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Focus China: News & Information for Investors, Entrepreneurs
and Businessmen from Tax Consultants, Accountants, and Lawyers

Accounting in China

Category: Accounting, Compliance, Miscellaneous, November 30th, 2017

Accounting in ChinaThe Chinese Generally Accepted Accounting Principles (China-GAAP) are similar to the International Financial Reporting Standards (IFRS), but differ from the American accounting system (US-GAAP). Most foreign companies are unaware of these differences, and are, therefore, running the risk of non-compliance.

This article intends to offer you a brief introduction to the most basic Chinese accounting features, in order to help you make your China venture a complete success.

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China’s New Point System for Expats

Category: HR, Legal, Visa, March 30th, 2017

On 9 September 2016, the State Administration of Foreign Experts Affairs published the reform of the current work visa system for foreigners in China. The changes will merge the various regulations for foreign specialists with the normal application procedures. The reform will also replace the current work permit booklet with a small card. Additionally, it implements a grading system, which will rank foreign workers according to their experience and skills.
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The Annual Compliance Review – Audit in China

Category: Audit, January 11th, 2017

The deadline for the Annual Compliance Review in China is on 31 May. Although it seems that there is still a long time until the deadline, there is an incredibly huge amount of work to do before you can hand in your annual audit reports.


China: Transfer Pricing Regulation Update

Category: Compliance, Tax policy, July 20th, 2016


On 13 July, the State Administration of Taxation issued a notice related to the long-expected adjustments in regulations of transfer pricing. With the announcement [2016] No.42, the previously valid “Implementing Measures for Special Tax Adjustments (for Trial Implementation)”, (Guo Shui Fa [2009] No. 2) effective for 8 years is partly replaced by SAT [2016] No.42 on two points:

  1. The reporting on related-party transactions (business transactions between a major shareholder and the corporation, such as a contract for the shareholder’s company to perform renovations to the corporation’s offices)
  2. Management of Contemporaneous Documentation (Actual project invoices, plans, and specifications, used to document the outlay of capital by a particular taxpayer for a particular construction project)

The third part of Guo Shui Fa [2009] No. 2 Regulation of cost sharing arrangements meanwhile stays untouched.
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Introduction to the United States tax compliance act of foreign accounts

Category: Investments, Legal, Miscellaneous, July 14th, 2016

1. What is FATCA?

The Foreign Account Tax Compliance Act is a U.S. tax law that was enacted in 2010 –

Final U.S. Treasury regulations on FATCA were issued on January 17, 2013. The regulations launched on July 1, 2014, and came into effect from 2014 to 2017. It aims to prevent U.S. tax evasion by U.S. persons through use of offshore accounts held at Foreign Financial Institutions (“FFIs”) and Non-Financial Foreign Entities (“NFFEs”). The U.S. Internal Revenue Service (“IRS”) and the U.S. Congress believe that many U.S. citizens are evading U.S. taxes by hiding their assets overseas.
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New Chinese-German tax agreement –

Category: Tax policy, July 14th, 2016

The State Administration of Tax (”SAT”), has released Tax Circular No. [2016]37 and the Interpretation of double agreement on taxation between China and Germany (“DTT”) on 16 June 2016. Tax circular 37 informs the new DTT will be in effect from 1 January 2017 onwards as the new tax agreement is approved by both governments.

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Work in Germany: Getting a German Work Permit

Category: Legal, Miscellaneous, June 16th, 2016

Do I need a visa to work in Germany? This article explains who and how you can apply for a German work permit
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Chinese Investors’ Interest in German’s Hidden Champions

Category: Investments, June 14th, 2016

It is long known that Chinese investors tend to have an appetite for Germany’s small and medium-sized companies. But the takeover of the Swabian concrete pump manufacturer  by construction giant Sany from Changsha (长沙) in 2012 brought a new investment strategy to the public eye, a switch-over from acquiring struggling enterprises to especially seeking very successful, established and specialised companies, the so called “hidden champions”. 

These often family-owned companies are almost exclusively small and medium sized enterprises and are categorised by their position in the top 3 on the global market, their revenue between $4 billion and a low level of public awareness. Within their niche markets they are sometimes a single product manufacturer who work closely together with their customers to find specific solutions. This customer interaction is the key driver of innovation and allows the hidden champions’ R&D to beat that of large companies by a factor of five. Consequently they earn their market share through performance and not price.

