Les conditions de l'investissement étranger en République Populaire de Chine

Written by Lysias

Le débat est lancé sur les conditions de l'investissement étranger en République Populaire de Chine. Autant il est prometteur, autant des critiques sont quelques fois faites sur le caractère directif de l'attitude des autorités chinoises quant à l'attitude des investisseurs étrangers. Nous avons déjà dans une précédente newsletter évoqué de notre côté l'existence parallèle de mesures protectionnistes dans nos pays vis à vis de l'investissement chinois. Nous commençons avec ce texte du cabinet Ming Tai et Shujie Feng, Maître de Conférences à l’Université du Peuple à Pékin et docteur en droit public économique de l’Université Paris I Panthéon-Sorbonne, sur les conditions de l’investissement étranger dans la République Populaire de Chine.

Il est évident que le premier conseil que nous ayons à donner est de se faire assister parallèlement par un cabinet chinois et un cabinet du pays d’origine de l'investissement. C'est dans cette perspective que nous avons créé ce partenariat organique avec le cabinet Ming Tai de Pékin. Nous allons renforcer nos liens en matière d'investissement durable et éditer une lettre d'information régulière France Chine est matière environnementale.

Guidelines for Investing in China

Foreign investors (whether individuals, foreign-incorporated business entities or other commercial organizations) may invest in China, including in the form of foreign direct investment and other forms mentioned below.  The most commonly used vehicles for conducting foreign direct investment in China are Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, wholly foreign-owned enterprises, foreign investment companies limited by shares, investment companies and cooperative development projects.  Other forms of investment include compensatory trade, processing and assembly, BOTs, etc.  The People’s Republic of China has special laws and regulations pertaining to foreign investment in China, such as the Sino-Foreign Equity Joint Venture Law, the Sino-Foreign Cooperative Joint Venture Law and the Foreign-Funded Enterprises Law.  Additionally, there are a large number of administrative rules, government regulations and policy provisions that impose certain restrictions on foreign-funded enterprises, such as the Administrative Measures for the Establishment of Partnership Enterprises in China by Foreign Enterprises or Individuals and the Administrative Rules for the Registration of Foreign-Funded Partnership Enterprises.  Following the revision of China’s Company Law in 2005, foreign investors seeking to establish limited-liability companies or joint stock companies must comply with the provisions of the Company Law in addition to the laws specific to those types of entities.

Generally speaking, foreign businessmen planning to invest in China must first determine whether the particular industry in which they plan to invest has been designated as one where foreign investment is ‘encouraged’, ‘restricted’ or ‘prohibited.’  If foreign investment in an industry is ‘encouraged’, investors may choose any of the investment forms detailed below, and they may begin operating once their project has been reviewed and approved by the local Bureau of Commerce in the locality of investment and they have obtained the requisite business, tax and other licenses.  If foreign investment in an industry is ‘restricted’, then in addition to the approval of the Bureau of Commerce, investors may be required to obtain authorization from the department in charge of regulating that particular industry (for example, review and approval by the People’s Bank of China is required for establishing a foreign-funded financial institution).  It is particularly important to be aware that foreign investments often require review and approval by the Development and Reform Commission, so that the investors can obtain preferential tax treatment when importing equipment or raw materials into the country.  Transnational companies engaging in large-scale acquisitions in China must further comply with the rules established under the Anti-Monopoly Law.

1. A. Vehicles for Conducting Foreign Direct Investment

(1) Sino-Foreign Equity Joint Ventures

Sino-foreign equity joint ventures are also known as stock-equity joint enterprises. They are enterprises established in China through the joint investment and management of foreign individuals, companies, enterprises or other commercial organizations and Chinese companies, enterprises or other commercial organizations.  Their characteristics are joint investment and management by all of the parties and the sharing of profits, risks and losses in proportion with the parties’ respective shares of contributed capital.  The capital contributed by each party is converted to an equity interest in the joint venture equal to its proportion to the total amount of capital contributed to the venture by all the parties.  The proportion of the total capital contributed collectively by the foreign parties to an equity joint venture generally may not be less than 25%.

Sino-foreign equity joint ventures are the oldest and most commonly used form for conducting foreign direct investment in China.  At present, they still account for a considerable proportion of all the foreign capital invested in China.

