Shanghai's FTZ: Investment in Net Businesses

On 6 January 2014 the Ministry of Industry and Information Technology of the PRC (‘MIIT’) and the People’s Government of Shanghai jointly released Opinions that allow for the set-up of wholly foreign-owned enterprises for the majority of types of internet service sector business in the Shanghai Free Trade Zone, as Dr. Falk Lichtenstein and Ada Tong of CMS, China discuss.

The internet service sector in China has long been tightly regulated and, from a foreign investor’s perspective, has been subject to several restrictions. For example, it was impossible for foreign investors to set up wholly foreign-owned enterprises (‘WFOEs’) in any sectors of internet business. In most sectors, even Sino-foreign joint venture companies with Chinese parties (‘JVs’) were not permitted.

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