Introduction of Foreign-Invested Telecommunications Enterprises in China
China encourages foreign investors to invest in China, and with the continuous updating of the Special Administrative Measures for Foreign Investment Access (Negative List), restrictions on foreign investment access have been liberalized or cancelled in many investment areas. On March 29, 2022, the State Council of China revised and issued the latest Administrative Provisions on Foreign-Invested Telecommunications Enterprises, which comes into effect on May 1, 2022.
- Characteristics of foreign-invested telecommunications enterprises
Foreign-invested telecommunications enterprises refer to enterprises established by foreign investors in accordance with the law to operate telecommunications services in China and may operate basic telecommunications services and value-added telecommunications services within the territory of China. The regional scope of business operations shall be determined by the competent department of industry and information technology under the State Council in accordance with relevant provisions.
- Registered capital requirements of foreign-invested telecommunications enterprises
(1)
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Operate nationwide or cross-provincial telecommunications services
- For those engaged in basic telecommunications services, the minimum registered capital is RMB 1 billion;
- For those engaged in value-added telecommunications services, the minimum registered capital is RMB 10 million;
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(2)
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Operate telecommunications services within provinces and cities
- For those engaged in basic telecommunications services, the minimum registered capital is RMB 100 million;
- For those engaged in value-added telecommunications services, the minimum registered capital is RMB 1 million.
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- Foreign investment proportion of foreign-invested telecommunications enterprises
(1)
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The investment proportion of foreign investors in foreign-invested telecommunications enterprises which operating basic telecommunications services (excluding wireless paging services) shall not exceed 49% ultimately;
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(2)
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The investment proportion of foreign investors in foreign-invested telecommunications enterprises which operating value-added telecommunications services (excluding wireless paging services) shall not exceed 50% ultimately.
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- Major foreign investors in foreign-invested telecommunications enterprises
The major foreign investor of a foreign-invested telecommunications enterprise refers to the investor who contributes the largest amount of capital among all foreign investors and accounts for more than 30% of the total capital contributed by all foreign investors. Major foreign investor in foreign-invested telecommunications enterprises engaged in basic telecommunications services shall meet the following conditions:
- Having the qualification of enterprise legal person;
- Obtaining the basic telecommunications operation license in the country or region of registration;
- Having funds and professionals suitable for engaging in business activities.
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- Major Chinese investors in foreign-invested telecommunications enterprises
The major Chinese investor of a foreign-invested telecommunications enterprise refers to the investor who contributes the largest amount of capital among all Chinese investors and accounts for more than 30% of the total capital contributed by all Chinese investors. Major Chinese investors in foreign-invested telecommunications enterprises engaged in basic telecommunications services shall meet the following conditions:
- Being a company established according to law;
- Having funds and professionals suitable for engaging in business activities;
- Meeting the prudent and industry-specific requirements stipulated by the competent department of industry and information technology under the State Council.
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- Other conditions for establishment of a foreign-invested telecommunications enterprise
In addition to the above-mentioned conditions, foreign-invested telecommunications enterprises shall also meet the requirements for operating basic telecommunications services or value-added telecommunications services as stipulated in the Telecommunications Regulations.
KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advice and services in respect of the formation and registration of company, application for various business licenses and permits, any compliance, tax planning, audit, and accounting in China. Please call and talk to our professional consultants for details.
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