3.6d Negative List (Expert Sharing by Prof Lutz-Christian Wolff, Wei Lun Professor of Law, CUHK)

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Del curso dictado por The Chinese University of Hong Kong

China Strategy

20 calificaciones

The Chinese University of Hong Kong

China Strategy

20 calificaciones

Curso 2 de 4 en SpecializationDoing Business in China

This course is designed to help you, as a strategist of a foreign company, better understand how to develop your China strategy. Specifically, after studying China’s changing strategic landscape, you will focus on mastering three strategic issues: who – the major players in China, how – the entry modes, and where – the location strategy for your China business. This course is aimed to deliver updated knowledge and real experiences of developing China strategy.

De la lección

How To Enter China: Entry Mode Choices

The success of doing business in China is influenced by the choices of entry mode. This Section explores the advantages and disadvantages offered by different entry modes, and also the different resources and time commitments required. We also introduce cross-border E-commerce, an increasing and emerging new entry mode. What is entry mode? Why are different entry modes chosen? What are the pros and cons of each entry mode? How do foreign firms choose entry mode? What is cross-border E-commerce in China and how do foreign firms use this new entry mode?

3.6a Key Issue: Regulations2:46

3.6b Wholly-Owned Subsidiary (Expert Sharing by Mr Gordon Lam, Vice-Chairman and Chief Executive of Hang Seng Bank (China) Limited)2:09

3.6c Wholly-Owned Subsidiary (Expert Sharing by Ms Helen Cheng, Equity Partner, Zhong Lun Law Firm)1:51

3.6d Negative List (Expert Sharing by Prof Lutz-Christian Wolff, Wei Lun Professor of Law, CUHK)4:42

Conoce a los instructores

Prof. Xufei Ma
Associate Professor, Director, Center for Entrepreneurship
Department of Management
Dr. Frank Ng
Lecturer
Department of Management

The negative list concept can only be understood in the context of the development,

the historical development of China's foreign investment system.

In the past, all foreign investments had to go through a very cumbersome approval,

registration and verification process,

and from the foreign investors' point of view,

this was really very troublesome because you never really

knew - although there have been rules and regulations,

but you never really knew whether your project would be approved.

The negative list approach,

which was introduced during China's negotiations

with the United States regarding an investment treaty,

is a different approach.

It implies that, as a matter of principle,

foreign investors obtain national treatment,

they are treated like domestic companies,

except for certain industry sectors,

which are listed in that negative list.

If you're listed, if your industry is listed in that particular list,

then your investment will either be

subject to restrictions or it will not be allowed at all.

China has not comprehensively introduced such a list yet.

The current system is still the approval,

verification and registration system.

But, in some areas,

in the free trade zones of Shanghai, Guangdong,

Tianjin and Fujian, the concept was introduced on a pilot basis.

Now, just three days ago,

the Standing Committee of the National People's Congress

has adopted a resolution according to which,

starting from October 1 of this year - that is

2016 - the approval and registration requirements

will be abandoned and a new approach would be taken.

Foreign investors only have to register their investments,

unless they are subject to some kind of restriction,

which is set out in a negative list,

which is still to be published.

Now this negative list is not out yet,

but we know it should come and should be available as of October 1 this year.

The interesting question is whether this negative list, how it will look like.

We don't know this at this point of time.

If it is a very comprehensive list,

which covers lots and lots of areas and industry sectors,

then the negative list concept, which has,

by the way, been adopted by about 80 other countries worldwide as well,

will be worse from

the foreign investors' point of view as compared with the current system.

The trend or indications,

implications given by lawmakers,

by policymakers show that China is eager to liberalize

its foreign investment system so as to attract more foreign investments into the country,

so I'm quite hopeful that in the future that the negative list won't be that harsh.

Having said that - and you have to allow me one or two more sentences -

the removal of the approval and registration and verification system

does not necessarily mean that we automatically have

a liberalized investment system because

those restrictions that are being removed could be reintroduced through other tools.

I've already mentioned the negative list,

but it could also be introduced through merger control tools,

through the state security check system,

through an annual inspection system,

which is about to be introduced,

so we have to wait and see how this all works out.

And one final remark.

I just mentioned that the lawmakers aim at

introducing this new system as of October 1, 2016.

I'm a bit doubtful whether this tight timeline can be kept,

but at least this is a move into the right direction.

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