(2) Sino-Foreign Cooperative Joint Ventures

Sino-foreign cooperative joint ventures are also called contractual joint ventures.  They are enterprises established and operated in China through joint investment and management according to the provisions of a joint venture contract between foreign individuals, companies, enterprises or other commercial organizations and Chinese companies, enterprises or other commercial organizations.  The rights and obligations of each party are determined by the provisions of the joint venture contract signed by the parties.  Consequently, each party’s share of the venture’s profits, risks and losses need not be in proportion with their share of the total amount of capital contributed to the venture.  The foreign parties in Sino-foreign cooperative joint ventures usually contribute all or a majority of the venture’s operating funds, with the Chinese parties making contributions in forms of land, factories, useful equipment and facilities, although some also contribute a certain amount of capital funds.

(3) Wholly Foreign-Owned Enterprises

The term ‘wholly foreign-owned enterprises’ refers to enterprises established in China by foreign individuals, companies, enterprises or other commercial organizations in accordance with Chinese laws and funded exclusively with capital provided by foreign investors.  According to the provisions of the Foreign-Funded Enterprises Law, wholly foreign-owned enterprises must be established in such a manner as to help the development of China’s national economy, and they must satisfy at least one of the following requirements: they must either (1) employ internationally advanced technology and equipment; or (2) export all or a majority of their products.  Wholly foreign-owned enterprises are ordinarily structured as limited-liability companies.

(4) Cooperative Development Projects

‘Cooperative development’ is an abbreviation for the exploration and development of land and sea oil reserves.  At present, cooperative development projects are widely used internationally as a form of economic cooperation in the area of natural resources.  The most significant characteristics of these ventures are that they are high-risk, high-profit and capital-intensive.  Cooperative development projects are usually divided into three phases: exploration; excavation; and production.  Most cooperative development projects involve all three of the above phases, and they are relatively uncommon enterprises.

(5) Foreign Investment Companies Limited by Shares

Foreign individuals, companies, enterprises and other commercial organizations may, in cooperation with Chinese companies, enterprises or other commercial organizations, establish and jointly manage foreign investment companies limited by shares in China.  The total capital of a joint stock company must be divided into shares of equal amounts; shareholders bear liability for the debts of the company only to the extent of their investments, and the company bears liability for its debts only to the extent of its assets.  Both Chinese and foreign shareholders jointly hold stock in the company, but the combined subscriptions of all the company’s foreign shareholders must account for at least 25% of its registered capital.  Joint stock companies can be established by either tender offer or subscription, and existing foreign-funded limited-liability companies may apply for permission to be restructured as companies limited by shares.  Foreign-funded enterprises that satisfy the necessary requirements may also apply for permission to issue A and B shares and to have their stock listed in foreign markets.

(6) Mergers and Acquisitions and other New Investment Forms

As China has progressively liberalized its domestic markets in the ever-expanding area of investment activity, it has also actively sought to expand the use of BOTs, investment companies and other new means of exploiting foreign investment.  Given that transnational mergers and acquisitions have already become a major way of conducting foreign direct investment, the Chinese government is presently working to formulate suitable policies that will facilitate the use of M&A-style investment in China.

(7) Foreign-Funded Partnership Enterprises

‘Foreign-funded partnership enterprises’ refers to business partnerships established in China among at least two foreign enterprises or individuals, or between foreign and Chinese natural or legal persons or other commercial organizations.  Foreign-funded partnership enterprises may take the forms of either general or limited partnerships.

1. B. Policy Guidance for Foreign Investment in China

The Chinese government divides foreign investment into three categories according to the particular industries invested in, distinguishing among areas of the economy in which foreign investment is ‘encouraged’, ‘restricted’ or ‘prohibited.’

(1) Relevant Statutory Provisions

(a)    Catalogue of Industries for Guiding Foreign Investment (revised 2007);

(b)    Interim Measures for the Administration of the Examination and Approval of Foreign Investment Projects;

(c)    Catalogue of Priority Industries for Foreign Investment in Central and Western China (revised 2008).

(2) Development Zones

In order to attract greater foreign investment, the Chinese government has established various “development zones” at the national level, such as the Zhongguan Village Science and Technology Park and the Beijing Tianzhu Export Processing Zone.  Many similar development zones have been established throughout the country, and they are permitted under national law to offer foreign investors certain kinds of preferential treatment.  Under the revised Enterprise Income Tax Law of 2007, the tax obligations of domestic and foreign capital enterprises have been equalized, and certain types of foreign investment enterprises (e.g.: high-technology enterprises like integrated circuit manufacturers) are eligible for preferential tax treatment in the forms of tax exemptions, rate reductions and rebates of taxes paid on income that has been reinvested in China.