China will be giving provincial and local governments greater authority to approve foreign direct investment (FDI). China’s Ministry of Commerce just announced that, beginning March 1, 2006, local commerce departments and state-level economic development zones will be authorized to approve the establishment of foreign invested companies.
Despite this announcement, we find it hard to believe Beijing will not continue playing a decisive role regarding entry of certain kinds of foreign business. At the same time, however, we view this announcement to be of major importance to foreign companies wishing to enter the China market. It is always irritating to hear someone say “I told you so,” but, we did tell you so here, where we criticized an article for claiming a relationship with Beijing is critical for every foreign business, and here, where we talked about how Beijing’s power over business is devolving to the regions.
Foreign businesses wanting to go into China must do more than simply decide to “go to China” or to set up in Shanghai. They should also consider the legal, tax, and business climate in various regions for their particular type of business.
