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  • Doing Business In China | Activities Prohibited to Foreigners

    April 15 2014

    In this post we will discuss the business activities and sectors which are prohibited to foreign investor in China. Do not hesitate to contact me if you have any question in relation to this matter at corporate@offshorepremium.com      This post is published as a courtesy of www.offshorepremium.com

    The Chinese government issued what is called the Foreign Investment Catalogue which first version dated from 1995.  Since then, the Catalogue has been revised several times; the latest revision has taken effect on the 30 January 2012

    The Foreign Investment Catalogue

    The Foreign Investment Catalogue contains a list that classifies projects into a number of categories.  “Encouraged,” “restricted” and “prohibited” projects are expressly enumerated in the Catalogue.

    • All activities which are not specified in the Catalogue are “permitted” by default.

    The category in which a project fall will determine,

    • the process of approval of the project;
    • taxes and other incentives that may be available for the project
    • caps on foreign shareholding by requiring the investment to be made under a JV on in some cases capping the actual investment of the foreign investor

    Catalogue of Industries in Which Foreign Investment is prohibited

    Below we are publishing the list of foreign investments that are prohibited.

    Remark: If your investment is not mentioned in this list then it means that he is either Permitted or maybe even Encouraged

    I. Agricultural, Forestry, Livestock and Fishery Industries1. Research and development, breeding and planting of China’s rare and special varieties, and production of relevantbreeding materials (including quality genes in planting industry, husbandry and aquaculture)

    2. Research and development of transgenic organism, and production of transgenic crop seeds, breeding livestock and poultry, and aquatic larvae

    3. Fishing in the ocean area and inland waters under China’s jurisdiction

    II. Mining Industry

    1. Exploration and mining of tungsten, molybdenum, tin, stibonium and fluorite

    2. Exploration, mining and selection of rare earth elements

    3. Exploration, mining and selection of radioactive minerals

    III. Manufacturing Industries

    (I) Beverage Manufacturing Industry

    1. Processing of green tea and special tea with Chinese traditional techniques (including famous tea and dark tea)

    (II) Medical and Pharmaceutical Products Manufacturing Industry

    1. Processing of traditional Chinese medicinal materials listed in the “Regulations for Protection of Wild Medicinal Resources”

    and the “Catalogue of China’s Rare, Precious and Endangered Plants under Protection”

    2. Application of processing techniques including steaming, stir-frying, moxibustion, and calcination for making ready-to-use pieces of traditional Chinese medicines; and production of traditional Chinese secret prescription medicines

    (III) Nonferrous Metals Smelting and Rolling Industry

    1. Smelting and processing of radioactive minerals

    (IV) Specialized Equipment Manufacturing Industry

    1. Manufacturing of Weapons and Ammunition

    (V) Electric Machinery and Equipment Manufacturing Industry

    1. Manufacture of open (i.e., acid mist directly coming out) lead-acid batteries, mercury-contained silver oxide button batteries,mercury-contained alkaline zinc-manganese button batteries, pasted zinc-manganese batteries and nickel-cadmium batteries

    (VI) Industrial Products and Other Manufacturing Industries

    1. Ivory carving

    2. Tiger bone processing

    3. Production of bodiless lacquerware

    4. Production of enamel products

    5. Production of Xuan paper and Chinese ink ingot

    6. Production of carcinogenic, teratogenic and mutagenesis products and persistent organic pollutants

    IV. Power, Gas and Water Production and Supply Industries

    1. Construction and operation of, outside small grids, power plants using coal-fired and steam condensation thermal generator sets with a single generator capacity of 300,000 kilowatts or less, and thermoelectric power stations using coal-fired, steam condensation and extraction thermal generator sets with a single generator capacity of 100,000 kilowatts or less

    V. Transportation, Storage & Warehousing and Postal Services Industries

    1. Air traffic control companies

    2. Postal companies; domestic express mails delivery business

    VI. Leasing and Commercial Service Industries

    1. Social surveys

    VII. Scientific Research, Technological Services and Geological Exploration Industries

    1. Development and application of human stem cell and genetic diagnosis and treatment technology

    2. Geodetic surveying, marine charting, aerial photography for surveying and mapping purposes, administrative boundary surveying and mapping, topographic map compilations and general map compilations, and compilations of electronic maps for navigation purposes

    VIII. Water Conservancy, Environmental, and Public Facilities Management Industries

    1. Construction and operation of natural reserves and internationally important wetlands

    2. Development of wild animal and plant resources originated in and protected by China

    IX. Education

    1. Compulsory education institutions, education institutions in military affairs, police, politics and other special fields, and Party schools

    X. Cultural, Sports and Entertainment Industries

    1. News agencies

    2. Publishing of books, newspapers, and periodicals

    3. Publishing and production of audio-video products and electronic publications

    4. All radio stations, television stations, radio and television channels (frequencies), radio and television transmission and coverage networks (transmitting stations, relay stations, radio and television satellites, satellite uplink stations, satellite receiving and transmitting stations, microwave stations, monitoring stations, and cable radio and television transmission and coverage networks)

    5. Radio and television program production and operating companies

    6. Movie production companies, distribution, and theater companies

    7. Provision of news websites, online audio and video programs, operation of business premises for Internet-access services, and operation of Internet cultural business (excluding music)

    8. Construction and operation of golf courses and villas

    9. Gambling and lottery industry (including horse race tracks for gambling purposes)

    10. Pornography industry

    XI. Other Industries

    1. Projects endangering the safety and performance of military facilities

    XII. Other Industries Prohibited by the State or by International Treaties China has Concluded or Acceded to

    Notes:

    1. If there are other provisions in the Mainland and Hong Kong Closer Economic Partnership Arrangement and its supplements, the Mainland and Macau Closer Economic Partnership Arrangement and its supplements, the Cross-strait Economic Cooperation Framework Agreement and its supplements, and the free trade zone agreements concluded and signed by and between China and other relevant countries, such provisions shall prevail.

    2. If there are other provisions in the special regulations or industry policies of the State Council, such provisions shall prevail

    As already stated above if the investment you want to implement in China is not in this list then it means that it is either Permitted or Encouraged

    Do not hesitate to contact me if you have any question in relation to this matter at corporate@offshorepremium.com

     

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