Now there are three reasons that make hidden champions an interesting investment opportunity for Chinese investors. First, according to the German Association of Chambers Commerce and Industry, the DIHK, an ageing population and an alternation of generation with no heirs or children who are unwilling to take over their parents’ business many of these companies are up for sale. Since owners of a family enterprises are often emotionally attached to the company, they are looking for an adequate investor, who holds comparable ideas about the enterprise’s future.

This is where Chinese investors become relevant, because they often see acquisitions in Germany as long term, strategic investments, which align with the hidden champions’ focus on long term growth instead of short term gains.

The third reason why hidden champions are interesting for investors from China is the opportunity to acquire know-how without the costs and time of development by buying a German high-tech enterprise and then being able to apply this knowledge to their own market at home.

The advantages are not only on the investor’s side, but also on the side of the German business because a Chinese investment allows the company to have access to a greater capital base and easier entry to the market in China. With China being a country of rapid development and high demand for services and technological know-how, it opens up possibilities of getting a foothold in a new market and consequently ensuring further long time growth.

It is not all positive, though, Foreign acquisition of companies that are strongly embedded in their environment is often met with scepticism and concern by the employees as well as the public. The fear that the enterprise’s identity and future is under threat is, as history shows, often unsubstantiated, because acquired businesses tend to retain their identity after a take-over.

The hardest part about the strategy of investing in hidden champions is in the name itself. The circumstance that they are hidden makes them hard to identify, especially for foreign investors, which require a trustful partner to help find the optimal investment opportunity. 

Even 4 years after the deal between Putzmeister and Sany, the topic is still highly relevant as individuals, companies and private equity firms compete for the famous German small and medium-sized enterprises. But it seems that Chinese – German cooperation is a general success. As the previous owner of Putzmeister Karl Schlecht stated: “What Sany is doing in China is something we can only dream of.”


Category: Events, June 8th, 2016


After our first Hannover Messe (HM) has come to a successful end, we are looking back at one of the world’s most important industrial trade shows. The first HM, then still called “Export Messe 1947 Hannover” was organized in 1947 as a competitor to the Leipzig Trade Fair. This laid the cornerstone for the now biggest fair for investment goods worldwide.

Henceforth, the HM’s core themes were industrial automation, IT, energy and environmentally friendly technologies, as well as research & development. These topics attract nearly 200 000 visitors per year plus 5000 exhibitors from 75 different countries. Among the top 3 exhibitor nations, China, next to Germany and this year’s partner country, USA, was present with 650 exhibitors. Additionally, both the U.S. and China broke new records with regardto the numbers of visitors from each respective country. Both crossed the 5000 thresholds and occupied, after Germany, the 2nd and 3rd place. Thus, China solidified its position as the second-biggest visiting nation at the HM.


This year’s theme: „Integrated Industry – Discover Solutions“.

Since 2010, the HM has had changing partner countries. This year’s partner was the United States of America. Accordingly, on April 24th, 2016, the HM had the honor to welcome President Barack Obama and Chancellor Angela Merkel for the opening ceremony. The President’s objective: convince more companies to invest in the United States. After the HM was officially opened at 7:28pm, Obama and Merkel undertook a joint tour of the trade fair, starting with the booths of American companies and covering technologies, such as 3D printers or electric vehicles. The winner of the Hermes Award 2016, Hartin IT Software, was also honored by a visit.

Finally, Obama used the occasion to give a speech to over 500 students and faculty members at the Leibniz University of Hanover. Apart from numerous global issues, he emphasized the importance of a peaceful, united and liberal Europe for the future of the world.


ECOVIS Beijing was not only impressed by the high-profile opening ceremony, but by the HM’s atmosphere and opportunities in general. We launched our first HM with a motivated team in order to promote ECOVIS Beijing and especially our new Heidelberg office and to make new contacts. Our ECOVIS Beijing partner Richard Hoffmann came to lend a helping hand. The precise preparation and the open and friendly attitude of our team turned the HM 2016 into a resounding success. We want to thank everyone, who has visited our booth and are looking forward to the next Hannover Messe. 

ECOVIS Beijing can provide templates for both labor contract and staff manuals. For further information, please contact: richard.hoffmann@ecovis-beijing.com

New Plan for German-Sino-Hi-Tech-Park in Heidelberg

Category: Investments, May 5th, 2016

On May 2nd, 2016, representatives from the Heidelberg and the Beijing District of Haidian have signed a mutual cooperation agreement.  The agreement covers areas of research and development and to set up a joint German-Sino-Hi-Tech-Park.

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