For example, the visitors from the mainland in the first week of June signed deals to purchase over US$2.2 billion worth of Taiwan products after a four-day visit to the island.

Around 827 million dollars of products would be for July delivery, while the balance of US$1.4 billion worth of products would be for the end of this year , according to the head of the delegation, Li Shuilin.

Among the products the delegation members are interested in are: LCD (liquid crystal display) equipment, spare parts for mobile phones and computers, plastic and chemical products, textiles and handcrafts, Li said.

The delegation was organized by the Mainland Association for Cross-Strait Economic and Trade Exchanges, and consist of about 80 representatives of 35 companies, including IT and home appliance giants Lenovo, Haier, Changhong and ZTE. The business representatives/ owners held talks with more than 300 Taiwan firms in Taipei and Kaohsiung to learn more about their products and market potential in the mainland as well as how to take reciprocal advantage of their joint manufacturing capacities, according to Li.

In telecommunications, a total of 17 telecommunication service providers and 30 equipment manufacturers of the mainland were invited to attend a forum in Taipei the following week.

“We see a lot of opportunities for cooperation as the mainland is fast developing its 3G market,” said Liu Liqing, chairman of the China Association of Communications Enterprises.

Johnsee Lee, president of the Taiwan’s Industrial Technology Research Institute (ITRI), also said the discussions would help local equipment producers better understand the market potential and industrial standards in the mainland.

The delegation was the first of its kind and was warmly received on the island.

This marked a substantial step by the mainland to help boost investment in Taiwan and the purchase of Taiwan products, proposed by Chinese Premier Wen Jiabao in April, Li said.

Chinese State Council’s Taiwan Affairs Office director, Wang Yi, also said that Beijing will encourage its citizens to visit Taiwan, and estimated that more than 600,000 mainlanders will travel there for tourism this year.

Ties between Taiwan and China have improved rapidly since Taiwan President Ma Ying-jeou took office in May 2008, pledging to set aside longstanding political disputes and enhance exchanges.

Their buying spree was seen as a gesture to expand trade ties between the mainland and Taiwan aside from the aim to offset the effects of the global economic downturn.

In addition to the regular two-way air and shipping traffic agreements, the two sides reached an agreement in principle to end a ban on investment from China to Taiwan.

Taiwan plans to begin accepting applications from Chinese firms to invest in local companies in as many as 101 business sectors by early July according to an Investment Commission draft proposal.

Source : Konaxis

The export orders total however, was almost 17 percent down compared to last October?s, seen by the organizers as a sign of troubles ahead for China’s exporters.

“Statistics show that China’s export will continue to decline in the next two quarters,” said Wen Zhongliang, director of the Business Office of the fair and deputy director of the Department of Foreign Trade, Ministry of Commerce.

“It may get better in the fourth quarter,” Wen said.

The Canton Fair, with a history of 52 years, has long been considered as a barometer for China’s import and export situation.

Fair sales showed that China’s economic situation is still grim despite of the “positive signs”, Wen said.

“The financial crisis had hit the real economy and its impact on consumer demands still continues,” Wen said.
Declines in export deals were posted in mechanical and electrical products, which account for half of China’s exports in money terms, reaching only US$11.3 billion, down 19.5 percent; in textile deals, worth 1.6 billion dollars, down 15 percent, and the daily commodities down 2.4 percent.

The “positive changes” in textile industry in March was a temporary and partial change, which should not lead to over-optimism for the industry, said Wang Yu, vice president of China Chamber of Commerce for Import and Export of Textiles.

“The orders are still decreasing, which is a great challenge for China’s 40,000 textile companies,” Wang told Xinhua.

Over 165,000 oversea buyers attended the fair, a 5.1 percent drop from the previous fair.

“Many old customers decreased or even canceled their purchasing plan this time,” said Du Yanhua, manager of Shanghai Flying Horse Import and Export Group Ltd..

Many Chinese companies said their export agreements are becoming “shorter” and “smaller”. Although Europe and America are still the major markets for China, the deals are down 28 percent and eight percent respectively compared to the previous fair while agreements increased in new markets, said Mu Xinhai, fair spokesman.

China’s exports to Argentina, India and the Association of Southeast Asian Nations rose 10, six and seven percent respectively, Mu said.

“Chinese companies are trying to explore new markets while old ones are shrinking,” Mu said.

Confidence could be seen at the fair amid the downturn. Some companies said the most severe time had ended and those that survived the crisis had improved themselves and reinforced their competitiveness, Wen Zhongliang said.

Source : Konaxis

With many businesses facing economic problems, the legal focus of business in China is shifting to an understanding of the implications of the new labor law, and specifically, its provisions for the reduction of staff salaries.

The Labor Contract Law is not specific on the reductions of salaries due to economic conditions. However, Article 41 of the law recognizes the reality of ?serious difficulties in production and/or business operations? in the context of terminating staff. When it comes to being faced with the choice of either terminating employment contracts, or reducing salaries, local governments in China are keen to see the staff retained. The Chinese government?s overriding concern is maintaining social stability ahead of economic concerns. Salary reduction is an alternative that both government and employer can agree upon rather than face stiff compensation penalties for terminating staff contracts.

The procedure, however, is not just a matter of agreement between the employer and employee and an amendment to the contract. While not specifically mentioned in China?s labor law, businesses are encouraged to ?consider the opinion? of the labor union and the relevant local labor administration bureau. In practice this means that a report, outlining the economic situation of the business, together with the required contingency plan over salary reductions, needs to be filed with, and agreed by both bodies. In fact, when faced with an economically bleak picture, the labor union may be able to help the company manage the transition. The approval of the Labor Union and the local labor authority will allow amendments to employment contracts to be made, then agreed upon.

China does see certain criteria as being important when it comes to the health of businesses. Key among these are maintaining profitability, employee retention and business sustainability. Businesses in China with a track record of success yet facing difficulties in maintaining salary levels would be well advised to enter into discussions with the labor union or the local labor authority and work with them to reach an effective compromise in staff retention.

The author is the Senior Partner of Dezan Shira & Associates. Companies requiring legal opinion on salary reductions in China may contact Marie Bi, Legal Counsel, Dezan Shira & Associates at legal@dezshira.com.

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