The Chinese shipping industry opens up

October 09, 2015 | BY

clpstaff

Gradual de-regulation in China's booming international shipping sector has been encouraging to foreign investors, and the most recent simplification of the approval process adds to the promising outlook. Here are the biggest rules of the PRC shipping business

The past decade has seen a marked relaxation of China's policies towards foreign investors in general, and the Chinese shipping industry is no exception. The entry into force of the Measures for the Administration of the Examination and Approval of Wholly Foreign-owned Shipping Companies (Revised) (Measures) on 23 July 2015, is but the latest example of this trend and provides further welcome news for those foreign investors seeking to tap into the opportunities presented by China's sprawling coastline and booming shipping industry.

These new Measures have numerous implications for maritime-orientated foreign investors wishing to take advantage of the wholly foreign-owned enterprise (WFOE) structure. The latest regulations on foreign investment within the shipping industry and preferential policies in the Free Trade Zones (FTZs) all reflect the general trend of relaxation.

The new Measures and WFOEs

Foreign investors were not permitted to establish WFOEs to conduct shipping-related businesses in China for many years. The Tentative Measures for the Administration of the Examination and Approval of Wholly Foreign-owned Shipping Companies (Tentative Measures), which came into effect in 2000, allowed them to conduct certain shipping activities in China by way of establishing a WFOE, subject to the approval of the Ministry of Transportation of China (MOT) and the Ministry of Foreign Trade and Economic Co-operation (MOFTEC), now the Ministry of Commerce (MOFCOM).

The new 2015 Measures reflect policies developed by Jiao Shui Fa [2011] No.440, the Circular on Strengthening the Examination, Approval and Administration of Wholly Foreign-owned Shipping Companies (Circular) issued by the MOT in 2011. For example, one of the conditions to establish a WFOE in the Tentative Measures was to “have maintained a resident representative office approved by the Ministry of Communications in the port city where it proposes to establish its wholly owned shipping company for at least three years”. The Circular removed this requirement, and the new 2015 Measures follow suit.

This premium content is reserved for
China Law & Practice Subscribers.

  • A database of over 3,000 essential documents including key PRC legislation translated into English
  • A choice of newsletters to alert you to changes affecting your business including sector specific updates
  • Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
For enterprise-wide or corporate enquiries, please contact our experienced Sales Professionals at +44 (0)203 868 7546 or [email protected]