Shanghai FTZ Introduces New Batch of Liberalization Measures for FIEs

October 14, 2014 Posted by China Briefing Reading Time: 3 minutes

SHANGHAI – On the occasion of the one-year anniversary of the Shanghai Free Trade Zone (FTZ), the State Council has revised and implemented a slew of administrative measures related to foreign-invested enterprises (FIEs) in the Shanghai FTZ, as contained in the “Regulations on International Maritime Transport”, “Regulations for the Administration of the Salt Industry”, and “Catalogue of Industries for Guiding Foreign Investment.” These consist of liberalization measures for FIEs in terms of business scope, qualifications and foreign equity ratios.

Based on these adjustments, wholly foreign-owned enterprises (WFOEs) established in the FTZ have been newly approved to participate in industries such as petroleum exploration, real estate brokerages, and small-capacity motorcycle manufacturing.

In many cases the revisions are subtle, but they are absolutely not to be overlooked. For foreign investors in niche industries, even a small change in the wording of industry restrictions can mean the difference between being able to operate in the world’s second largest economy and being locked out of China. Indeed, criticism of the Shanghai FTZ as lacking any substantive innovation ignores the trees in search of a forest.

This is the third wave of industry liberalization measures to be implemented in the FTZ to date, in addition to a host of smaller reforms in electronic tax filing, streamlined corporate establishment, expedited customs procedures, discretionary foreign exchange and alternative dispute resolution.

At a press conference held on September 26, the head of the Shanghai FTZ administration committee, Ai Baojun said that 1,677 FIEs had been established in the FTZ as of September 15, 2014, accounting for 13.7 percent of the total number of enterprises in the zone.

In the most recent changes, a total of 27 administrative measures were liberalized for foreign investment, as detailed below. For a comprehensive list of all newly liberalized industries or a consultation on what the Shanghai Free Trade Zone can do for your business, please contact Dezan Shira & Associates’ Shanghai office.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

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