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The Chinese market is not always open for foreign investment or export. Industries can have special requirements or be prohibited all together. The most famous example of this is the required 50/50 joint venture with a local car manufacturing company for foreign carmakers to produce their product in China. A requirement that was loosened starting 2022. When looking at entering the foreign market familiarize yourself with the restrictions for your industry and the A long-term view needed for the way around protectionism

Negative list 

Not all industries in China are open for foreign investment, several industries require special administrative measures for the access of foreign investment in certain industries or areas or are not open to foreign investment at all. Before 2016 China issued a list of all industries that where open for foreign investment. As of 2017 this policy was changed into a list of industries or areas with restrictions, also referred to as the negative list. Industries not on the list are open for investment to all businesses and will not require pre-approval by the Chinese government, giving them national treatment. In the latest version which came into effect in 2020 the list was reduced from 131 to 123 nationwide. Before entering the Chinese market, you need to check the current negative list of the Chinese market to ensure that your company can successfully pass the approval and enter the Chinese market. You can find a full English version of the list here

Level playing field 

One term that you will often hear when discussing the geopolitical situation regarding China is the need for a ‘level playing field’. This refers to economic distortions between market openness and state aid. Within the EU there is a growing awareness of the issue and in the United States there is a growing bipartisan consensus on the need for more assertive reactions. China is developing a new model focused on innovation and technological independence with strong party state guidance, this is likely to worsen its economic distortions. The EU and US are searching for a joint position and tools to bolster its rules based multilateral order model. 

EU - China Comprehensive Agreement on Investment 

The EU – China Comprehensive Agreement on Investment is a trade and investment agreement between the EU and China that was announced at the end of 2020 after 7 years of negotiations. Under the CAI, European companies would gain greater access to several Chinese markets. Additionally, China would commit to more stringent labor and sustainability standards, creating a level playing field and introduce a dispute resolution mechanism. The agreement, however, required ratification from the European Parliament in 2021 before taking effect. Some members of the European Parliament opposed a deal with China amid alleged human rights allegations in the country and growing political disputes with the EU and its allies. The European Parliament has voted to freeze the deal since then. 

Partners

Buren

Buren is an internationally oriented corporate law firm with offices in Amsterdam, Beijing, The Hague, Luxembourg and Shanghai and has a diversified business practice. Its rich heritage dates back to 1898. Today, the firm has more than 70 lawyers, notaries and international tax lawyers providing a full range of services to domestic and international clients who conduct business nationally and globally.

www.burenlegal.com

Contact information

Phone:
0629496439

E-mail:
r.kuppens@brainportdevelopment.nl

Ronnie Kuppens

Project manager China