What are the restrictions on foreign investment in China?

Foreign investment in China is subject to certain restrictions and regulation by the Chinese government. All foreign investments must be approved by the National Development & Reform Commission (NDRC), and the State Administration for Industry & Commerce (SAIC) and the Ministry of Commerce (MOFCOM) must be employed. Companies from outside of China doing business within the country must register with the SAIC. Additionally, any foreign investments larger than a certain amount must be reported to the NDRC. Foreign investments are also subject to restrictions regarding which types of investment vehicles are allowed. For instance, Foreign Invested Enterprises (FIEs) are limited to three forms: a wholly foreign-owned enterprise (WFOE); Sino-foreign joint venture (JV); or a foreign-invested company (FIC). The choice of which type of vehicle to use is largely based upon the purpose and scope of the company’s business. Foreign investments are also subject to industry-specific restrictions. For instance, certain industries such as banking, media, and telecommunications are largely closed to foreign investors. Some industries may also have foreign ownership limitations, meaning that the foreign investors cannot own more than a certain percentage of the company. Finally, the Chinese government requires foreign investments to meet certain social and environmental standards. Companies must be in compliance with Chinese labor laws and must ensure that their operations do not create negative environmental impacts or disrupt the local communities.

What are the restrictions on foreign investment in China?

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