Tax cuts boost business development in SW China’s Wuzhou

Photo shows a collagen casing factory of Shenguan Holding (Group) Co., Ltd. (Photo/People’s Daily Online)

In early winter, the sun is still warm in Wuzhou city, southwest China’s Guangxi Zhuang Autonomous Region, where Shenguan Holding (Group) Co., Ltd. is going from strength to strength, showcasing how local tax cuts are helping businesses thrive in the region.

Established in 1979, Shenguan Holdings (Group) Limited is a leading producer of edible collagen sausage casing products. In 1989, the Group produced China’s first collagen sausage casing, becoming the first enterprise in the country to have obtained the patent on collagen sausage casing technology.

Zhou Yaxian, Chairwoman of Shenguan Holding (Group) Co., Ltd., gives an introduction to the company. (Photo/People’s Daily Online)

In 2009, Shenguan Group listed on the Hong Kong Stock Exchange, becoming Guangxi’s first industrial enterprise to go public in Hong Kong. Relying on technological innovation and independent R&D, Shenguan Group quickly became a trailblazer in the industry, with a market share of about 80 percent in China and nearly 30 percent across the world.

   Hong Xiao (center), Director of Wuzhou Taxation Bureau, sits down for an interview with People’s Daily Online. (Photo/People’s Daily Online)

Shenguan’s rapid development couldn't be achieved without the implementation of tax and fee cuts. Wuzhou’s local taxation bureau has been keeping a close eye on the tax-related needs of Shenguan Group, sending service teams to assist the enterprise in dealing with tax-related problems, especially in the key stages of enterprise restructuring, merger and listing.

Over the years, the local tax authority has provided policy guidance and one-to-one tax services to the enterprise, helping it enjoy tax cuts such as additional VAT deductions for R&D expenses and a one-time deduction in full on fixed assets.

In recent years, China unveiled a vast array of tax cut policies, including lowering the VAT rate from 17 to 13 percent, and increasing the additional deduction for R&D expenses from 50 to 75 percent, providing a strong impetus for the enterprise’s development and upgrading. From January to October this year, the tax cut policies saved the Group 36 million yuan ($5.1 million).

A researcher works at a laboratory of Shenguan Group. (Photo/Tanja Herko)

Shenguan Group has spent 5 to 10 percent of its revenue on research and development. To date, it has gained a total of 69 patents. Since 2009, Shenguan's production lines have increased from 116 to 288, with its collagen sausage casing production capacity growing from 1.8 billion meters to 5 billion meters, pushing the Group onto a fast track of development.

 “The tax incentives have not only reduced our costs but also improved our cash flow, enabling us to increase our R&D spending,” said Ru Xiquan, Vice President of Shenguan Holding (Group) Co., Ltd.

Staff from the local tax authority provide one-to-one tax services in Shenguan Group. (Photo/People’s Daily Online)

“We are committed to telling companies the latest tax policies and providing them with customized guidance and services, so that the benefits of our tax cuts can be maximized. In this way, companies will grow faster, injecting vitality in the Chinese economy,” Hong Xiao, Director of Wuzhou Taxation Bureau, told People’s Daily Online.

Thanks to China’s unprecedented tax and fee cut plan, the country saw a whopping 1.78 trillion yuan in tax and fee cuts in the first three quarters of 2019. It is expected that by the end of this year, tax and fee cuts will total over 2 trillion yuan, which will further reduce the tax burden on enterprises and other market entities and invigorate the market.

Ru Xiquan, Vice President of Shenguan Holding (Group) Co., Ltd., demonstrates a collagen casing sample. (Photo/People’s Daily Online)

Photo shows skin care products of Shenguan Group. (Photo/Tanja Herko)

Photo shows collagen food products of Shenguan Group. (Photo/Tanja Herko)

Shenguan Group is not the only beneficiary of tax cuts in Wuzhou. The local tax bureau promotes the tax cut policies among enterprises, so that they can get their business off the ground more quickly.

As the country continues to unleash dividends of tax and fee cuts, Shenguan Group, with collagen technology as its core, has expanded its business from collagen casing products to health industries including food, health care, skincare, medical equipment and so on.