Few tips for foreign enterprise to start their internet-related business in mainland China
As the coronavirus pandemic continues to spread globally, internet-related services, especially in the area of music and video streaming service, has unexpectedly soar. A great potential of Chinese internet-related market is seen by our clients who are in need of our profession legal advice to give a head start in their internet-related business.
Landing law firm is specialized in providing professional legal advice and service for foreign investors. Here, we give some brief suggestions for reference only.
First, three mandatory requirements, regulating the structure of foreign enterprise, laid down by “Provisions on the Administration of Foreign-funded Telecommunications Enterprises (2016 Revision)外商投资电信企业管理规定(2016修订)” should be fulfilled from the outset. Initially, the company shall be a joint venture ("JV"), and cannot be a wholly foreign owned enterprise ("WFOE") (Article 2 of Provisions on the Administration of Foreign-funded Telecommunications Enterprises). What’s more, the maximum share percentage for the foreign shareholder is 50% (Article 6 of Provisions on the Administration of Foreign-funded Telecommunications Enterprises). Moreover, the main foreign investors of foreign-invested telecommunication enterprises operating the services shall have good performance and operation experience (Article 10 of Provisions on the Administration of Foreign-funded Telecommunications Enterprises).
Second, after the first requirement has been fulfilled, one or more licenses should be authorized by Chinese government in order to carry out internet-related business. The type or types of license required by Chinese authority varies from kinds of service which the related enterprise is due to operate. Basic threshold for a profitable internet information service provider is licence for value-added telecommunication service (Article 7 of Administrative Measures for Internet Information services). If the service of a profitable internet information service provider falls under the category of “internet cultural products” prescribed by Interim provisions on the Administration of Internet Culture (2017 Revision), then additional licence, namely “Internet