If you invest in China’s Internet companies, what restrictions will you face?
The restrictions on foreign investment in the value-added telecommunications sector are mainly reflected in the fact that the proposed company or its operating entity needs to meet the requirements on the equity proportion of the applicant, when it comes to the application for the value-added telecommunications business license.
The Ministry of Industry and Information Technology of the People’s Republic of China (MIIT) or telecommunications administrative agencies at the provincial level will penetrate the company’s equity structure, and calculate the cumulative equity proportion held by the foreign party. If the applicant can’t meet the requirements on the foreign equity ratio of certain value-added telecommunications services, the application will be denied.
The applicant needs to meet different requirements on foreign equity based on different types of value-added telecommunications services, different sources (Hong Kong, Macao, or other overseas regions) of foreign capital and different locations (Shanghai Free Trade Zone or other regions of China) of joint ventures.
Based on the above factors, this post has listed the requirements on foreign equity ratio for different types of value-added telecommunications business licenses as follows: [1]
[1] 世辉律师事务所：《世辉观点I增值电信干万条，外资准入第一条》发布于2019.03.06
Photo by Macau Photo Agency (https://unsplash.com/@macauphotoagency) on Unsplash
Contributors: Xiaodong Dai 戴晓东
