Summary
In order to implement the new measures relating to the opening up of telecom industries in the Trade in Service Agreement between Mainland China and Hong Kong to Establish a Closer Economic Relationship, China’s Ministry of Industry and Information Technology (“MIIT”) recently issued the Notice on the Provision of Telecom Services by Hong Kong and Macau Service Providers in the Mainland (“Notice 222”). This may trigger a new wave of internet data center (“IDC”) and other relevant value-added telecom license applications from Hong Kong and Macau companies.
MIIT issued Notice 222 on June 30, 2016, which provides an implementation framework for eligible Hong Kong and Macau companies to engage in value-added telecom businesses in mainland China under the Closer Economic Partnership Arrangement (“CEPA”). [1]
Highlights
What Eligible Hong Kong and Macau Companies Can Do Now
I. Establishing a Joint Venture
According to Notice 222, eligible Hong Kong and Macau companies may now hold up to a 50% interest in the equity of a joint venture in mainland China to provide the following services:
1. Internet Data Center;
2. Domestic internet protocol virtual private network services; and
3. Other value-added telecom services
II. Establishing a Wholly Owned Foreign Enterprise
In addition, eligible Hong Kong and Macau companies may also establish a wholly owned subsidiary to provide the following value-added telecom services in mainland China:
1. Online data processing and transaction processing services (E-commerce only);
2. Domestic multi-party communication services;
3. Storage and forwarding services;
4. Call center services;
5. Internet access services (Internet access services for Internet users only); and
6. Information services (application stores only).
Predictions
Notice 222 may trigger a new wave of value-added telecom license applications from Hong Kong and Macau companies.
Historically, the IDC business in China was highly restricted, and dominated by the principal state-owned telecom service providers.
At the end of 2012, pursuant to the Chinese government’s policy to encourage more private investment in the telecom sector, MIIT opened up the IDC license to all domestic Chinese companies, which resulted in thousands of IDC license applications from eager applicants. [2]
It is anticipated that Notice 222 will similarly trigger a new wave of IDC and other relevant value-added telecom license applications from Hong Kong and Macau companies (and foreign companies investing through Hong Kong or Macau) which engage in telecom and Internet-related businesses.
Our Services
JT&N has in-depth knowledge and extensive experience in assisting our clients in applying for IDC and other value-added telecom business licenses, as well as in setting-up their business operations in China. If you have any questions concerning this article or any need for legal services in this field, please contact Ms. Guohua (Annie) Wu or Mr. Wei Min Zhang.
Notes:
[1] According to Notice222, the eligibility of Hong Kong and Macau companies will be determinedpursuant to the relevant provisions of CEPA.
[2] Notice on Further Regulatingthe Market Access of Internet Data Center and Internet Access Industries, issued by MIIT on30 November, 2012.
Disclaimer
This information is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice or legal opinion. This material is intended, but not promised or guaranteed to be current, complete or up-to-date. Communication of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship. You should not act or rely on any information contained in this material without first seeking the advice of an attorney.
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