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Foreign Investment FAQ

Updated:2018-2-28 17:50:29    Source:www.tannet-group.comViews:972

Foreign investment is when a company or individual from one nation invests in assets or ownership stakes of a company based in another nation. As increased globalization in business has occurred, it's become very common for big companies to branch out and invest money in companies located in other countries, especially in China. Below is some of the commonest FAQs on foreign investment in China.

Q: What procedures should foreign investors follow to set up FBIE?
(1) The investors shall submit the establishment application and relevant documents to the administrative departments in charge of foreign trade and economic cooperation at the provincial level of the place where the FBIE is to be established.

(2) The administrative departments in charge of foreign trade and economic cooperation at the provincial level shall complete the original examination and report to the Ministry of Foreign Trade and Economic Cooperation (hereinafter referred to as the MOFTEC) within 15 days as of the acceptance of the above-mentioned materials.

(3) The MOFTEC shall, with the consent of the Ministry of Science & Technology, make a written decision on approval or disapproval within 45 days as of the acceptance of all the above-mentioned materials. And it shall issue a Certificate of Approval for Foreign-invested Enterprises to the approved enterprises.

(4) With the approved of establishing an FBIE, the applicant shall file an application for registration at the State Administration of Industry and Commerce or at local bureaus with its authorization by presenting the Certificate of Approval for Foreign-invested Enterprise within one month as of the acceptance of the Certificate of Approval for Foreign-invested Enterprise.

Q: What are the measures China uses to promote foreign investment?
Investment promotion refers a series of activities that governments adopt to attract foreign direct investment.

Investment promotion includes the following specific types of activities: advertising, direct mail, investment seminars, investment group, participating in the industry fair and exhibition, distributing materials, one-to-one direct marketing, preparing agenda for potential investors, facilitate interaction between potential investors and local partners, acquiring licenses and approval documents from the various government agencies, preparing project proposals, conducting feasibility study, and providing services to investors after the project begins to operate and so on.

Investment promotion does not include offering incentives to foreign investors, screening foreign investment or negotiating with foreign investors, although many organizations that are responsible for carrying out investment promotion activities also carry out these kinds of activities.

Q: What is investment and reinvestment?
Foreign direct investment refers to the activity where residents in one country set up a business in another country, or residents of one country acquire major stake and managing shares of an enterprise in another country, with general benchmark of the purchase being at least of 10 percent.

Foreign direct investment does not include the following activities: licensing, subcontract and security portfolio investment, because they do not involve large amount of equity capital, or a significant shift in terms of foreign management control.

Reinvestment refers to any increase in a foreign investor’s shares to the existing investment, including reinvestments on profits and inflows of new capital.

Foreign investors can be either an individual, or a company; its investment can be either wholly foreign-funded, or from a foreign and domestic joint venture.

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