These incentives are clearly response of the Chinese government toward the exodus of foreign investment in recent years. We see signs of relaxed control over the commercial activities in general, stronger intention to protect IPR, and national treatment to FIEs in areas like R&D. However it is more accurate to say these policies are currently staying as general principles only. Whether or not the State Council can really execute them locally remains to be seen.

On January 17th, The State Council published a 20-article Notice on measures to broaden the openness of market and effectively utilize foreign investment (the “Notice”), which includes measures to liberalize the market access, improve the investment environment and attract foreign investment. What is worth mentioning may be that the corresponding competent authorities are listed after each set out measure, which seems to add more serious expression to the Notice.

Here are some highlights that may have impacts on Nike’s business in China:

  • Liberalizing market access: The Notice indicates that the Foreign Investment Industrial Guidance Catalogue and other relevant policies and regulations will be revised to further relax the restriction on foreign investment in manufacturing and other sectors. Specifically, foreign investment in high-end, smart or green manufacturing projects is encouraged as well as other efforts to upgrade the traditional industries.
  • Research and development: Foreign-invested enterprises and research institutes are allowed to cooperate with their domestic counterparts on R&D initiatives. FIEs are able to take part in projects listed in the national science and technology plan, get tax deductions for R&D expenses, and enjoy other incentives for hi-tech companies and R&D centers.
  • National treatment: Reiterating the State Council’s Opinions on Fair Competition in 2016, the Notice requires all local and departmental rules and regulations to comply with the national policies and prohibits discriminatory practices against foreign investment. When it comes to the regulatory approval procedures for business licenses and qualifications, the same time frame and criteria must apply to both FIEs and local companies. The Notice also emphasizes equal treatment in government procurement projects.
  • Intellectual property protection: The Notice stresses the protection of FIEs’ IPR by improving the IP law enforcement mechanism, and reinforcing the efforts in rights safeguarding assistance, arbitration and mediation. International cooperation on IPR protection, such as the establishment of mediation and arbitration branches of international organization, is are welcomed.
  • Involvement in standard setting: The Notice calls for equal opportunities for both Chinese companies and FIEs in China’s standard setting efforts to improve the transparency of standard setting and revising process. Information sharing and public supervision are emphasized.
  • Incentives to foreign investment: The Notice openly allows local governments, particularly in the north-west and north-east regions, to formulate local rules giving FIEs income tax, land, and other incentives to attract foreign investment.

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