exemption
The taxes applicable presently for enterprises with foreign investments, foreign enterprises, and foreigners are the following: the income tax for foreign enterprises or enterprises with foreign investments (including local income tax), the increment tax, the consumption tax, the business tax, land increment tax, the resources tax, stamp tax, the slaughter tax,, the city real estate tax, the license plate tax for vehicles and ships, and the income tax for individuals.
According to the business and operation scope of a foreign enterprise only some of the above maybe applicable to be paid as taxes. Foreign Enterprises and Enterprises with Foreign Investment must, however, pay income tax and the increment taxes for enterprises.
Income Tax
1. Rate of tax: the rate for productive enterprises with foreign investment is 24%.
2. Favorable policies for the reduction and exemption of the income tax exist and are as follows:
1) for productive enterprises with foreign investment, if the real operation period is more than 10 years, the enterprise will be free from this tax for the 1st 2 years, and they could pay half of the income tax of the enterprise from the 3rd year to the 5th year. No tax is payable until the enterprise becomes profitable and this starts the above period running. The above is the so called “exemption for 2 years and half-reduction for 3 years” tax policy.
2) The following enterprises can pay the income taxes according to the rate of 15% and be exempted from local income tax after approval: the projects that are technology-concentrated and knowledge-concentrated projects, the projects that the investment is more than 30 million USD, and the recovery period is long, the construction projects of energy, traffic infrastructure and ports, etc.
3) The enterprises that are established in the Economic Development Zones will pay income taxes according to the rate of 15% and be exempted from local income tax.
The enterprises that are established in the Torch High-tech Development Zone, if they pass the confirmation review required for designation as an advanced technology enterprise, will pay income tax under the rate of 15%.
4) Enterprises with foreign investment that are product-exporting, may be authorized legal reduction and exemption of tax, if the value of exported products is more than 70% of the total productive value. If this condition is met, the company can pay half of the regulated rate of tax; if the enterprises are paying tax under the rate of 15%, and can reach the abovementioned conditions, they will pay under the rate of 10%, at the same time, be exempted from local income tax.
The foreign-funded enterprises with advanced technology, after the period of legal reduction and exemption of tax, if the technology could be confirmed as advanced, the enterprises may pay half of the legal tax for another 3 years. If the rate is lower than 10%, the enterprises should pay under the rate of 10%, and they are free for local income tax. NOTE: This means the rate would be 10% if the above conditions can be reached.
5) If the foreign investor returns the profit of the enterprise as added registered capital, or puts in additional money so as to open another enterprise with foreign investment, and the operating time is more than 5 years, after the application of the investor, and the approval of the tax authority, 40% of the devoted tax will be returned. If the new-establishment can be classified as an export enterprise or advanced technology enterprise, all the paid income tax for the enterprise will be returned.
6) If the Enterprise with foreign investment invests in technical innovation or to produce high-tech products, 40% of purchase will be deducted from the income tax of last year of the enterprise.
7) If the enterprises invests with private capital or bank loans in a project classified by the government as nation-promoting and applicable for national technical innovation policy, 40% of income tax will be deducted.
8) All the profit gained from the enterprises with foreign investment will be free from income.
Local Income Tax
The rate of local income tax is 3%. After approval, this can be exempted in appropriate cases.
Value Added Tax
The rate of VAT for industrial products is 17%.
For export products, the VAT will be exempted, deducted, or returned, so that they will be free from VAT.
Favorable Policies for Imported Equipment and Purchase of Domestic Equipment
Effective the 1st day of 1998, the import of equipment for encouraged projects, noted in the scope of regulation, will be free from the tariff and import increment tax.
1. For projects that belong to the encouraged category or the limited category B, if there is a technology transfer, all the equipment used by the enterprise, or the suit parts and spare parts will be free from the tariff and import increment tax except for that included in “The category of prohibited commodities for projects with foreign investment”.
The following imports will be covered under this item: the import of self-using equipment of the project of government-loaned or internationally-loaned projects, the free equipment offered by processing trade merchants or the suit parts and spare parts imported with the equipment.
2. For the established enterprises with foreign investment, the research and development center with foreign investment, or the high-tech and product-export enterprises with foreign investment which are listed on the encouraged category or the limited category B, for high-tech or product-export enterprises that are conducting technical renovation, the enterprises could import self-use equipment or technology, spare parts without paying for tariffs and import increment tax.
3. For the enterprises with foreign investment which is belonging to the encouraged category or the limited category B, if they purchase domestic equipment with the investment capital, and the equipment belongs to duty-free category, all the increment tax of the equipment will be returned.
