Distribution in China: Implications of 2004's Major Legal Changes

摘要

The Chinese market has long captured the imagination of the world's companies, who have in recent years made great strides in outfitting China's population with mobile phones, electronic equipment and the latest form of shopping experience, hypermarts. For all their gains in China, however, until 2004, foreign investors still faced a series of legal limitations in their right to reach out directly to the Chinese population because of restrictions on foreign investment in the distribution sector, which ranged from a cap on the maximum foreign shareholding to geographical barriers. Distribution in China took a dramatic turn in 2004, however, with the promulgation of new rules on commercial enterprises that allowed greater access to the sector by foreign investors, with wholly foreign owned commercial enterprises now permitted and the right to distribute supposedly available to all takers. However, lack of clarification and an internecine government jostling over how to implement these rules mean that only now are some of the lasting implications of these new rules becoming apparent, though many questions remain.