The China Venture

legal and regulatory environment of direct investment in China. The Swiss Government has
nominated a subsidiary of the ‘State Development Bank of China’ to be eventually appointed
fund manager once mutually agreeable negotiations have been concluded and all necessary
details of the funds structure have been approved by the Swiss Federal Council.“ 83
Swiss JV
Partners
+
Subsidiary of State
Development Bank
Investment Committee
PRC JV
Partners
Investments
Debt: min 50%
Equity: min 67%
Joint Venture
Projects
Sino-Swiss
Partnership Fund
Switzerland (min 51%)
Chinese Government
In-/Divestment Due Diligence / Management Support
Administration Decision Control Authority
In-/Divestments:
Debt: max 50%
Equity: max 33%
Max. CHF 5 Mio./project
Initial injection:
Min. CHF 15 Mio.
Max. CHF 49 Mio.
FIGURE 3-3: Preliminary structure of the "Sino-Swiss Partnership Fund" 84
3.2.4 Environment for Investors
3.2.4.1 Tax Holidays, Customs Liberation, and Other Incentives
To encourage foreign investment, several tax holidays and benefits are granted. To support
special development in certain areas, the Government has granted special status to the SEZ’s,
14 open coastal cities, coastal open economic zones, high-technology development zones, and
other areas. In these regions, special incentives and privileges are accorded to foreign
investors. These include reduced corporate income tax rates, tax holidays, exemption from or
reduction in withholding taxes for profits remitted overseas, exemption from or reduction in
import and export taxes, lower land-use fees and simplified entry and exit procedures. 85
83
Source: Dr. Daniel V. Christen (Consultant of the Sino-Swiss Partnership Fund), Beijing, March 19,
1997.
84
Source: Seminar OSEC in Zurich, March 19, 1997.
85 Doing Business in China, Ernst and Young, 1994.
67