4. If the research and development center with foreign investment import the equipment, technology, parts or spare parts that could not be manufactured in China or the features of the native products could not reach the technical demand, the imported products will be free from tariff and import increment tax.
Cost of Factory or Workshop
Foreign investors can build their own workshops or rent workshops.
To Build a Factory or Workshop
To Get the Land-use Rights In China, the land belongs to the State, any corporation or natural person can only secure the land-use rights for this property. Lands for different uses have different using periods. The using period of land for industrial use or commercial use is 50 years, the using period of land for residential use is 70 years.
Note: The Price of land-use rights can be reduced if the investment is large or the technology planned for use by the enterprise is advanced.
Cost of Building Workshops and Factories
The cost of building workshops and factories differs because of the different technical requirement for the buildings, different construction companies utilized, different grade of construction, etc. Hereinafter is the referenced cost of building a workshop or factory.
Designing and Supervising Cost
Designing cost for construction is between 1.5-2.5% of total construction cost. Supervising cost is between 3-4% of total construction cost. The price can be negotiated between different design institutes and different supervising institutes.
To Rent a Factory or Workshop
Foreign investors can also rent workshops or factories. Many regions have built many standard workshops/factories for foreign investment. Hereinafter is the referenced price of renting workshops.
Cost of Labor
Salary
The human resources of Weihai are abundant, and the average salary is quite low. By the end of 2000, there are 332,200 employees in Weihai, and the annual average salary of one employee is RMB 8023. In Weihai, an ordinary worker’s monthly salary is about RMB 600(USD 73); a middle-level managing person’s salary is about RMB 1000-1500(USD 120-180); a high-level managing person’s salary is about RMB 2000(USD 240). Please note that these rates are about one third or slightly more of the rates found in the Shanghai area.
Social Insurance
Besides the salaries, the company shall pay social insurance for employees according to the Labor Law, regulations of the State Council and provincial government. Social insurance includes Basic Endowment Insurance, Basic Health Insurance, Unemployment Insurance, Birth Insurance and Public Reserve
Fund for Housing.
Basic Endowment Insurance
From January, 1, 1999, companies shall pay 18% of last year's total salaries for Basic Endowment Insurance. In three years, the ratio shall increase to 20%. The employees shall pay 5% of their own salaries for Basic Endowment Insurance, increasing 1% every two years. The payment of employees shall be deducted and paid by the company that employs them.
Basic Health Insurance
Companies shall pay 8% of last year's total salaries for Basic Health Insurance. The employee shall pay 2% of their own last year's salary for Basic Health Insurance. The payment of employees shall be deducted and paid by their company.
Unemployment Insurance
Companies shall pay 2% of last year’s actual salary of each Chinese employee for Unemployment Insurance. The employee shall pay 1% of their own salaries for Unemployment Insurance. The payment of the employee shall be deducted and paid by their company.
Birth Insurance
Basic Endowment Insurance includes Birth Insurance.
Public Reserve Fund for Housing
Companies shall pay 8% of actual salaries of Chinese employees to the Public Reserve Fund for Housing. The employee shall pay 8% of their own salary for Unemployment Insurance by themselves.
Cost of Public Utility
Price of Water1. The price of water for industrial use: RMB 2.34/tonPrice of Electricity
2. The cost for capacity enhancement: RMB 250/ton
1. The average price of electricity is RMB 0.65/kwhPrice of Using Public Heating System
2. Cost for Capacity enhancement:
RMB 220/kva (When the voltage is 10kv)
RMB 170/kva (When the voltage is 35kv)
RMB 90/kva (When the voltage is 110kv)
1. Heating price: RMB 23/ m2 (The heating period is 4 months in winter)Gas Price
2. Installation of pubic heating system:
RMB 70/ m2 (If the workshop has been equipped with inner piping system.)
RMB 110/ m2 (If the workshop has not been equipped with inner piping system)
1. Gas price: 1.30/m3Freightage
2. Installation price: According to the actual workload
Ocean Freightage
1. Qingdao--San Francisco (every Thursday and Saturday)
Ocean freightage charge: USD 1180/teu
USD1550/feu
2. Qingdao--LA, Long Beach
Ocean freightage charge: USD 980/teu
USD1380/feuCustom clearance fee: RMB 120/one time
Port charge: RMB 105/teu
RMB 165/feu
CFS: RMB 200/teu
RMB 400/feu
THC: RMB 370/container
Trucking charge(Weihai-Qingdao): RMB 1800/teu
RMB 2250/feu
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