21 December, 2019
In November 2019, China released draft implementations regulations for the new Foreign Investment Law. The draft regulations, if enacted, will come into force on 1 January 2020. It came as a much anticipated document as many were hoping for guidelines and regulations to address the long-expressed concerns of foreign investors in China. These concerns include forced technology transfers, profit repatriation, and trade secrets.
Although criticized by the US-China Business Council to be overly light on details and containing “language that is unlikely to be enough to allow equal participation for foreign companies”, the draft still meets the general expectations by tackling critical problems. Notable clauses touch upon thorny issues, including punitive damages for the infringement of IP rights, protection of trade secrets, a ban on the forced transfer of technology, free remittance by foreign employees, and profit-sharing and the surplus property distribution. The draft also aims to improve communication channels between government departments and foreign businesses to create a more transparent business landscape.
Under the mounting pressure to make China stay as an attractive market to foreign investors, the regulations mark the country’s real efforts to clear up doubts and concerns.
For further information, please contact:
John Koh, Director, Osborne Clarke
john.koh@osborneclarke.com
