However, the report suggested distributors and joint venture partners can still play a valuable role in helping develop a brand's presence.
In terms of franchising and joint venture arrangements, adequate incentive for the licensee are needed as well as clear terms outlining compensation should either party wish to end a joint-venture agreement.
The report also highlighted the tax implications brought about by the choice of business models of luxury companies. In particular, China's new Unified Corporate Income Tax Law introduced the need for contemporaneous documentation of transfer pricing, and companies now need to take a serious look at proactively managing their transfer pricing risks.
(China Daily June 20, 2008)
