Spotlight on China
Navigating the regulatory landscape
China’s regulatory environment is complex and evolving. The Chinese government is encouraging more private and foreign investment into the M&E industry.
Although a number of sectors remain off-limits to domestic and foreign investors, the government is steadily relaxing restrictions in certain sectors.
“To successfully navigate China’s regulatory environment, M&E companies must develop relationships with key regulatory decision makers. Establishing a two-way dialogue will allow M&E companies to have their voices heard in regulatory decision-making.” — Carrie Tang, Greater China M&E Tax Leader
Successfully navigating China’s regulatory landscape requires:
- Making regulatory considerations a core pillar of growth strategy. Navigating regulations is critical to success. As such, M&E companies will need to assess the impact regulations will have on the organization’s strategy and its day-to-day operations.
Domestic and foreign M&E companies must develop a clear picture of the regulatory landscape that governs their businesses. Processes, systems, skills and resources that help to navigate the regulatory environment must be embedded within M&E companies’ corporate infrastructure in China.
- Identifying and developing relationships with key regulatory stakeholders. Government and business interests in China are closely intertwined. M&E companies must understand the key decision makers that influence their current and future business objectives and develop relationships accordingly.
- Engaging reputable local advisors to help navigate the regulatory landscape. Regulations in the M&E industry are often fragmented among several different authorities. At times, M&E sectors are regulated by multiple overlapping authorities, and these authorities can compete for oversight of a single sector. To succeed in this complex environment, M&E companies should select a local advisor or a number of advisors to help them interpret evolving regulations.
- Continuously assessing evolving regulations to identify opportunities and risks. M&E companies must continuously assess the impact of China’s evolving regulatory landscape on their business. What new opportunities does this provide that they should leverage? What potential risks does it create and how can these by mitigated?
- Factoring visible and hidden compliance costs into business and operating plans. The complexity and variable nature of China’s regulatory environment can present M&E companies with a number of significant compliance costs. Some of these costs are visible and relate to an M&E company’s operations and/or growth in China. Other costs are hidden.
In both instances, many M&E companies underestimate the scope and scale of their compliance needs in China. To contain cost creep, M&E companies must develop an understanding of how regulations and compliance will impact their entire business — even aspects of their business that are not core or critical to their growth.