China regulator allows 100% foreign ownership in e-commerce

The move to allow 100% foreign ownership in Chinese online data processing and transaction processing businesses, or e-commerce, represents the expansion of a pilot scheme launched in January in the Shanghai Free Trade Zone. 

The new rule, which went into effect last Friday, is expected to open up foreign competition and promote a healthy development within the sector in China, the MIIT said in a statement.

Under current rules, foreign investors cannot have full exposure to Chinese companies that operate in certain industries listed in the foreign investment catalogue, such as the internet, education and telecom. Previously Chinese e-commerce firms were only allowed to have foreign ownership of up to 55%.

It is unclear how far the deregulation could stretch from e-commerce to other internet sectors.

China e-commerce gross merchandise volume (GMV) hit RMB12.3 trillion ($2 trillion) last year, up 21.3% from 2013, according to consultancy iResearch. It is estimated to reach RMB24.2 trillion in 2018.

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