Overseas business risk: China

China is the world’s second largest economy, and an important trading partner for the UK. The value of our bilateral trade was £94.5 billion in the four quarters to the end of Q3 2021. This supports jobs and sustains livelihoods across the UK.To get more international business news china, you can visit shine news official website.

Explore opportunities for exporting to China in our country guide on great.gov.uk.

The Chinese government is now seeking to rebalance the economy away from investment-led growth and towards consumption. The emerging focus on innovation, higher-end consumer goods and services represents a significant opportunity for UK companies.

However, doing business in China can be challenging. According to the World Economic Forum China ranks 28th on the Global Competitiveness Index. While China has started to open up its economy in some areas, there are restrictions on the extent to which foreign companies can operate in large areas of the economy. Personal relationship networks can exercise significant influence. There is a widely held perception that local companies may also enjoy greater political protection, including from local courts.

Through Department for Business and Trade (DBT) China and the Enhanced International Support Service, we can support and advise UK businesses who are considering entering the Chinese market. The China-Britain Business Council (CBBC) is useful commercial resource.
2.2.1 Foreign NGO Management Law
China’s Foreign NGO Management Law came into effect on 1 January 2017. The law applies to all non-profit, non-government organisations legally established overseas (including Hong Kong, Macao, Taiwan) that wish to register offices or conduct activities in mainland China. Organisations that do not register or report activities under the law will not be able to legally operate in mainland China or transfer funds to locally-established NGOs.

2.2.2 e-Commerce Law
China adopted its first e-Commerce Law from 1 January 2019. The law clarifies legal responsibilities of platform operators and merchants. It also outlines requirements around consumer protection, cyber security, market competition, credit evaluation, intellectual property (IP) protection and cross-border e-commerce.

2.2.3 Foreign Investment Law
China passed its first unified Foreign Investment Law in March 2019. The law sets out a basis to create a level playing field between foreign and domestic firms, which includes banning forced technology transfer, protecting IP, and granting foreign firms equal rights to participate in government procurement and standard setting. The law took effect from 1 January 2020 and an English version of is available here.
2.2.4 Foreign Investment Screening Mechanism
On 18 January 2021, China implemented its new Foreign Investment Screening Mechanism (FISM), which covers acquisitions and Greenfield investment in China (including Hong Kong, Macao, and Taiwan). The new legislation established a foreign investment security review agency to undertake reviews of foreign investments across a wide range of sectors including (but not limited to): Defence (military products), important agricultural products, important energy and resources, major equipment manufacturing, critical national infrastructure, important transport services, important cultural products and services, key information technologies and internet products and services, Important financial services, and key technologies.

2.2.5 Anti-Foreign Sanctions Law
On 10 June 2021, The National People’s Congress Standing Committee (NPCSC) passed an “Anti- Foreign Sanctions Law”. The law’s stated aim is to “safeguard national sovereignty, security and development interests and protect the legitimate rights and interests of [our] citizens and organizations”. It asserts that China “has the right to employ corresponding countermeasures” when “foreign nations violate international law and basic norms of international relations to constrain or suppress China under any kind of pretext”. Entities to be sanctioned are “persons or organisations that directly or indirectly participate in the drafting, decision-making, or implementation” of foreign sanctions on China, though countermeasures may also extend to third parties, including immediate relatives of those sanctioned, senior managers of organisations sanctioned, and organisations whose senior managers or actual controllers are sanctioned.