There is no such thing as free money, however subsidies come very close. Subsidies are chased after often, and in China this is not different. Chinese companies can have a competitive edge compared to their foreign colleagues because of local subsidies. Luckily, there are also various subsidies which foreign companies can apply for. These, as subsidies often do, have application and eligibility requirements. In this article we would like to inform you about which subsidies are available for foreign companies in the Shenzhen area, what their general requirements are, and the amount of subsidy that is available.
Subsidies for Equipment Investment
Shenzhen and the surrounding Pearl River Delta is known for its production industry. Many factories of all types of products are located here, from the famous Apple factory Foxconn to small factories producing anything you can think of. As China is getting more competition from South East Asian countries for the position of best producing country, more subsidies are available for companies in manufacturing industry. If you have a company or plan setting up a company that produces products, the following subsidies might be of interest to you.
Besides being world’s biggest producer of consumer products, China wants to also become known as a country which develops products. This is one of the main long-term goals of the country. Because of this goal, there are many subsidies for companies that have their R&D activities in Shenzhen and even the whole province of Guangdong. If you are interested in R&D subsidies, the following subsidies might be of interest to you.
Preferential industries, as mentioned in the table above, often align with businesses which are in demand a lot. We previously wrote an article on this, which can be found here.
If you are unsure what patents and utility models are, here is a description as found on World Intellectual Property Organization:
- The requirements for acquiring a utility model are less stringent than for patents. While the requirement of “novelty” is always to be met, that of “inventive step” or “non-obviousness” may be much lower or absent altogether. In practice, protection for utility models is often sought for innovations of a rather incremental character which may not meet the patentability criteria.
- The term of protection for utility models is shorter than for patents and varies from country to country (usually between 7 and 10 years without the possibility of extension or renewal).
- In most countries where utility model protection is available, patent offices do not examine applications as to substance prior to registration. This means that the registration process is often significantly simpler and faster, taking, on average, six months.
- Utility models are much cheaper to obtain and to maintain
- In some countries, utility model protection can only be obtained for certain fields of technology and only for products but not for processes.
For SME companies that are not large enough to have their own patents, utility model patents often are a way to defend their IP. The fact that there are subsidies available for companies with only utility model patents is great news for SME companies.
Trade and Commerce Subsidies
For companies doing their own R&D and production there are quite a lot of subsidies available in Shenzhen, but also import companies and trade companies can apply for subsidies. These are less numerous, because it is less of a long-term focus for China, they are available nonetheless. The following trade and commerce subsidies exist.
Planning with Subsidies in Mind
The subsidies listed in this article are granted by third parties. As such, they are not guaranteed and should be a variable in your business plan. Applying for the subsidies can be done directly at the governmental bureaus that offer them. Another option is reaching out to local subsidy agents, which can apply for all eligible subsidies against a percentage of what gets granted to your business.
Planning the set-up of your business or expanding your business in China should take careful thought. Please reach out to 1421 Consulting Group if you would like a partner to spar with about your business ideas. We are always willing to help.