Tax benefits lift Xinghua's condiments business

In Xinghua, a county-level city in Jiangsu province known as the "home of condiments", businessman Que Jiahua was grateful that he could get enough in tax refunds to help boost his company's condiment production.

Que, CEO of Jiahao Food Co Ltd, which holds some 30 patents, said his plant saved 1.45 million yuan ($198,117) from tax reductions last year. The company then imported a Tetra Pak high-end production line in March to up its manufacturing of chicken seasoning and broth.

With 178 locally registered condiment enterprises, Xinghua aims to build an industry cluster that is "the sole center in China and No 1 in the world". Famous domestic brands have gathered in the city, with an input of over 400 million yuan.

The city's taxation authority, part of the State Administration of Taxation, is following the country's arrangement of reducing "six taxes and two fees" to help enterprises affected by the COVID-19 pandemic tide over the impact.

"The tax-relief aid is of great help to us," said Que, adding that as part of Huabao Group, a multinational conglomerate focusing on flavors, fragrances and condiments, his company has set up the Oriental Flavor Research Center in joint efforts with Jiangnan University, and embarked on a path of industry-university partnership.

"We will expand our production line by importing more advanced equipment to meet market gaps," Que said.

Chinese taxpayers are enjoying benefits from reductions in resource taxes, urban maintenance and construction taxes, real estate taxes, urban land use taxes and stamp taxes, as well as slashes to education surcharges and local education surcharges, said Ma Jianhui from the Xinghua Municipal Bureau of Taxation.

Tax and fee incentives can help boost the city's condiments production to allow it to develop a healthy food industry reaching a scale of 100 billion yuan, she said.

Her colleague Chen Jing noted that their research shows that global condiment sales hit some $218 billion a year — about 10 percent of the food industry — but China's condiments industry only makes a value of about $20 billion, less than 10 percent of the world's total condiments market.

"These small products have a big market to develop," Chen said.

Jiang Heng, general manager of Taizhou Co Ltd — part of publicly listed Anjoy Food — agreed.

By relying on Xinghua's unique advantages in agricultural products, aquatic products, and livestock and poultry breeding, Jiang's company has developed new products such as crab roe tofu, "lion's head" meatballs, fragrant fried lotus root strips and fried lotus root chips.

"Our rapid development could not come without the timely service of the tax department," he said, noting that a tax and fee relief of nearly 16 million yuan for his company not only alleviated its financial pressure, but added confidence for it to develop new projects.

Zhu Xiaoxiang, business manager at Dingfu Food Technology (Jiangsu) Co Ltd stationed at Xinghua Seasoning Industrial Park, also stressed that the tax and fee relief has helped it open new sales channels and usher in a new way of development.

Dingfu, a latecomer yet a rising star, independently produces various compound seasonings and is well-received locally. Yet, due to market changes, it faced such challenges as financial pressures for equipment upgrading, adjustments in product structure and sales reorientation.

"We not only enjoyed a 70,000 yuan reduction from education surcharges and local education surcharges this year but got timely care and guidance on production from the tax authority," Zhu said.

"So far, we have reached cooperation with well-known catering brands and opened online sales channels, which provide a new path for development," he said.

Since the beginning of this year, the Xinghua Municipal Bureau of Taxation has continued to optimize the taxation environment for local businesses and established a workshop called "Promoting Taxes through Good Negotiation", in a bid to strengthen the bond between taxpayers and the tax department.