Page 9 - THE SOUTH CHINA BUSINESS JOURNAL
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It also clarifies certain terms used within the law, that is unlikely to be enough to allow equal
such as: participation for foreign companies.”
• “Other investors” – which is now defined to In particular, the senior vice president at USBC,
include Chinese individuals, with Article 3 of Jake Parker, voiced his concern about the lack of
the Draft Regulations expressly allowing foreign explanation about the scope of key terms, such
investors to make investments in China jointly with as ‘trade secrets’ ‘national interests’ and ‘social
Chinese individuals. public interests.’
In addition, the draft makes a concerted effort However, Lorena Miera Ruiz, Senior Associate
to improve communication channels between of Dezan Shira & Associates’ International
government departments and foreign businesses Business Advisory Department, notes that
to create a more transparent business landscape. “though these draft regulations still leave a few
Some notable provisions are: questions unaddressed, it makes significant
headway on many key issues concerning the FIL
• The government and its relevant departments – such as whether the definition of ‘investors’
should ensure laws, regulations, rules, normative will encompass Chinese individuals and how the
documents and policy measures are in writing transitional period will work.”
and published on national government service
platforms, and should provide consulting and “Foreign investors should take time to review the
guidance services for foreign investors and provisions carefully before the new legislation takes
companies (Article 11); forces come January 1, 2020,” says Ruiz.
• Profit-sharing clauses and the surplus property In the face of the ongoing US-China trade war and
distribution clause will still be valid during the the slowing Chinese economy, there is mounting
contractual term (Article 43); and pressure to continue to attract the same level of
foreign direct investment into China.
• All policy commitments made by the local
government will be in written form and not exceed The government introduced the FIL draft
the statutory authority given to them (Article 28); implementation regulations and the Regulation
on Optimizing Business Environment, another
Finally, the draft implementation reminds FIEs document that aims to guarantee equal market
to make changes to the governing structure within access for businesses – within mere weeks from
six months after the five-year transitional period each other.
deadline (January 1, 2025), in which case FIEs will
no longer be able to make other changes, and Regardless, foreign investment in China is
the incompliance will be shown in the Enterprise showing steady growth. According to figures
Information Publicity System (Article 42). released by MOFCOM in October, FDI rose 6.5
percent in RMB terms (and 2.9 percent in US dollar
What do the experts think? terms) in the first three quarters of 2019.■
The new draft implementation regulations come About China Briefing
less than two months prior to the FIL coming into
force and mark a step towards making significant China Briefing is produced by Dezan Shira & Associates. The
improvements to China’s business climate for firm assists foreign investors throughout Asia from offices across
foreign businesses. the world, including in Dalian, Beijing, Shanghai, Guangzhou,
Shenzhen, and Hong Kong. Readers may write to china@dezshira.
While some business associations like the EU com for more support on doing business in China.
Chamber have been impressed with the first
draft of the implementing regulations, calling it
“accommodating”, others raise concerns about
issues that remain unaddressed.
The US China Business Council (USBC)
criticized the first round of the draft as being
too light on details and containing “language
South China Business Journal 6
It also clarifies certain terms used within the law, that is unlikely to be enough to allow equal
such as: participation for foreign companies.”
• “Other investors” – which is now defined to In particular, the senior vice president at USBC,
include Chinese individuals, with Article 3 of Jake Parker, voiced his concern about the lack of
the Draft Regulations expressly allowing foreign explanation about the scope of key terms, such
investors to make investments in China jointly with as ‘trade secrets’ ‘national interests’ and ‘social
Chinese individuals. public interests.’
In addition, the draft makes a concerted effort However, Lorena Miera Ruiz, Senior Associate
to improve communication channels between of Dezan Shira & Associates’ International
government departments and foreign businesses Business Advisory Department, notes that
to create a more transparent business landscape. “though these draft regulations still leave a few
Some notable provisions are: questions unaddressed, it makes significant
headway on many key issues concerning the FIL
• The government and its relevant departments – such as whether the definition of ‘investors’
should ensure laws, regulations, rules, normative will encompass Chinese individuals and how the
documents and policy measures are in writing transitional period will work.”
and published on national government service
platforms, and should provide consulting and “Foreign investors should take time to review the
guidance services for foreign investors and provisions carefully before the new legislation takes
companies (Article 11); forces come January 1, 2020,” says Ruiz.
• Profit-sharing clauses and the surplus property In the face of the ongoing US-China trade war and
distribution clause will still be valid during the the slowing Chinese economy, there is mounting
contractual term (Article 43); and pressure to continue to attract the same level of
foreign direct investment into China.
• All policy commitments made by the local
government will be in written form and not exceed The government introduced the FIL draft
the statutory authority given to them (Article 28); implementation regulations and the Regulation
on Optimizing Business Environment, another
Finally, the draft implementation reminds FIEs document that aims to guarantee equal market
to make changes to the governing structure within access for businesses – within mere weeks from
six months after the five-year transitional period each other.
deadline (January 1, 2025), in which case FIEs will
no longer be able to make other changes, and Regardless, foreign investment in China is
the incompliance will be shown in the Enterprise showing steady growth. According to figures
Information Publicity System (Article 42). released by MOFCOM in October, FDI rose 6.5
percent in RMB terms (and 2.9 percent in US dollar
What do the experts think? terms) in the first three quarters of 2019.■
The new draft implementation regulations come About China Briefing
less than two months prior to the FIL coming into
force and mark a step towards making significant China Briefing is produced by Dezan Shira & Associates. The
improvements to China’s business climate for firm assists foreign investors throughout Asia from offices across
foreign businesses. the world, including in Dalian, Beijing, Shanghai, Guangzhou,
Shenzhen, and Hong Kong. Readers may write to china@dezshira.
While some business associations like the EU com for more support on doing business in China.
Chamber have been impressed with the first
draft of the implementing regulations, calling it
“accommodating”, others raise concerns about
issues that remain unaddressed.
The US China Business Council (USBC)
criticized the first round of the draft as being
too light on details and containing “language
South China Business Journal 6
