As we enter the 21st century, more and more foreign huge companies are planning to invest in China where has the largest population and huge appreciation potentials. However, the Chinese legal system is quite different from the English one. So, before the foreign enterprisers put their investment plan into fact, they should pay enough attention to the follow legal factors: Firstly, foreign investors are only allowed to establish a couple of specified type of companies in China.
According to the Chinese law, foreign investors can only "establish Sino-foreign cooperative enterprises in the People's Republic of China with enterprises or other economic organizations of the People's Republic of China"i. So the foreign investors should ask themselves whether or not these types of companies fit their requirements in order to prevent any undesirable troubles occur. In contrast, the situation is totally different in the UK. There is no restriction on the establishment of most kinds of companies, i. e.foreign investors need not to gain any certificate from any organs.
Its positive aspect is that foreign investors have much more choices if they decide to establish companies in the UK. However, the negative aspect occurs as well, which is that they may not be guided correctly in legal areas due to the loose policy. So they should be very careful later, once they break the law, they will be punished seriously. Secondly, a strict examination and approval procedure is available in China before cooperative enterprise is established.
For example, they should submit a series of complicated documentations, including the agreement, contract, articles of association and other documents signed by the two parties, to the appointed organs and await their authorization as well as they have to open an account that is booked in China. In the other hand, the procedure in the UK is quite simple. Foreign investors need not to gain any certificate from any organ and there is no foreign exchange control as well.
From this aspect, we can easily found out that set a cooperative company in China is much more complicated and the foreign investors should prepare the appointed documentations carefully, otherwise, they may be refused to set up any kind of company in China. Thirdly, I would like to critically discuss the important factors concerns with import and export controls. As we are undoubtedly aware that both Chinese government and British government are trying their best to protect their native industries. However, when we analyse it in details, it is not difficult for us to realise that the specific industries they protect are wholly different.
So it is very significant for the investors to distinguish them clearly. According to the British policy, the follow two products are highly restricted by the government. One is "Agreements with a large number of countries restricting trade in steel products"ii and the other one is "Agreements under the Multi-Fibre Agreement affecting textile and clothing imports from countries with low labour costs. "iii Similarly, Chinese government also protects its weak industries, such as primary products, movie industry and so forth. The investors should be very careful when they want to set foot in these restricted industries.
Once they break the rule, they will be trapped into troubles, i. e. "the industrial and commercial administrative organ can order it to cease operation or even evoke its business license. "iv Generally speaking, I believe that it is a good policy because it can successfully protect the weak national industries in order to guarantee the smooth increase of overall economy. So the foreign investors are highly supposed to negotiated with experienced Chinese investment advisors about this topic in details and then make their investment plan.