China encourages foreign-invested enterprises, getting more and more investor-friendly and is creating a more competitive environment for foreign companies. If the percentage of foreign investments in the registered capital of a company is higher than 25 percent, that entity can enjoy the treatment available for foreign enterprises.
Moreover, a foreign investor in China should set up a long-term business plan in accordance with permitted industries to invest in by Chinese government.
Our Chinese lawyers will offer complete legal assistance for investments in China.
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Investments within China made by foreign companies refer to Sino-foreign contractual joint ventures, Sino-foreign equity joint ventures and wholly foreign-owned enterprises (according to the Interim Provisions Concerning the Investment within China of Foreign-invested Enterprises). These have the structure of a limited liability company, according to the Chinese law.
Foreign companies must fulfill the following conditions in order to make investments in China:
• have a paid off registered capital;
• started to make profits;
• conducting business operations in accordance to the local law;
• have no track record of illegal business operations;
• amount of investment within China made by a foreign enterprise does not 50 percent of its net assets;
• the Industrial Catalogue for Foreign Investment and the Interim Provisions for Guiding Foreign Investment should be both consulted before making an investment in China.
• foreign-invested companies shall not make investments in the prohibited fields for foreign investment.
Our law firm in China can help international investors with legal consulting on the matter, in order to check all the needed conditions for a proper investment in China.
Foreign industries in China are of four types: the encouraged, the restricted, the prohibited and the permitted ones. Different substantial rules (e.g. tax), restrictions and procedural rules will apply to various categories of industries so that an entrepreneur could understand whether the business which will be carried out is encouraged/discouraged by Chinese government. The foreign investor will consequently know which kind of rules and regulations he/she has to comply with.
Generally, the 2015 version of Catalogue of Industries for Foreign Direct Investment highlights a trend according which Chinese market is continuously opening up to foreign companies. In comparison to the 2011 catalogue, the 2015 version emphasizes the fact that the scope of permitted industries has been enlarged. Additionally, the 2015 catalogue also removes 41 industries from the restricted category (such as some mining industries – diamonds, high-aluminum fireclay, barites, phosphorus mines, celestite and szaibelyite, real estate, cross-border transportations).
Other alterations are related to the encouraged industries by Chinese government – more and more foreign entrepreneurs are emboldened to invest in modern agriculture, environment friendly industries, high technology, new cleaning energy industries, modern service industry. Our Chinese attorneys can offer details if you wish, as a foreign investor, to benefit of proper legal assistance when making an investment in China.
The category of prohibited industries usually covers the ones that may affect national policy or public security, such as manufacture of tobacco products, gambling, domestic courier service, on-line publishing and Chinese law consultation service (except for those in relation to the impact of Chinese legal environment).
If you are interested in specific information in the matter of opportunities for foreign investments in China, please contact our lawyers in China.