Welcome to ChinaInvest.biz Magazine - July 2010 Issue

ChinaInvest.biz Media is a division of Klako Group and will be providing monthly insight into investment, tax and operational issues for foreign companies entering and operating in China.

On January 31st, 2007, the State Council of the People's Republic of China adopted the "Regulations on the Administration of Commercial Franchise," which took effect on May 1, 2007 ("2007 Franchise Regulations"). With promulgation of the 2007 Franchise Regulations, China entered the last phase of a long and difficult process that started in 1997 to create a legal structure for the franchise business model in China.

The China Chainstore and Franchise Association is a quasi-government organization that is responsible for mandating rules and codes of conduct for franchise operations and promoting franchise development. It represents the franchising industry in China and reports there are currently over 1900 separate franchise chains operating in China engaged in over 50 business sectors with 87,000 individual franchised outlets. Many of these organizations are locally established Chinese businesses.

This development has been pioneered by the successful entry of foreign franchisors like McDonald’s, KFC and Pizza Hut (although to date the operations of these companies in China is primarily through a company owned and managed structure rather than through a traditional franchise network), and more recently many other western brands such as Starbucks with 150 stores in 6 years and Subway with 27 locations.

We would like to provide retailers with another option in entering the China market – that of franchising. We hope the information can be a guide for establishing and operating a franchise in China today.

Establishment and Operation of a Franchise in China

By Klaus Koehler, Managing Director, Klako Group

May 1st 2007, China released new Franchise Regulations (“Regulations on the Administration of Commercial Franchises”). It replaced the existing Commercial Franchise Measures that were implemented on February 1st 2004. The Regulations introduced several significant changes to the legal framework set up under the 2004 measures. Franchises are proven to be the most successful way of starting a new business in China, even if the term “franchising” is only vaguely understood and its limits as a business model here are ill-defined. Franchising is a system with its own terminology and that may be where some of the confusion arises in China.

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All information in this report is verified to the best of our ability and is assumed to be correct at time of release; however, Klako Group does not accept responsibility for any losses arising from reliance on the information provided within.

Interview with Mr. Pierre Eversen, the Chief Representative of Geneva Lab Limited

Geneva Lab was founded in 2004 by Jan Erik Lundberg current CEO of Geneva Lab. Our Headquarter is in Zurich, Switzerland. We operate under the brand name: GENEVA

We are a team based in Switzerland and China that is passionate about designing and engineering high quality sound & vision products, for users with a contemporary life-style. Our design philosophy is based on the view that the most important attribute of an audio system is that it should sound great. We will never compromise on design or technology. We also believe that our products should be easy to use and effortless fit into a home. We are also minimalist about features, adding only those functions we feel are essential to a good experience. These philosophies challenge our engineers to strive for the best. Please do not be misled by the external simplicity of our products. The inside contains the very latest audio technologies.

Products from Geneva Lab are not mass produced low-cost units. We are only using manufacturers that share our passion for high quality and do not cut corners to save cost because that would impair the total experience of the product. Our creations require significant amount of craftsmanship, like our piano lacquered cabinets. Without a real care and attention to detail by the people who make these products, we would never be able to deliver such high quality and finish.

If being Swiss means being a perfectionist, we are proud to be Swiss. We also hope that our passion for what we do is part of your experience of our products. From us at Geneva Lab, we hope that you really enjoy our products.

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