I recommend reading this it states the desire of China to keep most profits for it self. It verifies that ZI has totally opened a door and that feat was awesome .
China dims hopes for foreign Internet investment
BEIJING, Dec 13 (Reuters) - China plans to impose strict regulations on foreign investment in Internet companies, including a cap on ownership, despite hopes raised by a WTO deal with the United States, a top government minister was quoted as saying on Monday.
Minister of Information Industry Wu Jichuan made clear existing foreign investments in Internet companies would be ``dealt with' so they matched the terms of the landmark China-U.S. agreement paving the way for China to join the World Trade Organisation.
Under last month's agreement, foreign companies are allowed to hold 49 percent equity stakes in telecommunications companies from the start of China's WTO accession, rising to 50 percent after two years.
It was unclear what would become of existing foreign investments in Internet sites which exceeded 50 percent.
``Clearly these businesses are in violation of current Chinese policies (and) we shall find an appropriate way to address it,' Wu said in an interview with the Wall Street Journal.
There had been hopes China might allow all existing Internet investments to stand under a ``grandfathering' arrangement in the U.S. deal and possibly decide its best interests would be served by flexibly enforcing ownership limits.
INDUSTRY SHOCKED
Wu had shocked the industry in September by declaring foreign investment in Internet Content Providers (ICPs) was illegal. Until then, such investment was seen as a grey area.
Leading Chinese portal sites, including Sohu.com and Sina.com, rely almost exclusively on foreign capital and are seeking foreign listings.
Capping foreign ownership could hold back the development of the entire Internet industry in a country lacking a venture capital market.
It would also force foreign investors into partnerships with domestic companies, reducing their management control.
Wu also said China would impose a licensing regime on ICPs.
``Whether your business be high-tech communications or selling fruit, you need a licence,' he said.
A licensing regime could give authorities broad powers to reject foreign investment in certain areas, citing, for example, loosely-defined national interests or security concerns.
It could also entangle the investment approval process in red tape and reduce investment transparency.
MINISTRIES TO MONITOR INTERNET SITES
Wu said government ministries would monitor Internet sites.
``We will not allow the introduction of trash that is harmful to the people,' he said.
After the WTO agreement was signed, U.S. Trade Representative Charlene Barshefsky raised expectations China's restrictions on Internet investment would crumple.
``No longer an issue. We have rights to invest,' she told reporters.
Aides to Wu dashed hopes the WTO agreement offered a resolution for foreign telecommunications companies who have been ordered to withdraw $1.4 billion of investments in Chinese networks.
``Since these projects are in violation of existing policies, we need to correct them immediately,' the Wall Street Journal quoted Dai Shuang, head of the information ministry's General Planning Department, as saying.
``WTO does not change this at all,' Dai said.
Companies such as U.S. Sprint Corp (NYSE:FON - news), Bell Canada (Toronto:BI.TO - news), NEXTEL Communications (NasdaqNM:NXTL - news) and France Telecom skirted a long-standing ban on foreign investment in domestic networks through innovative joint venture agreements with China's number two carrier China Unicom.
They have fought for the right to maintain their stakes or be compensated for their investments plus lost future earnings.
Wu said China was still committed to spreading CDMA mobile technology, saying there was ``a process of building and development that must take place.'
Officials have said China Unicom is set to complete a nationwide CDMA (Code Division Multiple Access) cellular network by the middle of next year, and will choose among bids by 12 foreign and domestic manufacturers in January. |
