More involvement in real business: assessing China's FIE holding companies

摘要

FIE in Chinese law stands for foreign investment enterprise. The relationship between a FIE holding company and its subsidiary does not fit easily into the common law conception of a group of companies comprising a holding company and one or more subsidiaries. There are two striking features of a holding company under the common law perception. First, it embraces all the characteristics of an ordinary company, not subject to any artificial limitation on the acts and things that a company is regarded in law as capable of doing. Second, there is no special consideration for company affiliation, and the same set of rules applies to all holding companies, no matter their 'roots' are indigenous or foreign. Since the late 1980s, foreign investment has played an important role in China's economic reform. The foreign investment law regime is an exclusively separated legal system by reference to its internal laws under which foreign businesses are basically not governed. There are three types of FIE, namely, Sino-foreign equity joint ventures (EJV), Sino-foreign co-operative joint ventures (CJV), and wholly foreign-owned enterprises (WFOE), whose establishment and operation are strictly confined to pre-determined investment projects.