China removes foreign equity cap on E-Commerce businesses

HONG KONG - China has announced that it is lifting foreign equity ratio restrictions on online data processing and transaction processing businesses – which means that these businesses can now be 100% foreign-owned, with immediate effect.

A Ministry of Industry and Information Technology (MIIT) statement says the move has been made to support development of e-commerce, encourage and guide the active participation of foreign investment and further stimulate market competition.

The decision to remove foreign equity restrictions on online data processing and transaction processing (operating e-commerce) businesses across the country follows trials in the China (Shanghai) Pilot Free Trade Zone.

According to the Hong Kong Trade Development Council, foreign equity ratio requirements set out in this MIIT Circular apply when foreign companies apply for a permit to establish online data processing and transaction processing (operating e-commerce) businesses.

For other requirements and relevant examination and approval procedures, the ‘Provisions on the Administration of Foreign-Invested Telecommunications Enterprises’ apply.  hktdc@hktdc.org   (ATI).