Free Trade Zones: Lowering Old Barriers – Reaching New Heights

Author:OIL Offshore Incorporations Offshore Incorporations
Profession:OIL Offshore Incorporations
 
FREE EXCERPT

Following the constant development of the Shanghai Free-Trade Zone (FTZ), the barriers for investing in companies have once again been lowered, as reforms aiming to encourage further foreign investment continue. In June 2014, the Statistics Bureau of Shanghai estimated 10,000 registered entities in the zone, with 661 of those recorded as foreign-invested enterprises.

Recent Updates Made to the 'Negative' List

With an ambition to continuously limit the paperwork and reduce the restrictions related to setting up an entity in the Shanghai FTZ, the Shanghai Municipal Government has recently shortened its 'Negative' list. The June 2014 edition contained 135 items, 27% shorter than the preceding edition, as it removed more than ten restrictions that partook in the 2013 'Negative' list. Moreover, Shang Yuying, Chairman of the Shanghai Commission of Commerce, has recently shared the zone's objective to shorten the list to less than 100 items in 2015.

Removing Entry Restrictions for E-Commerce Companies

On 13 January 2015, China's Ministry of Industry and Information Technology (MIIT) announced an alteration to the Shanghai FTZ. The announcement detailed that the MIIT has introduced a pilot scheme allowing wholly foreign owned e-commerce enterprises within several sectors in the Shanghai FTZ. Prior to this reform, foreign investors were only allowed to control 55% of the shares in online data and transaction processing businesses in the Shanghai FTZ, as compared to the 50% control permitted to foreigners in Mainland China. The modification of the regulations for online data processing and transaction processing services will now allow foreigners investing in e-commerce companies to conduct business without limitations in the FTZ. Foreign investors are furthermore fully allowed to provide call centre, domestic multi-party communication and internet access services. However, virtual private network (VPN), internet data centre, storage and forwarding and information services still require a joint venture with a Chinese partner within the zone.

Policy

Outside Shanghai FTZ

Inside the Shanghai FTZ

Ownership

JV  is required with foreign investment .

Both JV  s and WFOE  s can be established, as foreign investments can account for up to 100%.

Registered capital

For businesses operating within the scope of a province, autonomous region or municipality, the registered capital minimum requirement is RMB 1,000,000.  For businesses operating in the whole...

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