Relaxation in telecoms sectors for foreign investors in Shanghai FTZ

The Administrative Provisions for Foreign-invested Telecommunication Enterprises that entered into effect on 1 January 2002 and were amended on 10 September 2008 limit the equity participation percentage of foreign investors in foreign-invested enterprises providing value-added telecoms services to less than 50%. The Opinions on Further Opening Value-added Telecommunication Services in the China (Shanghai) Pilot Free Trade Zone to Foreign Investment, issued by the Ministry of Industry and Information Technology (MIIT) and the Shanghai Municipal People’s Government on 6 January 2014 relax the previous restrictions on shareholding percentage of foreign investors in enterprises providing value-added telecoms services within the China (Shanghai) Pilot Free Trade Zone.

Current regulations

The Administrative Provisions for Foreign-Invested Telecommunication Enterprises specify that the equity participation percentage of foreign investors in a foreign-invested enterprise that provides value-added telecoms services may not ultimately exceed 50%. The Catalogue for Guiding Foreign Investment in Industries, as amended in 2011, also specifies that the shareholding percentage of foreign investors in an enterprise that provides value-added telecoms services may not exceed 50%.

As a special arrangement between mainland China and the Hong Kong Special Administrative Region, Supplement X to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), signed on 29 August 2013, specifies that the shareholding percentage of qualified “Hong Kong service providers” (as defined under CEPA) in an equity joint venture enterprise established in Guangdong that provides online data processing and transaction processing services may be up to 55%. The transaction processing services include e-commerce services such as B2B, B2C, C2C, etc.