As the three FIE Laws were introduced at the start of China’s reform and opening up, they serve as fundamental laws for foreign investment issues in China for almost 40 years. However, because of the rapid and deeper development of China’s economy in recent years, these laws face a number of issues. 1.1. Conflicts with the Company Law Under current relevant laws and regulation, foreign investors have several options to set up their businesses in China. They can establish corporations in the form of EJVs, CJVs or WFOEs under the EJV law, CJV law or WFOE law respectively. In addition, they can set up limited liability companies (“LLC”) under the Company Law as well. Generally, Company Law is focus on regulating domestic enterprises instead …show more content…
These supervisors should be appointed or elected by shareholders and employees. As the FIE laws do not mention this matter, limited liability FIEs like EJVs should also comply with Article 52. However, under the FIE laws, shareholders’ meeting is not regarded as an authoritative body and therefore there is no provision or framework for FIEs to deal with the shareholders’ voting procedures. Although the board of directors, which is the highest authority under the FIE laws, can appoint supervisors, the appointment would be inappropriate and doubtable because supervisors’ responsibility is to supervise those directors . 1.2. Excessive regulation of foreign-invested enterprises According to the current FIE laws, a case-by-case approval system is applied to all FIEs. Obtaining of positive approvals for investment projects from National Development and Reform Commission (“NDRC”) is the first step; Afterwards, approval for establishment should be acquired from MOFCOM; In order to operate the firm, a business license, which is granted by the State Administration of Industry and Commerce (“SAIC”), is required . Approvals are also required on every significant issues such as the transfer of controlled capital or shares, merger and acquisition, liquidation and so on. In the case Qingyue Gao v Shicai Chen , the two foreign parties had signed two contracts in respect of 70% shares transferring from the plaintiff to defendant in 2006. The
On the other hand, knowledge of the political and legal environment of China will be fundamental. Information on their laws and regulations, such as foreign trade policies, product standards, tax laws and requirements, trade barriers, labor laws, etc. are extremely important when assessing China as a potential market for our company. Finally, a thorough research on China’s market conditions, such as potential competitors, market trends, market opportunities and threats, potential risks, unique market characteristics, etc. will be necessary to obtained a complete evaluation of the country before entering the market.
Joint ventures (JV) are a popular method of foreign market entry because they theoretically provide a way to join complementary skills and know-how, as well as a way for the foreign firm to gain an insider’s perspective on the foreign market. Since China began its market opening in 1978, joint ventures have been the most commonly used form of foreign direct investment (FDI), with about 70% of FDI in China in the 1980s and 1990s taking the form of joint ventures (Qui, 2005, p. 47). The Chinese company, as well as the foreign investor, has since 1978 been drawn to the joint venture form. Walsh, Wang & Xin (1999) note that from the Chinese
Tracing back the history of China, Xia Dynasty of the second millennium BCE was the earliest dynasty in China, which was centered along the Yellow River. Before China was unified, it was the time during which most of China's cultural tradition arose. Chinese civilization ascended and developed in a vast area, one-third larger than the United States if such dependencies as Manchuria, Inner Mongolia, and Tibet are included. For centuries China was almost completely isolated from the other centers of civilization by mountains, deserts, and seas. This isolation helps explain the great originality of China's culture. China has many mountain ranges and three river systems that rise close together on the high Tibetan plateau and flow eastward to
China and Russia are both countries with strong state traditions who have favored communist systems over the western idea of democracy. But, in the 1990’s, China and Russia began to stray from their communist systems in their own ways. Russia began the shift with rapid political liberalization under Gorbachev followed by the fall of the Soviet Union. China, on the other hand, embarked on a managed transition with step by step introduction of capitalism while the CCP remained the sole political power. China’s transition was hugely successful, experiencing astounding GDP growth and the largest increase in human welfare in history. Russia’s reforms on the other hand was a failure as the soviet lost half its territory and population. Following the fall of the Soviet Union was an economic recession with an increase in crime and death rates. China experienced a huge increase in human welfare while Russia saw a huge downturn. After comparing China’s and Russia’s different path towards modernization, China has seen stronger and stabled growth as opposed to Russia’s shortcomings.
I"It matters not whether the cat is black or white, as long as it catches mice." Deng Xiaoping
Foreign investment is an important part of our economy. There are many benefits to foreign investment in any country. It would be very difficult or impossible today to close the doors to foreign investment. The fact is foreign investment is responsible for providing a great deal of needed capital in this country. This capital is an asset in the continuous modernization and expansion of our manufacturing and other productive facilities. Without investment in our factories and processes we would fall behind in the world market. These investments lead to increased competitiveness within the international community.
In the book China: A Nation in Transition, many topics are covered, including the one-child policy, religious ceremonies, and most importantly, women's rights and emancipation. In the chapter Chinese Communism and Emancipation of Women, the reader learns about various issues China has with gender inequality between men and women along with quickly growing campaigns and efforts in the pursuit of equal rights. For example, this chapter covers what rulers have done in order to help women , like when the young Mao Zedong added women studying abroad to his socialist society, along with pointing out some discrepancies between men and women, like passing the Health Care and Labor Organizations law creating limitations on jobs women can perform. On
One reason for the concern is the current doctrine of immunity, why this is of concern. In the world of international investment, regulations have not always been equal and perhaps in this current moment, it remains varied, at
China government give opportunity for invest in the country such as give low corporate tax, directly start the business without any join venture with local partner, government will provide loan facility. If the firm breaks the law and regulations, government can immediately close down the firm.
In 1915, Japan violated the open door principle because they presented the Twenty-one Demands to China. In 1937, China and Japan were war which each other and that led to the United States having to adopt in favor of the Open Door policy. Including embargoes on exports of oil and scraps of metal (one of the reasons why Japan went to war with the U.S.). Japan’s defeat in WWll and the communist victory in China’s civil war led to the end of special privileges for foreigners. This made the open door policy meaningless.
I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.
China’s accession to the WTO in 2001 has helped shape its economy to becoming a more predictable environment for trade and foreign investment. Corporate governance and frameworks for business operations and interactions have improved, providing a much more transparent environment. (Deckers, 2004)
From the angle of environmental protection, this Chapter seeks to explore the determinants for the adoption of a broad environmental exception in China’s IITs. The determinants first of all come from the domestic needs regulating foreign investments. The Ralls case illustrated the increasing review of foreign investments through domestic instruments. And the domestic regulations on foreign investors also prove to be increasing in China especially on the national security and environmental matters. Given that new forms of cultural, IT-service and internet concerns have been included in China’s domestic instruments on foreign investments, these matters need to be recognized and preserved in the regime of IIL. Therefore, not only exceptions but also broad exceptions are necessary to accommodate the domestic interests of host states. The domestic determinants in China also include the situation that China has stepped into comprehensive social and economic
Chinese economic reform is experimental, fast and upheaval. Reform and Opening-Up Policy is a significant policy in the Chinese economics reform. It was a turning point that Chinese economy got over the shock from the aggressive economic policies ahead and realized the economics renaissance gradually.
In recent years, the investment scales of foreign business are increasing stably. In 2001, the foreign direct investment was 46.8 billion dollars. In 2005, it has arrived at 85.5 billion dollars. At the same time, the form and field has changed diversification. With the China economy high speed developing and enlarging the industry field, the foreign investment will related to communication equipment, computer, bank service, insurance service, etc. so it will also increase for a long time.