1. Foreign Ownership Thresholds for Platform Companies

• E-commerce Marketplace Operator

The equity cap on foreign investment in “operational e-commerce” (marketplace) companies has been fully liberalised. Foreign investors may now hold up to 100 % of the shares.

• Regulatory Milestone

In 2015, the Ministry of Industry and Information Technology (MIIT) issued the “Notice on Removing the Foreign Equity Ratio Restriction for Online Data Processing and Transaction Processing Services (Operational E-commerce)”, extending the 100 % foreign ownership rule nationwide.
Objective: intensify market competition and attract foreign capital into the e-commerce sector.

• Application & Oversight

Foreign-invested telecom enterprises must still comply with the “Regulations on the Administration of Foreign-Invested Telecommunications Enterprises” (State Council Order No. 534). Provincial Communications Administrations (CAs) supervise daily operations to safeguard fair competition and consumer rights.

• Strategic Impact
  • Greater flexibility for overseas e-commerce giants entering China.
  • Simplifies the A-share listing route for offshore-listed champions (e.g., Alibaba, JD.com) by eliminating the need to dismantle VIE structures.

2. Incorporation Workflow for Foreign-Invested Enterprises

Step	Action	Key Points
1. Name Pre-approval	Reserve the company name with the local State Administration for Market Regulation (SAMR)	Ensure uniqueness and compliance with naming conventions.
2. Document Lodgement	Submit authenticated corporate documents of the parent company (e.g., Singapore entity): – Certificate of Incorporation – Shareholder Register – Articles of Association – Legal Representative’s ID	• Notarisation by a Singapore notary public • Legalisation by the Chinese Embassy/Consulate in Singapore
3. Business Licence	File with the local SAMR; obtain the Business Licence within ~30 working days.

3. Sector-Specific Licences & Certifications

A. ICP Licence – Value-Added Telecommunications Service (Internet Content Provider)

• Competent Authority
  • Provincial CA for intra-provincial services.
  • MIIT for nationwide services.
• Qualification Criteria
  • Minimum RMB 1 million registered capital.
  • ≥ 3 employees enrolled in local social-security scheme.
  • Clean compliance record (company + key personnel) for the past 3 years.
  • Website must complete ICP filing first.
• Application Workflow
  • Register in the Telecom Market Integrated Management Information System.
  • Upload digital dossier:

 • Business licence

 • Articles & cap-table

 • Legal representative & shareholder IDs

 • Social-security proof

 • Domain certificate & hosting agreement

• 1. Preliminary review → acceptance notice.
  2. Final approval within 60 working days; licence issued.

B. EDI Licence – Electronic Data Interchange (Online Transaction Processing)

• Scope Trigger

Required when the platform enables online transactions & payments.

• Competent Authority

Same jurisdictional split as ICP.

• Qualification Criteria
  • RMB 1 million (provincial) / RMB 10 million (national) registered capital.
  • ≥ 3 employees on social security.
  • Adequate premises, facilities & technical solutions.
  • Clean compliance record (3-year look-back).
• Application Workflow & Documentation
• Mirror those of the ICP licence (see A. ICP Licence).

Note: Industry practice shows Alibaba (China) Co., Ltd. does not publicly file an EDI record, but this does not exempt other platforms from the requirement.

C. Cyber-Security Compliance

• Legal Basis

Cyber-Security Law of the PRC mandates data-protection measures and, where applicable, cyber-security review.

• Filing Process – Public Security Bureau (PSB) Portal
  1. Register on the National PSB Internet Security Management Platform (https://beian.mps.gov.cn).
  2. Entity selection – choose “corporate”, upload:

 • Business licence scan

 • Legal representative ID (front & back + handheld photo)

• 1. New website filing – complete site name, ICP number, domain certificate, server IP, etc.
  2. Security officer & emergency contact details.
  3. Submit online, await 3–5 working days review.
  4. Install PSB badge – embed the issued HTML code at the footer of the homepage.

4. Tax & Financial Obligations

Requirement	Action
Tax Registration	Within 30 days of licence issuance, register with the State Taxation Administration and procure tax-control equipment.
Financial Reporting	Prepare annual financial statements under CAS (China Accounting Standards). Statutory audit may be required for foreign-invested enterprises.

5. Additional Considerations

• Legal Representative must reside in China to handle day-to-day corporate affairs.
• Sectoral Licences

Platforms venturing into food, pharmaceuticals, finance, etc., must secure additional industry-specific permits.

 

Case Snapshot – Alibaba

• Alibaba (China) Co., Ltd. is 100 % owned by a Hong Kong entity.

• Completed PSB cyber-security filing, ICP filing, and displays statutory icons on its homepage.