China adopts a socialist market economy regime.

China has various industries including agriculture, banking, construction, e-commerce, infrastructure, banking, finance, insurance, real estate and technology. According to a report published by the National Bureau of Statistics, in 2020, the following industries account for the following proportion of gross domestic product:

China has a population of approximately 1.45 billion. The official language is mandarin Chinese.

Business hours are usually from 9:00 am to 5:00 pm from Monday to Friday, but can vary slightly from province to province. The major national public holidays include the New Year Holidays (three days), Chinese New Year Holidays (seven days, usually in February or late January), Tomb-sweeping Holidays (three days), Labour Day Holidays (five days), Dragon Boat Holidays (three days) and National Day Holidays (seven days).

Despite a year when the Covid-19 pandemic plunged major world economies into recession, China's economy expanded 2.3% in 2020 compared to the year before, beating the expectation of the International Monetary Fund that China's economy would grow 1.9% in 2020, which is the only major world economy that IMF expected to grow at all.

In May 2020, China managed to kick off its most important political events, namely the Chinese People's Political Consultative Conference and National People's Congress.

In accordance with the Foreign Investment Law of the People's Republic of China (FIL) and its implementing regulations, which came into effect on 1 January 2020, China has implemented a system of pre-entry national treatment, plus a negative list management for the administration of foreign investment, as well as a regime of national security review of certain foreign investments.

"Pre-entry national treatment" means that the treatment available to foreign investors at the market access stage is no less favourable than that available to domestic investors. "Negative list" refers to the special administrative measures required for the foreign investment's access to certain specific industries. China grants national treatment to the foreign investments that are not on the negative list.

On 23 June 2020, the National Development and Reform Commission (NDRC) and Ministry of Commerce (MOC) jointly promulgated two "negative lists", which became valid on 23 July 2020. On 5 November, the NDRC and MOC jointly promulgated an "encouraged catalogue", which became valid on 27 January 2021. Both documents superseded previous versions of negative lists and encouraged catalogues.

Following the implementation of the FIL, which set out provisions for the foreign investment national security review (NSR) system, on 19 December 2020, the NDRC and MOFCOM jointly issued Measures for the Security Review of Foreign Investments (2021 NSR Measures), which came into effect on 18 January 2021. The 2021 NSR Measures set out the:

The 2021 NSR Measures incorporated adjustments and supplements based on NSR legislation and implementation practices over the past ten years, which enhances the operability and transparency of China's NSR regime.

China has a civil law system, consisting of statutes, administrative rules and regulations. In addition, the Supreme Court of China issues judicial interpretations which the lower courts must follow when adjudicating cases. The lower courts do not have to follow the rulings of higher courts, although they usually do in practice. China does not have a federal system like the United States.

To operate a business within China, foreign investors must incorporate a foreign-invested enterprise (FIE) in China and obtain a business licence for it, issued by the local government. The incorporation of an FIE must be reported to (or approved by) and filed/registered with the Chinese authorities, including the:

In most industries, foreign shareholders will be companies duly incorporated in their home country. For industries subject to special regulation by the Chinese government, such as banking, insurance and telecommunications, foreign shareholders may be limited to those engaging in similar businesses, owning a certain amount of capital and/or other qualifications.

Except for specific industries in which foreign investors are restricted or prohibited from investing, foreign investors are generally allowed to acquire an equity interest in existing domestic companies and to conduct businesses subject to registration/filing with the local governmental authorities (SAMR, MOC and other authorities). To acquire a domestic A-share listing company, a foreign investor must first obtain approval from the MOC.

Foreign investment in China is regulated by the Special Administrative Measures (Negative List) for Access of Foreign Investment promulgated in 2020 (2020 Negative List).

Under the 2020 Negative List, foreign investors are restricted or prohibited from investing in the industries set out in the list. For example, a foreign investor's stake in value-added telecommunication enterprises must not exceed 50% and they are prohibited from investing in news entities. Except for the industries set out in 2020 Negative List, foreign investors are allowed to invest in other industries, enjoying equal treatment with domestic investors.

China implements sanctions within the United Nations framework, under which there are certain restrictions or prohibitions on doing business with particular countries, jurisdictions, entities, organisations or individuals subject to sanctions imposed by the UN.

