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21 May 2019, Tuesday, 01:25 (Hong Kong)

China to allow wholly foreign-owned ecommerce companies in Shanghai Free Trade Zone

In an announcement publicized on Tuesday, China’s Ministry of Industry and Information Technology (MIIT) announced that the country is loosening regulations in its Shanghai Free Trade Zone, and will now permit wholly-foreign-owned companies to operate within that zone in the “online data processing” and “transaction handling” industries. The announcement specifically states that this includes ecommerce companies.

Until now, Chinese regulations have restricted foreign access to many technology-related industries, requiring foreign tech companies to form joint ventures with local partners to release their products in China. Even in the Shanghai Free Trade Zone, those rules have persisted – they’re the reason Microsoft and Sony were both forced to choose local partners to launch their game consoles, for example. But today’s announcement opens the door completely for foreign ecommerce firms that would rather go it alone.

Of course, this new freedom is still just a trial run. MIIT’s announcement also asks Shanghai’s government to take care in guiding and overseeing foreign-owned companies taking advantage of the new rules. If things go poorly, MIIT might well shut the experiment down. And of course, there are often good reasons for foreign companies to choose a local partner even if it isn’t required by law: China’s ecommerce market is different from many others, and foreign companies that tried to go it alone in the internet’s early days failed pretty miserably.

Still, the change represents a pretty exciting opportunity for foreign ecommerce companies, even if China’s ecommerce market is already dominated by some pretty powerful players. (Source)

«South China Insight», 23.01.2015

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