Barriers to Foreign Investment in the Chinese Internet Industry

1697 Words May 18th, 2009 7 Pages
Barriers to Foreign Investment in the Chinese Internet Industry
Summary: Developing an Internet business in China is not easy, even though the country has the largest Internet user population among all countries in the Asia-Pacific region. Chinese laws make foreign investment difficult, and the country -- quite unlike the United States -- has strict legal controls on information and distribution and poor enforcement of intellectual property laws. This article explains the barriers facing high-tech companies in China.
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China has the largest population and one of the fastest-growing economies in the world. If only one percent of its population participates in the New Economy, China
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• The China Securities Regulatory Commission is responsible for granting approval to any China-based Internet company that is interested in listing on a domestic or foreign stock market.

• The State Encryption Management Commission is in charge of the regulation of encryption technologies and their commercial use.

• The State Administration for Industry and Commerce is responsible for overseeing business activities of all domestic and foreign-invested Internet companies.

• The State Council Information Office, which is directly linked to the Propaganda Department of the Chinese Communist Party, regulates foreign media operations in China, including Internet media.

• The Ministry of Education is responsible for regulating web sites that provide distance learning.
Laws with Chinese Characteristics
In addition to the ambiguous laws and the confusing regulatory structure, the differences between Chinese and Western laws baffle and surprise foreign investors.
In China, laws are generally considered as concrete formulation of the policies of the Chinese Communist Party. As a summary of the Party's administrative and judicial experience, laws can be incomplete, incoherent or even self-contradictory. They are expected to fall behind policies and may also be formulated on an interim or provisional basis.
To provide flexibility, Chinese laws in general are broadly and vaguely drafted, pending

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