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  • Jerry Wang
    Jerry Wang
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    Brief introduction to the legal environment on foreign investment in China
    Brief introduction to the legal environment on foreign investment in China

    By: Jerry Wang, Esq.
    G&D Law Offices
    Shanghai City, the P. R. China
    Wangbin_esq@126.com


    Maybe you are planning to invest in China while you know nothing about the relevant Chinese legal requirements. No worries, this article will show you the outline on foreign direct investment in China. Please note the oversea investment is, first of all, subject to the policies, laws and regulations of your state, it’s advisable to have a lawyer and get these issues solved at the very start.

    In this article, you will read:

     Who may invest in China?
     Investment forms
     Industries policies
     Taxation
     Foreign exchange
     Financing
     Customs
     Labor
     Governing law and dispute resolution
     Exit

    1. Who can invest in China?

    In accordance with the related laws and regulations, any foreign enterprise, economic organization or individual is permitted to invest in China.

    2. Investment forms

    The foreign investor may establish a wholly-foreign-owned enterprise (WFOE), sino-foreign joint venture and/or sino-foreign joint cooperative venture. The aforesaid three forms are stipulated by different laws and regulations, respectively.

    Under the PRC laws, the nature of a WFOE is a limited company and a sino-foreign joint venture can be either a limited company or a stock company; while a sino-foreign joint cooperative venture is either a limited company or a civil entity which shall be governed by related PRC civil laws.

    Many foreign companies establish a representative office in China. Such representative office is not a legal person. Subject to some restrictions, it is permitted to operate business in China; all the liabilities resulted accordingly shall be beard by its establisher (the foreign company).

    3. Industry policies

    The foreign investment shall comply with the relevant industrial policies. Different industries, different policies, for example, in some industries a foreign investor is permitted to establish a WFOE, while in others only a sino-foreign joint venture is allowed; Pursuant to related policies, some industries are still not open to the foreign investors currently.

    As the particular requirements depend on the industry you are about to invest, I’m not able to show you every aspect of those policies here. If you need the particular information in relation to the industry you are interested, please contact me (wangbin_esq@126.com) or your PRC counsel.

    4. Taxation

    (to be continued)
    • 11 Mar 2008, 04:22 am