Apart from UN sanctions, China has announced a number of unilateral sanctions against certain foreign entities, organisations and individuals in relation to their involvement in certain activities that are considered contrary to China's national security and interests. Sanctioned entities can be subject to measures like being prohibited from entering the mainland, Hong Kong or Macao and prohibited from doing business with citizens and institutions.

In addition, there were laws and regulations enacted in late 2020 which specifically authorise restrictions or prohibitions on doing business with certain foreign persons.

On 19 September 2020, the Ministry of Commerce enacted the Provisions on the Unreliable Entity List (UEL Provisions) that lay out a mechanism to assign foreign companies to the Unreliable Entity List (UEL), and impose sanction measures on them. Foreign persons might be put on the list if they:

The UEL Provisions set out a menu of measures the government can choose from, which includes:

On 17 October 2020, the Standing Committee of the National People's Congress passed the new Export Control Law (ECL), which implements export controls over goods, technology and services and other technical data about dual-use items, military items and nuclear items. The law took effect on 1 December 2020. Under the ECL, the government will establish a list of restricted foreign persons who violate end-user or end-use restrictions, possibly endanger national security and interests, or use controlled items for terrorist purposes. Foreign persons listed are prohibited or restricted from transactions for controlled items, and from exporting relevant controlled items to suspended persons.

There are various exchange control and currency regulations in China. An FIE in China is legally entitled to convert after-tax dividends derived from the FIE into foreign currency and remit it overseas in accordance with the regulations.

An FIE must also report (and update on an annual basis) its beneficial ownership to the relevant Chinese governmental authority via www.gsxt.gov.cn when it starts up its business in China, when there is any change in its beneficial ownership and/or when it is dissolved. Also, although banks are mainly responsible for bank deposit reporting as required by the Chinese anti-money laundry authority, an FIE must co-operate to provide information when the Chinese anti-money laundry authority launches an investigation into anti-money laundering and/or anti-terrorist financing.

On a national level, special incentives can be granted to encourage the development of specific technologies or industries. For example, if a company is classed as a "high-tech enterprise", it enjoys various tax reductions or supporting funds granted by governments. For example, its income tax rate will be 15%, rather than 25%.

At a local level, governments can grant preferential policies to attract investors, such as granting a subsidy for renting premises, local tax reductions and so on.

Other than tax preferential policies, there are no other material incentives granted by the national government. Local governments can grant specific incentives to attract investment, such as providing easy access to visa and other approvals, premises with nominal rent and tax breaks for management, depending on the negotiations done with the local government.

As mentioned above, China offers certain incentives to industries and projects that apply to both foreign and Chinese investors that are encouraged and supported by the state, mainly reduced corporate income tax rates, tax reductions and exemptions. Various incentives may also be available to foreign investors based on local practices at provincial or municipal levels.

The main business vehicles in China include:

Trusts are not an independent legal entity in China.

The most common structure used by a foreign investor is a wholly foreign owned enterprise (WFOE). A WFOE is a limited liability company, 100% owned by foreign company(ies) or individual(s). The foreign investor in a WFOE can control all aspects of the business process and daily operations. This makes it easy to protect its business processes, trade marks, and trade secrets. A WFOE's after-tax profit can be repatriated back to the investor's home country after making up losses for previous years (if any) and allocating legal reserve funds in accordance with its articles of association. An incorporated WFOE provides the highest level of confidence in legal title, and the highest level of flexibility and discretion for foreign investors.

A joint venture (JV) is the second most common form of business vehicle in China. A JV is a limited liability company formed between Chinese investor(s) and foreign investor(s). The ratio between foreign and Chinese capital is based on commercial decisions and regulatory restrictions on certain industries. Chinese and foreign investors share in the revenues, expenses and control of the enterprise. A JV requires a foreign company to join forces with a local Chinese business. The benefits of sharing internal business networks, contacts, and processes is apparent as it reduces the time it takes for the foreign investor to establish itself. The drawback is that it makes the company vulnerable to theft and abuse of its intellectual property if the relationship between the shareholders deteriorates or if adequate protection is not built into the initial company setup. A JV is typically used by foreign investors who:

Both WFOEs and JVs are FIEs. Therefore, the incorporation processes for a WFOE and JV are very similar. This is except for the fact that the application documents prepared for a WFOE and JV are different.

