In March, China issued a new consolidated law on foreign investment. While many see it as a landmark piece of legislation, its eventual execution will be key to just how successful it is.
On March 15, China issued the Foreign Investment Law of the People's Republic of China. Upon taking effect on January 1 next year, it will replace the three existing laws on foreign investment and become a fundamental law of China in the foreign investment area.
"The new law includes 41 articles. It is a highly abridged version of the 171-article draft the Ministry of Commerce released in 2015. This shows the legislation is more of a guideline than detail-focused. The implementation of the principles stipulated in the new law and how to work with the three existing laws on foreign investment still depend on the promulgation of relevant implementing rules and regulations," says Xu Ping, senior partner and head of the corporate and commercial group at King & Wood Mallesons.
The new law attempts to address outstanding concerns from foreign investors, namely rising business costs, the uneven playing field when competing with domestic firms in China, and a general lack of market access. The wording of the new law is quite general, leaving many implementation details to be clarified before foreign investors will see concrete changes and benefits.
However, many see the new law as a landmark.
"The new law makes it clear that the focus of reform is not limited to rolling back foreign ownership restrictions, but also to improve the business environment significantly on an ongoing basis after the investment is made," says Eric Liu, partner at Zhao Sheng, Linklaters' joint operation partner in China.
"I truly believe that, as one of the biggest foreign investment reforms in the past decades, the new law will bring fundamental positive changes and we expect that the legislation change will be welcomed by foreign investors widely in many sectors and lead the next upsurge in foreign investment especially in the financial services, TMT, automotive, transportation and healthcare sectors," Liu adds.
According to Liu, the most important protections for foreign investment include giving equal rights and access to foreign invested companies; protecting IP rights; and increasing the ease of doing business for foreign invested companies, all of which will greatly boost the business of foreign investors in China.
Changes and Challenges
While the new law looks important on paper, only when it is implemented will foreign investors find out just how useful it is. And some lawyers already see them facing challenges.
"One of the key challenges to foreign investors will be that due to the national treatment approach, some will no longer be able to benefit from certain preferential policies. As a result, they may need to revisit their China strategies and adjust business models to get themselves well prepared to compete with their local competitors under the same regime," says Liu.
"Reforming Sino-foreign joint ventures' corporate governance to comply with the new law with the five-year grace period is likely to lead to intensive renegotiation of the shareholders right package which will also be a big challenge to foreign investors."
According to Xu, reforming the foreign investment regime demands a systematic approach. She says: "Now that the law has been formally enacted, we recommend that foreign investors pay close attention to the relevant provisions of FIL and the upcoming implementation regulations and measures, and monitor further revision and amendment of the Existing Foreign Investment Regulations."
"Existing FIEs should adjust their charter documents, organizational forms, corporate structures and other matters in a timely manner accordingly. We look forward to assisting our foreign investor clients actively seize the greater investment opportunities that will soon be possible in China under this new, more equitable legal framework," Xu adds.
拭目以待
3月，中国政府颁布了新的外商投资法。很多人视此为中国高水平对外开放的里程碑，然后其最终效果如何，我们还将拭目以待。
3月15日，中国政府颁布了《中华人民共和国外商投资法》（“《外商投资法》”），《外商投资法》将于2020年1月1日起实施，届时将取代现行的“外资三法”，确立新时代我国利用外资的基本制度框架。
“本次提交全国人大审议的《外商投资法》草案一共41条，相比2015年商务部起草的《外国投资法》（共计171条）篇幅大为缩减，体现了立法的目标从关注具体操作性转向关注原则性、框架性和指导性，而外商投资法所规定原则的实施，以及与现行外资三法如何衔接，仍取决于相关实施法则的出台。”金杜律师事务所资深合伙人和公司业务负责人徐萍律师说到。
《外商投资法》旨在解决外商投资者面对的一些突出性问题，即不断提升的商业成本、与国内企业相比不平等的竞争环境、缺乏透明度造成市场准入障碍。尽管《外商投资法》在内容上只规定了外商投资的基本原则，很多具体细节性事项仍待政府进一步明确、才能最终确保外商投资者切实感到变化与利好。
上述问题尽管客观存在，但《外商投资法》的颁布无疑具有重要的里程碑意义。
“新法明确指出，改革的重点将不仅限于取消外资持股限制，还包括投资后持续大幅改善营商环境。”年利达律师事务所在上海自贸区与昭胜律师事务所联营办公室的管理合伙人刘坚中律师指出。
“《外商投资法》是过去几十年中对外商投资法律实务的一项重磅改革，该法的出台无疑将在诸多方面带来根本性的改观，同时我们也期待来自各个行业领域的外商投资者均能对这部新法给与更多的支持。我们也预测，《外商投资法》将引发新一波外商投资热潮，尤其在金融、TMT、汽车、交通、医疗等领域。”刘坚中律师谈到。
在刘坚中律师看来，保护外商投资企业权益的最好方式包括：给与外商投资企业与国内企业同等权利和机会；加强对外商投资企业的知识产权保护；提高外商投资企业在中国营商的便利程度，这些将极大促进外商在中国投资的积极性。
变化与挑战
《外商投资法》的颁布无疑具备划时代意义，但只有真正落实实施才能让外商投资者切实感受到政策利好 。在此过程中，律师已经看到了其中外商投资者面临的挑战。
“对于外商投资者来说，被赋予国民待遇也意味着其不再享有外商投资的优惠待遇，这个变化无疑带来不小的挑战。由此，外商投资企业需要重新考量在中国的发展战略、并对商业模式做出调整，从而与中国企业同等竞争，”刘坚中律师说道，“改革中外合资企业的公司治理结构以符合《外商投资法》规定的五年过渡期安排，可能会引发就股东权益问题进行重新磋商与谈判，这对外商投资企业来说也意味着很大的挑战。”
在徐萍律师看来，外商投资体制改革是一项系统性工程。徐萍律师谈到，“《外商投资法》颁布后，我们建议外商投资者应密切关注该法及今后陆续出台的各项配套法律法规，同时也重点关注现行外商投资法律法规会有哪些重大修订与修改。”
“现有外商投资企业需按照相关《外商投资法》以及即将制定的配套行政法规和部门规章及时完成章程文件、组织形式、公司治理机构等方面的调整。同时，我们期待能更好地协助外商投资客户，助力他们在新的规则体系下积极把握在中国的投资新机遇。”徐萍律师补充道。
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