Partnership Option Soon Available for Foreign Investors

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SHANGHAI, Dec. 3 – China will soon allow foreign investors the option to invest in the mainland via partnership firms beginning in March next year.

This will enable investors to set up contract-based partnership firms either on their own or with a local partner. A partnership firm has the advantage of flexibility during set up and in management, legal structure and capital structure as opposed to a joint venture which can be quite rigid.

Currently only Chinese investors with onshore renminbi funds are allowed to set up partnership firms. A foreign partnership firm also eliminates the need to get approval from the Ministry of Commerce and will only require approval from local authorities (except in industries and sectors that require special approval).

Partnership regulations require investments to be in the form of fully convertible currency, or renminbi. The new regulations are aimed at making the FDI process simpler to attract more investment. In line with its current foreign investment policies, the central government is especially interested in encouraging foreign investors with advanced technology and management experience to set up partnerships.

Foreign direct investment in the country declined during the year as a consequence of the global financial crisis with FDI rates dropping by 12.6 percent.

For more information on foreign direct investment vehicles in China, please contact Dezan Shira & Associates at