The incorporation of an FIE must be reported to (or approved by) and filed/registered with the Chinese authorities, including:

The foreign investor must apply on the SAMR online platform for the pre-approval of the proposed name of the FIE. When the pre-approval of the name is completed, for company registration, the foreign investor must submit the following SAMR application document copies:

The SAMR will share the following with the MOC:

This is to promote time efficiency, as the MOC filing can be processed together with the SAMR registration.

The SAMR will normally complete the review within five to ten working days after the application and reporting documents have been submitted online. After the SAMR completes the review, the foreign investor can make a reservation online to deliver all the required original documents to the relevant SAMR for registration.

Once the FIE is incorporated, it must conduct any further registration requirements as necessary under Chinese laws and regulations, such as tax and foreign exchange registration, and preparing the company chop (seal/stamp) of the FIE.

The PRC Company Law was revised and came into force on 26 October 2018, and the Foreign Investment Law came into force on 1 January 2020. Under the PRC Company Law and regulations promulgated in accordance with it, companies must submit annual reports to competent authorities, which will be published for general public information. Thus, WFOEs must submit their annual report for the previous year to the relevant government authorities (for example, company registration authorities). The cost of annual reporting is minimal. The incorporation and any updates of registered items with the authorities of the FIE must be reported on the MOC's online system.

There are no statutory minimum registered share capital requirements for companies, except for those operating in certain regulated sectors, such as financial leasing and telecommunications where minimum capital requirements will apply.

There is no maximum limit on the registered capital of a WFOE.

Capital contribution can be in non-cash consideration, such as industrial property rights, equipment, land use rights and equity.

Restrictions on rights attaching to shares. A JV's shareholder:

Exceptions can be agreed by the parties to a co-operative JV by contract.

Automatic rights attaching to shares. Automatic rights attached to shares include, among other things, the:

The shareholder/shareholders' meeting is the highest authority of an FIE. The general manager is its top executive and is normally nominated by the shareholders and appointed by the board. The general manager is in charge of the FIE's daily management.

There are no specific restrictions on foreign managers.

Directors assume fiduciary duties and must not act against the FIE's interests.

A shareholder's liability is limited to its contribution to the FIE's registered share capital. However, in certain cases, the corporate veil can be pierced. For example, if a shareholder causes damage to the FIE's creditors, it can be jointly and severally liable with the FIE for the FIE's debts.

The main environmental laws that apply to corporate operations include the:

Environmental Protection Law (2014).

Enterprises (especially production-oriented enterprises) must obtain environmental permits for specific matters, including environmental impact assessments for construction projects, pollutant discharge, operation and disposal of solid waste and hazardous waste and radioactive activities. In addition, enterprises in different industries must also pay attention to specific environmental regulations and law enforcement initiatives at both national and local levels.

If foreign employees are directly employed by a Chinese entity, they are governed by the Labour Law 2018, the Labour Contract Law 2012 and various administrative regulations relating to:

The above laws and regulations do not usually apply to Chinese employees working abroad if employment contracts are signed between the Chinese employees and the foreign company under foreign law.

Employment contracts between a Chinese company and its employees must be governed by Chinese law, regardless of any choice of law clause in the employment contract.

An employment contract must include the following main terms:

A written employment contract is required and must be written in a language that is capable of being understood by all parties. Terms not specifically included in an employment contract can be incorporated into it (for example, provisions of employee handbooks, collective labour contracts and Chinese laws).

Employees and employers can conclude a collective agreement on matters such as labour compensation, working hours, rest, leave, work safety and hygiene, insurance and benefits.

Work permits are required for foreign employees and must be applied for from the labour bureau. The process usually takes around three weeks if it goes smoothly. It is free to apply for a work permit.

Residency permits are required for foreign employees and must be applied for the local immigration authority. The process usually takes around two weeks if it goes smoothly. The cost of residency permits depends on the residency period.

At least one-third of an FIE's supervision committee must be made up of employee representatives. The committee supervises:

The FIE's trade union must be consulted if the employer intends to implement mass layoffs (see Question 16) as a result of operational difficulties. The FIE must seek the trade union's or employees' representatives (congress) opinion when adopting important rules or considering restructuring.

Termination at will is not allowed and an employee can be terminated only on statutory grounds for termination as specified in the Labour Law. The employee does not satisfy the employment criteria during the probationary period.

The fair/justified grounds for dismissal initiated by an employer are listed as above. In addition, an employee's resignation or proposed termination under certain circumstances (due to the fault of the employer) and mutual termination are also considered to be fair/justified dismissal.

