In the news: Foxconn fights to save tax breaks, HP sells its data unit to Tsinghua Unigroup and Facebook woos Chinese advertisers

Foxconn leads fight to save tax breaks

Foxconn and other foreign businesses in China are fighting to save tax breaks and other benefits promised by cities and provinces, as the country aims to curb big spending by local governments. Taiwan-based Foxconn, manufacturer for Apple, has been negotiating to preserve about Rmb5 billion in promised subsidies in Zhengzhou. Foreign groups say the government's new effort to tame local subsidies has thrown promised tax breaks and other investment incentives into doubt, with local governments pulling back previous incentives and officials seeking guidance from the top on promises to sell discounted land or waive social insurance payments. The government wants all tax breaks drawn up by local authorities without State Council approval to be withdrawn, so that all companies are subject to the full 25% corporate tax rate. Although foreign groups are unfair to them, this is just another step taken by China to clean up and standardise practices across its regions, which, to be fair, is constructive in the long run.

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HP sells data unit to Tsinghua Unigroup

Hewlett-Packard is nearing a deal to sell control of its data-networking unit to Tsinghua Unigroup, which emerged as the preferred bidder in an auction of 51% of H3C Technologies. The other bidders for the business, worth roughly US$5 billion, included China Huaxin Post and Telecommunication Economy Development Center. Purchasing H3C would give Tsinghua a major presence in China's networking gear market. HP has limited the list of bidders to domestic companies to win government approval for the sale and boost its operation prospects. The deal comes after China's move to ask foreign tech companies for their source codes and encryption data. Selling off the data-networking business to the local market as opposed to a foreign competitor is good strategy, and it's probably exactly what China wanted.

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Facebook woos Chinese advertisers

Although Facebook is banned in China, it is hiring in Hong Kong and has tapped a second local partner to reach advertisers and draw more business from Chinese companies. The goal is to pitch these companies to the benefits of reaching Facebook's 1.39 billion active monthly users abroad. Google has unveiled a Chinese language developer channel on YouTube last month and recently opened up its Google Play store to Chinese app developers. Twitter also opened its first Hong Kong office this month to look for more advertising business in China. With 832 million users around the world visiting Facebook every day, lesser-known Chinese companies seeking to expand and attract customers overseas can increase their brand recognition easily by advertising on the platform.

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