Ministry of Commerce and NDRC release new guidelines regarding Sino-foreign JVs

In early March, the National Development and Reform Commission and Ministry of Commerce, with the approval of the State Council, jointly released the 2015 Revised Draft of the Foreign investment Industry Guidance Catalogue.

At a recent press conference held by the Ministry of Commerce, Ministry Spokesman Shen Danyang explained that this most recent revision to the catalogue removes a lot of limits imposed upon foreign investment. In addition to incentivizing new investment and changing the management methods for foreign investment, the revisions also aim to optimize the economic system and increase transparency for the process.

According to the catalogue, Chinese parties participating in Sino-foreign automobile, motorcycle or other vehicle joint ventures are required to possess a share of at least 50 percent in their respective joint ventures. At the same time, a single foreign company may only establish two joint ventures in a single industry, such as the passenger automobile or motorcycle industry, in the country. However an existing Sino-foreign joint venture would not be restricted from acquiring other domestic enterprises in that industry.

The catalogue also goes another step further in encouraging automobile manufacturers to participate in traffic transportation projects, as well as removing cooperation restrictions regarding embedded electronic systems.