Statutory minimum notice. If an employer intends to terminate an employment contract for justified reasons, except under certain circumstances that justify immediate termination, it must provide the employee with:

The employer must inform the trade union (if any) of the reasons in advance for unilateral termination and consider its opinions.

Severance payment. An employee must be paid severance pay based on the number of years worked with the employer at the rate of one month's wage for each full year worked. Any period of not less than six months but less than one year is counted as one year. The severance pay payable to an employee for any period of less than six months will be one-half of their monthly wage.

Grounds for unfair dismissal. If an employer intends to terminate an employee without any statutory grounds, it will be classified as unfair dismissal, giving rise to labour disputes.

Remedies. Where an employee considers a dismissal is unjustified, it can submit the dispute to a labour dispute arbitration committee for arbitration, and either party can bring a court action if the arbitration award is not acceptable to it. Remedies for unjustified dismissal include reinstatement of employment or compensation equivalent to twice the amount of the statutory severance payment that would have been paid under the procedure for justified dismissals.

The following employees are specifically protected by law when they are terminated due to incompetence, poor health or major changes to the objective circumstances under which the employment contract was concluded:

Redundancies and mass termination can occur in the following circumstances:

An employer must explain the mass layoff plan and the reasons for it to the company's trade union or all the employees of the company 30 days in advance, and listen to their opinions. They must also report the layoff plan to the relevant labour authority.

Under the Individual Income Tax Act, last amended in 2018 and effective from 1 January 2019, the following are tax residents in China:

Individuals who have no domicile and do not live in China or live in China for less than 183 days in a calendar year are non-residents.

Employees that are tax residents must pay individual income tax (IIT) in China on their worldwide income. However, expatriates who have not continuously lived in China for six years can be exempt from the payment of IIT in China in respect of their non-China sourced income that is paid by overseas entities or individuals. The computation of this period will start again if the expatriate leaves China for more than 30 days for one single trip during a calendar year within a six-year period.

Employees that are non-residents only pay IIT on their China-sourced income.

Resident employees must pay IIT on their comprehensive income, including:

IIT is paid at seven progressive rates between 3% and 45%, depending on taxable income.

The taxable income is calculated by deducting RMB60,000 and statutory permitted deductions from the total comprehensive income for a calendar year.

Social security contributions must typically be paid by both employees and employers, except as indicated below, and include:

The tax rates applicable to non-resident employees are the same as for tax resident employees, subject to any applicable bilateral tax treaty (see above, Tax Resident Employees).

The salary income of a non-resident employee is subject to a monthly deduction of RMB5,000 for the purposes of calculating the monthly taxable income.

If a non-resident employee has been in China for 90 days or less (or no more than 183 days for tax residents of jurisdictions that have a bilateral tax treaty with China) in a calendar year, the employee is exempt from the payment of IIT on any China-sourced income that is paid by an overseas employer and not borne by the employer's place or establishment in China.

The employer is the statutory withholding agent for employees' IIT and social security contributions.

Employers must make social security contributions for their employees (see above, Tax Resident Employees).

Chinese resident enterprises include:

Non-resident enterprises are subject to withholding of CIT at 10% on interest, dividends, rental income, royalties, gains from transfer of property or other passive income received from China, unless applicable bilateral tax treaties reduce the withholding tax to a lower rate or exempt the withholding tax.

Non-resident enterprises with a place or establishment in China must pay CIT at a rate of 25% (generally on deemed profit basis) in respect of China-sourced income received by the place or establishment and income that is generated outside of China but is effectively connected with the place or establishment.

Non-resident enterprises may also have to pay VAT, stamp duty and other Chinese taxes under relevant Chinese tax laws and regulations (see Question 21).

The main taxes applicable to a business vehicle are as follows.

A China tax resident enterprise must pay CIT on its worldwide profits. The standard rate is 25%, unless a reduced rate or special exemptions or deductions apply. Generally, tax resident enterprises must file monthly or quarterly CIT returns within 15 days after the end of the month or the quarter, and file annual CIT returns and complete annual CIT settlement within the first five months after the end of the year.

A non-resident enterprise must pay CIT at 10% on its China-sourced income, generally on a withholding basis, or 25% on income that is received by its place or establishment in China and income that is generated outside of China but is effectively connected with the place or establishment (see Question 20, Non-Tax Resident Business).

