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Restraints placed on U.S. companies in China

On Behalf of | May 30, 2018 | Uncategorized

When doing business in China, there are a large number of requirements that companies must follow. For example, airlines must remove any sort of information that would suggest Hong Kong and Taiwan are not under Chinese control.

Negotiations between Chinese and U.S. officials continue. While there appears to be progress in certain areas, China continues to tighten restrictions in others.

There has been some progress concerning restrictions placed upon foreign banks and asset management firms. This includes removal of investment limits. Foreign companies can also own a majority stake concerning securities.

On the other hand, as recent as June 2017, there was enactment of a new Chinese law placing restrictions on cross-border data transfers.

Examples of restraints placed upon businesses

An authority on the Chinese economy stated: “It’s a constraining environment.” Some examples of restraints placed on foreign business include:

  • Suggestions that certain territories such as Macau or Hong Kong are not regions administrated by China. One hotel chain had its website blocked due to listing Taiwan and Tibet were nations independent from China.
  • China will monitor content that is not in the Chinese language. They also will attempt to enforce the manner in which companies speak to the Chinese nation.
  • China will require storing of a great deal of online data locally. This has particularly impacted web services.
  • The Chinese government requires foreign companies to join in joint ventures with Chinese partners. This often means the transference of proprietary technology.
  • Even large companies will face ample censoring of content.

It is important to understand the challenges that accompany creation of a business in China. A company has little chance of obtaining success without locating legal and practical assistance of someone who understands China business and culture.