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Opportunities and our action plan-- Seminar on Foreign Investment Law successfully convened

Chen & Co. Law Firm has long been assisting foreign investors and FIEs in their investment in China. We will help the foreign investors take advantage of the FIL in terms of the opportunities and new environment and achieve greater success in Chinese market.


On 15 March 2019, the National People's Congress deliberated and passed the Foreign Investment Law of the People's Republic of China (“the FIL”), which will take effect as of 1 January 2020. The FIL is a landmark development in foreign investment legislation since China launched the reform and opening-up policy 40 years ago, which will have significant impact on investment by foreign investors in China as well as the overall reform and opening up progress. In response to the concerns and practical needs of foreign investment enterprises (“FIEs”), on 12 April 2019 Shanghai Pudong Association of Enterprises with Foreign Investment, EY and Chen & Co. Law Firm jointly sponsored the seminar on the FIL in English.

 

Raymond Zhu, a tax and business advisory partner of EY[1], hosted the seminar, and Fan Yaquan, executive vice president of Shanghai Pudong Association of Enterprises with Foreign Investment, and Gary Cai, a BD leader of EY[2] delivered the opening speeches.

 

Mr. Fan first expressed his appreciation to Dr. Lin Zhong, managing partner of Chen & Co. Law Firm for sharing his timely and insightful article to address the issues involving FIEs following the enactment of the FIL. The association has been making, and will continue to make, relentless efforts to facilitate FIEs investing and operating in China by a variety of means. First, the association will provide FIEs with the toolkit consisting of six tools to understand the policies, market, business, finance, culture and life in China. Second, the association will roll out an innovation map to assist FIEs in expanding their innovation channels. Third, the association will launch a coordination center to protect the rights and interests of the FIEs where government services are not satisfactory to FIES and/or when FIEs encounter operation problems.

 

Gary Cai extended warm welcome to the representative of the FIEs, most of whom are CFOs and general counsels. Gary pointed out that both EY and Chen & Co. Law Firm have accumulated rich experience in serving FIEs and had been continuously followed the changes of laws and policies on foreign investment. Both EY and Chen & Co. Law Firm will support all the FIEs with the professional services and help enterprises in building a better working world.

 

The keynote speaker, Dr. Lin has practiced international commercial law for over 25 years, and he analyzed the practical impact of the FIL on FIEs from their perspective and explained the major issues to be clarified.

 

With the purpose of increasing the stability, transparency and predictability of legal environment for foreign investment, the FIL introduces the pre-entry national treatment plus negative list regime. If a foreign investment does not fall into the negative list, the foreign investor will enjoy national treatment, i.e. the treatment to the foreign investment will be no less favorable than that to domestic investment and investors. Dr. Lin believes that the negative list will be further shortened with the wider opening of China's markets.

 

Dr. Lin pointed out that the FIL underlined the protection of the legitimate rights and interests of the FIEs, and the creation of a fair and reasonable competition environment for FIEs. The FIL aims to enhance IP protection and prohibits administrative branches and their staff from using administrative measures to force technology transfer. The FIL also aims to establish a complaint mechanism for FIEs to promptly deal with complaints of FIEs or the investors.

 

The FIL will replace the Sino-Foreign Equity Joint Venture Law, Sino-Foreign Cooperative Joint Venture Law and Wholly Foreign-owned Enterprise Law. The organizational forms and organizational structures and activities of FIEs will be regulated by the provisions of the Company Law of the People's Republic of China, the Partnership Enterprise Law of the People's Republic of China and other relevant laws. To address the issues of different types of FIEs, Dr. Lin made a thorough analysis easily understood by the audience. The FIL will also further guarantee the FIEs’ rights to participate in formulation of industrial standards and government procurement on the same ground as their domestic counterparties and assure their rights to remit capitals inward or outward.

 

The panelists consisting of Dr. Lin as the moderator, Jason Shi, legal counsel of Qualcomm, Raymond Zhu, and Titus Bongart, a tax partner and head of GBN Greater China, ASEAN and Korea, EY with different background and rich experience, then had a heated discussion during the panel session and they exchanged insights and sparked new ideas. The topics cover FIE clients' response to the new law; the change to the governance structure of joint ventures; increase shares in JVs after the lift of limitation on foreign investment, foreign exchange issues, industrial standards, intellectual property and government confidentiality liability.

 

Chen & Co. Law Firm has long been assisting foreign investors and FIEs in their investment in China. We will help the foreign investors take advantage of the FIL in terms of the opportunities and new environment and achieve greater success in Chinese market.

 

[1] Ernst & Young (China) Advisory Limited

[2] Ernst & Young (China) Advisory Limited


For more information, please contact:

Dr. Lin Zhong

Managing partner

Chen & Co. Law Firm

Phone:+86 21 2228 8358

Email:zlin@chenandco.com




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