VAT is payable on the following activities in China, usually at 13%, 9% or 6%:

General VAT payers are permitted to offset input VAT by providing valid VAT special invoices received from vendors or other valid VAT deduction vouchers against their VAT liability. Small-scale VAT payers are generally subject to 3% VAT and cannot offset input VAT.

VAT payers are also required to pay surcharges, including urban construction and maintenance tax, education surtax and local education surtax. The maximum rate is generally 12%, on the basis of the amount of VAT actually paid to tax authorities.

Transferors must pay LAT on the appreciated value of real property (including land use rights and buildings) for transfers of real property in China at progressive rates between 30% and 60%, depending on the appreciated value.

Stamp duty is imposed on various dutiable contracts, an enterprise's accounting books, certificates and licences, and evidence of title transfer. Share/equity transfer agreements are subject to stamp duty as they fall within the category of evidence of title transfer. A 0.05% stamp duty is imposed on a transfer of equity interest (shares, except listed shares publicly traded on the Chinese stock exchanges) in Chinese companies. Both the seller and buyer are liable for this stamp duty, and each of them must pay 0.05% stamp duty for each original equity transfer agreement or duplicate copy used as an original. Trading of Chinese listed shares publicly on the Chinese stock exchange is currently subject to a 0.1% stamp duty, which is imposed on the seller only.

Dividends paid to foreign corporate shareholders are subject to a withholding tax at 10%, which may be reduced based on an applicable bilateral tax treaty.

Dividends received from abroad are subject to either:

Income taxes already paid outside China in respect of these dividends can be used to set off income taxes payable in China, subject to applicable statutory limitations.

Interest paid to foreign corporate shareholders is subject to withholding tax at 10%, which may be reduced based on an applicable bilateral tax treaty. In addition, 6% VAT and related surcharges will be applied.

IP royalties paid to foreign corporate shareholders are subject to withholding tax at 10%, which may be reduced based on an applicable bilateral tax treaty. In addition, 6% VAT and related surcharges will be applied.

A China resident enterprise cannot deduct interest paid to related parties exceeding the permitted related party debt-to-equity ratio (Article 46, PRC Enterprise Income Tax Law). The permitted debt-to-equity ratio is:

The profits of a foreign subsidiary do not need to be imputed to a parent company that is a resident enterprise unless it is covered by the controlled foreign company (CFC) rules in China.

The profits of an enterprise that is controlled by both a China resident enterprise, or any China resident enterprise and resident individuals, attributable to the resident enterprise will be included in the income of the resident enterprise for the current period if both the following apply:

There are transfer pricing rules in China. The fundamental rules on transfer pricing are provided under the Enterprise Income Tax Law and its implementing rules, together with other transfer pricing regulations.

The Chinese tax authorities are entitled to make reasonable adjustments for transactions between a company and its related parties that both:

Relevant taxes payable to China customs for imported goods include:

Export of certain types of goods is subject to customs tariffs (the rates may vary in different years), depending on the goods involved. Most of exported goods enjoy VAT refunds (by certain refund rates depending on goods involved).

China has signed double tax treaties with more than 100 countries, including Japan, the US, France, Germany, the UK, Singapore and Canada.

Following the restructuring of the State Council in May 2018, the authority in charge of competition affairs in China is the SAMR.

Any competing entities (either Chinese or foreign entities) cannot enter into monopoly agreements, which include:

Entities are also prohibited from entering with their trading parties into monopoly agreements for (among other things):

Entities with a dominant market position are prohibited from committing any of the following abuses of their dominant position:

Other forms of abuse of a dominant position are determined by the Anti-monopoly Law Enforcement Agency.

Violation of the relevant competition law by itself is not a criminal offence in China. Violations of the relevant competition law (such as provisions on monopoly agreement or abuse of a dominant position) can be subject to one or any of the following administrative penalties:

Mergers and acquisitions that are deemed to be a "concentration of business operators" are subject to merger control. Concentrations of business operators include mergers or takeovers, whether voluntary or by acquisition of shares, or through the exertion of influence (for example, through contract).

Combinations are subject to merger control if either the:

Where business operators implement the concentration in violation of the merger control law, the SAMR can impose the following administrative penalties:

Foreign-to-foreign acquisitions are subject to Chinese merger control laws provided that they constitute a "concentration of business operators". There are no foreign exemptions.

