Land policy in Zhongshan

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With the spreading development of foreign direct investments across China, not only big cities, but also second tiers city have become more concerned about how to make most from the limited land they have. The southern Chinese city of Zhongshan it’s an interesting example in this regard.

While the Zhongshan Government has issued a wide range of policies for the development of both city social life itself and industry growing in East Zhongshan, it has also issued its own catalogue for industrial investment, with four categories – main encouraged industries, territorially encouraged industries, limited industries and prohibited industries. This policy will probably help to sustain the cities business environment, but will also influence and determine both domestic and foreign-invested companies successes and failures.

Furthermore, recently the government issued a notice on strengthening the management of industrial factory. In the past, many factories in Zhongshan were built up without caring too much about regulatory requirements or performing necessary construction procedures, fire control or other procedures. It meant that having completed the construction, the investor started production in locations without having performed environmental impact evaluation, lease registration, fire control examination, and on occasions without the required business registration documentation.

In effect, the government tended to be flexible to make it easier to obtain more investments. However, over time, the number of investors increased. Consequently the local government has started to select investment and upgrade the productivity of the land. In many areas in Zhongshan nowadays, there is the requirement of investment density (earound US$300 for GET). Under such a background, we advise that investors should be more careful and conservative on selecting land, and pay attention to detail when checking what then local government (not just in Zhongshan) is advising against what actual state level regulations should be.

Businesses previously enjoying a flexible investment policy are now being punished for being out of compliance – despite previous local support – and we recommend checks are made to ensure your business is in compliance from the first day of operations.

Dezan Shira & Associates maintain an office in Zhongshan, advising foreign investors on legal administration, corporate establishment, due diligence and tax policy in the city. Please contact Lisa Qian for more information.