Environmental Analysis of Shanghai (China)

| | | |
| |Type of Government: |Stability of Government: |
| | | |
| |Communist party |Relatively high |
| | | |
| |Dominant rule of single party: |Powerful central government that|
|Characteristics |i.e. central policy guidance |majorly regulates the market |
| | | |
| |Chinese Communism-‘’new |High level of protection for the |
|Meaning |Capitalism’’? |domestic businesses from the |
| |Vertical relationship |government |

Environmental analysis of Shanghai (China)

Political and Legal Factors:

Government analysis:

Taxation

Foreign companies that wish to invest in China are responsible for following tax payments:

❖ Income Tax (3% local income tax; 30% income tax rate= 33%)

❖ Business Tax : 3%

❖ Property Tax: annual rate of 1.2 % after 20 % is deducted.

Tax year is a calendar year but there is a possibility for foreign company to adapt it to its own fiscal year.

Advantage:

❖ Foreign companies that are based in the area of Shanghai or Pudong airport pay reduced tax rate of 15 %.

❖ According to china regulations in case a foreign company that isn’t