value-added telecommunication

By Wang Rui and Xiao Yu   King & Wood Mallesons’ M&A Group

In 2014, the Ministry of Industry and Information Technology (“MIIT”) and Shanghai Municipal Government issued a series of regulations in relation to opening up value-added telecommunication services to foreign investments within the Shanghai Free Trade Zone[1].  According to these regulations, the restrictions on foreign investments in seven categories of value-added telecommunication services[2], which were listed under the current Classification Catalogue of Telecommunication Services[3] (“Classification Catalogue of Telecommunication Services (2003)”), have been relaxed to different degrees[4].  Among which, the percentage cap on foreign equity ownership of companies providing “Online Data Processing and Transaction Processing Services (Operating E-commerce)” has been lifted from 50% to 55%.  Meanwhile, the approval and establishment process for foreign invested telecommunication enterprises have been substantially simplified in the Shanghai Free Trade Zone[5], and such enterprises are permitted to provide relevant value-added telecommunication services on a nationwide basis[6].
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