There are no particular rules governing specific industries on merger activities.

The Criminal Law and its relevant legal interpretations prohibit offering bribes (money and/or monetary benefits) to governmental officials and/or their entities/relatives in exchange for illegal benefits. The relevant crimes include:

In addition, business operators must not provide bribes by offering money or goods or in any other way, to any of the following entities or individuals to seek a transaction opportunity or competitive advantage:

(Article 7 of the Anti-Unfair Competence Law.)

Definition and legal requirements. Patents include:

To be patentable, an invention or utility model must be novel, inventive and practically applicable. A design must have distinctive features that are easy to recognise and not conflict with other prior and existing legal rights of other persons.

The patent owner has the exclusive right to use the invention and prevent others from using it without his/her consent.

Registration. Patent applications for registration must be made to the China National Intellectual Property Administration (CNIPA).

Enforcement and remedies. SAMR and the court are responsible for enforcing patent rights and can impose the following penalties:

The infringer can also be criminally liable for counterfeiting someone else's patent in serious circumstances (for example, if the illegal turnover is more than CNY200,000).

Length of protection. The length of protection is 20 years for invention patents and ten years for utility model patents and design patents. These periods are not renewable.

Definition and legal requirements. A new amendment to the Trademark Law came into effect on 1 November 2019. The Trademark Law defines a trade mark as being a distinguished mark, including any or a combination of the following:

To be registered as a trade mark, a sign must:

The owner of a registered trade mark can use the mark exclusively and prevent others from using the identical or confusingly similar marks on identical or similar goods/services without his/her consent.

Protection. Applications for trade mark registration must be filed with the China National Intellectual Property Administration (CNIPA). Unregistered marks are not protected under the Trademark Law unless they are well known.

Enforcement and remedies. The SAMR and the courts are responsible for enforcing trade mark rights. The liabilities and remedies are the same as for patents (see above, Patents). except that the criminal liabilities can be imposed on the infringers who commit the following illegal activities in serious circumstances (for example, if the illegal turnover is more than CNY50,000):

Length of protection and renewability. Trade marks are continuously protected, subject to renewal every ten years.

Registered designs can be protected through patent law (see above, Patents).

Unregistered designs can be protected under copyright law (see below, Copyright) if it is qualifies as a copyrightable work.

Definition and legal requirements. The new amendment to the Copyright Law will come into effect on 1 June 2021. Under the new Copyright Law, copyright applies to intellectual creations that are of originality in the fields of literature, arts and science and are capable of being manifested in a certain form. The owner of a copyright has the right to prevent other persons from copying or reproducing or utilising in other forms listed in the Copyright Law the work without their consent, unless it is proved that such persons created the same or a similar work without copying the copyrighted work, or it is a fair use.

Protection. Copyrights are automatically protected on the work's creation.

Enforcement and remedies. The National Copyright Administration and the courts are responsible for enforcing copyrights. The liabilities and remedies are the same as for patents (see above, Patents) except that the criminal liabilities can be imposed on infringers who commit the following illegal activities in serious circumstances (for example, if the illegal turnover is more than CNY50,000 or more than 1,000 infringing copies are made):

Length of protection and renewability. Protection lasts for:

All marketing agreements are regulated by the Anti-Unfair Competition Law, the Advertisement Law and the Civil Code. Marketing activities must convey accurate information, without misleading consumers.

A foreign entity cannot conduct business, including marketing, within China without setting up a Chinese entity.

The parties can negotiate and agree on the compensation on termination or failure to renew based on mutual consent under normal business operations.

Agency law is regulated in China by the Civil Code.

Distribution is regulated in China by the Company Law and the Anti-trust Law.

Franchises are regulated in China by the Measures for the Administration of Commercial Franchises 2007, issued by the State Council. A franchiser must have established at least two direct sales outlets after engaging in the business for more than a year in China. A franchisor must provide the key information relating to the products, such as basic information about the franchise model, an audit report and litigation status to the franchisees.

In August 2018, the Standing Committee of the National People's Congress promulgated the first E-commerce Law in China, which came into force on 1 January 2019. The E-commerce Law regulates the following major topics:

The Electronic Signature Law, revised in 2015 and 2019 respectively, regulates:

In addition, Measures for the Supervision and Administration of Online Trading were promulgated on 15 March 2021 by the SAMR and came into force on 1 May 2021. These measures set out the obligations of online product business operators and service providers. They also contain special provisions on business operators of third-party transaction platforms.

