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alicia4797
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Asked: 2025-05-08T21:56:03+08:00 In:

Are there any restrictions on the types of businesses foreigners can start in China?

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Are there any restrictions on the types of businesses foreigners can start in China?
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    1. Yun Hee Choi
      Begginer
      Yes, there are restrictions on the types of businesses foreigners can start in China, mainly governed by the Negative List for Foreign Investment Access and sector-specific regulations. Below is a summary of key restrictions and recent updates as of 2025:

      1. Restricted or Prohibited Industries

      The 2024 Negative List (effective November 2024) reduces restrictions from 31 to 29 items, with significant changes:
      • Manufacturing: All restrictions were removed in 2024, including previously limited sectors such as the printing of publications and traditional Chinese medicine production.
      • Agriculture:
        • Foreign ownership in wheat/seed production is capped at 66%, with Chinese ownership must not be less than 34%; corn production requires Chinese majority control.
        • Rare species breeding, genetically modified seed production, and fishing in Chinese waters are prohibited.
      • Mining: Exploration and mining of rare earths, tungsten, and radioactive minerals are banned.
      • Services:
        • Foreigners are not allowed to practice Chinese law or partner in local law firms in legal services.
        • For market research, joint ventures are required, and Chinese entities must have control in media-related surveys.
        • News publishing, online audiovisual services, and social media platforms (except in WTO-committed areas) are banned in the internet sector.
      • Culture/Media: Foreign investment is prohibited in news agencies, book publishing, film production/distribution, and TV/radio stations.

      2. Conditional Access (Joint Ventures/Equity Caps)

      • Aviation: In air transport, Chinese majority control (foreign investment ≤ 25%) is required, and CEOs must be Chinese.
      • Telecoms: Foreign ownership of up to 50% is allowed in value-added telecom services (with exceptions for e-commerce).
      • Healthcare: Hospitals must be established as joint ventures.

      3. Special Economic Zones (Easier Access)

      Free Trade Zones (FTZs) and the Hainan Free Trade Port have shorter negative lists with pilot openings in sectors like fintech and biotech.

      4. Compliance Notes

      • Market Access Negative List (2025): Applicable to all businesses (foreign and domestic), it lists 106 prohibited/permitted sectors. For example, unmanned drones and e-cigarettes require approvals.
      • Local Partnerships: In some sectors such as education, collaboration with Chinese entities is necessary.

      Recent Reforms

      • The full opening of the manufacturing sector in 2024 indicates China’s promotion of high-tech foreign direct investment.
      • Under pilot programs, there are gradual openings in finance, education, and healthcare in the services sector.
      Always consult local legal advisors to navigate sector-specific rules.