Foreign Investment Restrictions


Since acceding to the World Trade Organization in 2001, China has been on a long and turbulent journey toward realizing its WTO commitments with respect to the free flow of commerce and the lifting of foreign investment restrictions. Although considerable progress has been made to date (indeed, with many promising developments in just the past couple of years), it is also true that large sections of the Chinese economy remain subject to significant forms of state intervention and burdensome or prohibitive foreign investment restrictions. Unfortunately, these restrictions apply to some of the most exciting and potentially lucrative components of China’s economic landscape, including key sectors such as its massive Internet and telecoms industries.

With decades of accumulated experience assisting international clients in their market entries into some of China’s most heavily regulated economic sectors, DaHui is uniquely positioned to help clients navigate China’s web of foreign investment restrictions, and to help them lawfully structure around such hurdles in planning and implementing their business in China. We have assisted some of the most successful foreign players in China’s economy, using various structuring models and legal solutions to overcome the challenges posed by China’s foreign investment restrictions. We are also exceptionally well versed in China’s recent Foreign Investment Law and its (at least symbolic) declaration of equal treatment among domestic and international participants in the China market, allowing us to provide our clients with informed and reasoned advice on not only China’s status quo foreign investment regime, but also trends and developments of where these restrictions may be headed within the near future.

Our services in this area include:

  • Assessment of proposed China operations and market entry strategies, and diagnosis of implicated foreign investment restrictions (particularly under China’s so-called “Negative Lists”)
  • Assessment of relevant operating license requirements, as well as foreign-shareholding limitations applicable to such operating licenses
  • Advice on structuring China operations under a contractual partnership model, used to avoid direct foreign participation in China’s restricted business sectors
  • Advice on all aspects of permissible joint venture models used to lawfully participate in restricted sectors, including “foreign-invested telecoms enterprise” or “FITE” JVs
  • Assistance with variable interest entity (VIE) structuring options and other nominee arrangements used to establish effective contractual (non-equity) control over Chinese domestic companies
  • Strategic identification and sourcing of local contractual partner candidates, joint venture partner candidates and nominee shareholder candidates used across various structuring solutions to overcome foreign investment restrictions in China

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