Guidelines for Regulating the Standard Terms of Online Trading Platform Contracts announced in 2014 cover concluding contracts via data messages by business operators doing business on online trading platforms.

Other legal requirements generally applicable to consumer protection, online payment, internet advertisements, anti-monopoly, cybersecurity, and data privacy are scattered over several Chinese laws and regulations and may also apply to e-commerce activities.

An Electronic Data Interchange (EDI) licence and/or an Internet Content Provider (ICP) licence issued by the Ministry of Industry and Information Technology are needed to set up online platforms to do business with traders who use the platform to market or sell products or services to consumers or other businesses, and the server of the online platform will be hosted in China.

The Anti-Monopoly Law 2008 provides general restrictions and requirements against monopolistic conduct. In particular, Guidelines of the Anti-monopoly Commission of the State Council for Anti-monopoly in the Field of Platform Economy provide specific rules and guidelines for online platforms.

Consumer protection under the Consumer Protection Law 1993 (revised in 2013) also applies to consumers on online platforms.

The major law in relation to advertising is the Advertising Law issued in 2015 and subsequently amended in 2018.

In addition to the Advertising Law, the major regulation about digital advertising is the Interim Measures for Administration of Internet Advertising, which was promulgated in 2016.

The major law in relation to marketing is the Advertising Law of the PRC issued in 2015 and subsequently amended in 2018.

With respect to direct marketing, prior consent is essential before it goes to customers directly.

Sales promotions are regulated by various laws and regulations, including:

The Law of the PRC on the Protection of Rights and Interests of Consumers (amended in 2013).

The Law of the PRC Against Unfair Competition (amended in 2019).

The Pricing Law of the PRC (issued in 1997 and takes effect since 1998).

The Advertising Law of the PRC (amended in 2018).

Other laws and administrative regulations on sales promotions.

The rules applicable to sales promotions must be disclosed to consumers expressly and accurately. Where there are any restrictions on sales promotions, consumers must be alerted in advance.

China has not enacted a single piece of comprehensive personal data law or regulation. Provisions relating to the protection of personal information and privacy are scattered throughout major civil and criminal laws and administrative regulations, mainly including those listed below:

On October 21, 2020, after deliberation at the 22nd meeting of the Standing Committee of the 13th National People's Congress, the full text of the Personal Information Protection Law of the People's Republic of China (Draft) (PIPL) was officially published on the NPC's website for public comments. On 29 April 2021, the second draft of PIPL was released, after more deliberation of the Standing Committee of the National People's Congress, for public consultation. It is expected the final PIPL will be issued in the near future.

In addition to the general requirements under the above laws and regulations, the following apply:

In addition, the following laws, regulations and national standards governing the protection of personal information were recently issued in relation to protecting consumer privacy:

The Product Quality Law 1993 (most recent revision in 2018) regulates the:

For product defects, the manufacturer and seller must indemnify consumers against losses on request, in addition to other liabilities that may apply under Chinese law.

A seller can seek recourse from a manufacturer if it assumes liability and the manufacturer is responsible for the defects, and vice versa.

If a business entity finds that its goods or services have a serious defect that could cause personal injury or damage or the goods or services have been recalled outside the territory of mainland China, it must immediately:

The Food Safety Law 2009 (most recent revision in 2018) regulates the:

For food safety accidents, the relevant party must deal with the accident immediately and report to the competent governmental authorities.

Specific product liabilities may also apply to other special industries.

Main activities. The regulatory authority in charge of competition affairs in China is the Anti-Monopoly Bureau of the State Administration for Market Regulation – SAMR.

Main activities. The Ministry of Ecology and Environment's main activities include, among others:

Main activities. Other than the Chinese authorities for general FIE investment approval and registry purposes, the China Banking and Insurance Regulatory Commission (CBIRC), the China Securities Regulatory Commission (CSRC) and the People's Bank of China (PBOC) are the main regulatory authorities for licensing an FIE conducting financial services business in China, for example:

CBIRC: http://www.cbirc.gov.cn/en/view/pages/index/index.html

CSRC: http://www.csrc.gov.cn/pub/csrc_en/

PBOC: http://www.pbc.gov.cn/en/3688006/index.html