Introduction to Foreign Investment in the Telecom Industry

The sixth clause of the Temporary Regulations for the Administration and Approval of the Qualification for Engaging in the Telecom Business, issued by the former Communication Ministry of China on September 11, 1993, stated that foreign organizations, individuals, Sino-foreign joint ventures, wholly foreign-owned enterprises and collaborative enterprises do not have the permission to invest, manage or engage in the telecom business.

The seventh clause of Chapter One of the Temporary Regulations for the Administration of the Opened Telecom Market, issued on November 10, 1995, also stated that all kinds of foreign groups, enterprises, persons and wholly foreign-owned enterprises, joint ventures and collaborative enterprises are not permitted to join the management of the telecom business and no form of foreign investment is allowed to become a shareholder in telecom enterprises. Foreign investment is forbidden in the Chinese telecom industry.

But with China's entry into the World Trade Organization (WTO), the Ministry of Information has issued an order to declare that the above-mentioned regulations be abolished from December 11, 2001 -- the day China joined the WTO. Thereafter, China will gradually open up its telecom market to foreign investment according to the telecom-related commitments in its Schedules of Commitments in Services.

Seeking financing from overseas stock markets is a main method for the Chinese telecom industry to attract foreign capital and partners.

[Source: Ministry of Information Industry]