Foreign companies continue to benefit from China's further opening-up

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China has continuously cut the number of sectors and businesses that are off-limits for investment in its negative list for market access in recent years, providing huge opportunities for foreign companies and stimulating the vitality of market entities.

The country's latest negative list unveiled last Friday contains 131 administrative measures on investment, down 20 from that in 2018.

The list eases market access for the establishment of nursing homes and social welfare institutions. Industries, fields and businesses not on the list are open to all market players.

Aerial photo taken on Oct. 28, 2019 shows a night view of the National Exhibition and Convention Center (Shanghai), the venue of the second China International Import Expo (CIIE), in east China's Shanghai. [Photo/Xinhua]

Inclusiveness and openness

"For foreign companies, the continuously narrowing negative list brings inclusiveness and openness," said Nanda Lau, a partner of Herbert Smith Freehills, one of the world's leading legal services providers.

"A shortened negative list means broader market access for foreign investors and more opportunities for companies, particularly in the newly opened sectors," she said.

Aerial photo taken on Oct. 16, 2019 shows a view of the Yangshan Deep Water Port of east China's Shanghai. [Photo/Xinhua]

On Nov. 22, the Japanese financial services group Nomura announced that its joint venture (JV) in Shanghai had obtained a license for securities business from the China Securities Regulatory Commission.

The approved business scope includes stock brokerage, securities investment consultation, proprietary trading and asset management, the company said.

With the easing of regulations for global banks, Nomura applied to set up the JV with a majority stake in China last year and the application was approved by China's top securities regulator in March.

The joint venture, Nomura Orient International Securities, was set up on Aug. 20, with Nomura holding a 51-percent stake.

The new company will initially focus on leveraging Nomura's expertise in face-to-face consulting to provide wealth management services in China, with an ultimate goal of growing its business into a full-fledged brokerage by providing wider financial services, according to Shigehiro Tomita, Shanghai chief representative of Nomura Securities.

"I'm so impressed by China's opening-up measures, especially in the financial sector. As the market grows bigger, the opportunities here are more diversified," Shigehiro said.

Higher-quality growth

China's constant widening of opening-up not only benefits foreign companies but also promotes higher-quality growth.

Aerial photo taken on July 23, 2019 shows Tesla's gigafactory in east China's Shanghai. [Photo/Xinhua]

Tesla officially unveiled its Model 3 electric vehicle manufactured in a Shanghai gigafactory last Friday in Shanghai and announced it would start delivering the made-in-China cars before late January.

According to the company, the made-in-China Model 3 vehicles have entered Tesla-run stores in the country.

China scrapped shareholding limits for new energy vehicles (NEVs) last year and is expected to phase out all equity caps in the automobile industry by 2022.

Staff members unveil a made-in-China Tesla Model 3 at a Tesla experience center in Shanghai, east China, Nov. 22, 2019. [Photo/Xinhua]

While some worry that domestic carmakers would be under threat by more foreign players, Titus von dem Bongart, a tax partner at the international accounting firm Ernst & Young Global Limited (EY), pointed out that the opening-up of the automotive sector in China has brought big changes, which can push domestic carmakers to speed up their technological upgrading.

"Allowing higher investment ratios for foreign companies creates more competition in the market, which would stimulate growth and best practices," he said.

"Meanwhile, these opening-up measures will further deepen investment cooperation between China and other countries and regions, and facilitate more extensive capital, technology, management and personnel exchanges, which are key to ensuring China's high-quality economic growth," he added.

Visitors watch a Tesla Model X car during the second China International Import Expo (CIIE) in Shanghai, east China, Nov. 6, 2019. [Photo/Xinhua]

In 2015, Fidelity was among the first batch of foreign firms to establish a wholly foreign-owned enterprise in China.

"Allowing more foreign firms to come into the market is extremely critical. A few years later, there will be an ecosystem participated in by foreign firms in insurance, banking and fund management industry, which will be a strong catalyst in terms of further developing the Chinese capital market," said Jackson Lee, China country head at Fidelity International.

New foreign investment law

With increasing beneficial policies, China continues to see an uptrend in foreign direct investment (FDI) inflow as investors remain bullish in tapping the market. FDI into the Chinese mainland expanded 6.6 percent year on year in the first 10 months of this year.

To open its doors wider, the country's national legislative session approved in March a new foreign investment law, paving the way for sharing China's market and opportunity with the world.

With unified provisions for the entry, promotion, protection, and management of foreign investment, it is a new and fundamental law for foreign investment in China.

Aerial photo taken on Oct. 16, 2019 shows a view of the Yangshan Deep Water Port of east China's Shanghai. [Photo/Xinhua]

"The new law, which has addressed major concerns of foreign investors in China, shows China's will and determination to follow through with further reform and opening-up. It gives people more confidence in the country," Titus said.

For most of the foreign companies in China, the new law is a big step forward and gladly welcomed.

Aerial photo taken on Oct. 16, 2019 shows the automated wharf of the fourth phase of the Yangshan Deep Water Port of east China's Shanghai. [Photo/Xinhua]

"The new law sets an overarching legal framework, which provides a level playing field for foreign investors in China, offering broader market access and national treatment," said Nanda Lau, an advisor to many international companies operating in China.

"Practically, the enhanced protection of intellectual property rights and simplified registration process under the new law are very attractive," she said.

Lau said with the new law in place, "foreign investors can expect an even more transparent and equal investment environment in China."