Investing in a Distribution Channel: Current Legal Framework and Implications after WTO
December 31, 2001 | BY
clpstaff &clp articlesWith China's WTO accession and the corresponding relaxation of restrictions on distribution services, foreign investors will have a greater opportunity to expand their businesses.
The Chinese goods distribution market has been open to foreign investment since 1992, when foreign investors were permitted to invest in a few pilot distribution businesses in six large cities (Beijing, Shanghai, Tianjin, Guangzhou, Dalian and Qingdao) and five special economic zones (Shenzhen, Zhuhai, Xiamen, Shantou and Hainan) and hold minority shares in their ventures with Chinese partners in accordance with an State Council, Foreign Investment in Retailing Provisions (the 1992 Official Reply). Since then, the Chinese central government has approved about 30 Sino-foreign joint venture distribution enterprises (JVDEs) for pilot purposes. In 1999, the government promulgated the Pilot Projects for Commercial Enterprises with Foreign Investment Procedures (the 1999 Measures). Together, the 1992 Official Reply and the 1999 Measures set up the current legal framework of foreign investment in distribution trade services.
THE LEGAL FRAMEWORK
The major provisions regarding the establishment and operation of a JVDE are as follows.
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