Published: June 8, 2020
Category: Business/Corporate Matters
By: David Cui
On March 6, 2020, the United States issued a presidential executive order, which, on the ground of endangering the national security of the United States, rejected a Chinese company's acquisition of an American Hotel information management company that had been completed as early as 2018, and ordered the transaction party to complete the divestiture of the original transaction assets within 120 days after the issuance of the executive order. With the increasingly strict examination of Chinese enterprises in the high-tech field by the foreign government, foreign enterprises who want to enter the Chinese market should also understand the restrictions imposed by Chinese laws.
China legal landscape on technology access
(1) Market access restrictions
Overseas technology companies can enter the Chinese market through technology import, which is stipulated by the Regulations of the People's Republic of China on the Administration of Technology Import and Export promulgated in 2001. According to the Regulations (Regulations), technology can be divided into the following three categories: (1) prohibited; (2) restricted; (3) free. " Prohibited "technology" may not be imported (Article 9), while "restricted" technology may be imported under the licensing mechanism (Article 10). As for "free import" technologies, import agreements need to be registered.
When a foreign technology company invest in or enter the Chinese market through joint ventures with Chinese technology companies, they shall observe the Foreign Investment Law (FIL).
The FIL prohibits foreign investors from investing in industries on the "Negative List" unless they meet additional conditions. According to category 7 of the Negative List 2020 (relating to the telecommunications market), no foreign companies are allowed to hold more than 50% of the shares in the Chinese telecommunications business. Basic telecommunication services are controlled by Chinese enterprises.
(2) Business operation restrictions
Even if a foreign technology company has successfully entered the Chinese market, it should also understand the legislation concerning national review and monitoring of internet operation and data flow.
(i) Internet security law
In 2016, China passed the Cybersecurity Law. As for internet operators, Article 28 stipulates that they shall "provide technical support and assistance for public security organs and state security organs to safeguard state security and investigate criminal activities in accordance with the law".
Data transmission and collection are essential for most technology companies. Article 37 requires that all personal information and / or important data received and generated by the "critical information infrastructure operator" during its operation in the People's Republic of China must be stored in the People's Republic of China. In the process of business operation, when the data is transmitted to the outside of China, the security assessment is needed.
（2） Encryption
After the promulgation of the Cybersecurity Law, the "Password Law" promulgated in 2019 relaxed the restrictions on foreign commercial encryption products. For example, Article 23 explicitly advocates "promoting the international standardization of commercial passwords, participating in the drafting of international standards for commercial passwords, and promoting the conversion and use of Chinese and foreign standards for commercial passwords".
Article 28 The competent department of commerce under the State Council and the State Password Administration are authorized to supervise the import and export of commercial passwords for the purpose of protecting national security and social public interests.
(3) Relevant policies
On July 3, 2020, the National People's Congress issued the draft of data security law, which aims to formulate rules for data space participants, carry out data activities must fulfill the obligation of data security protection and bear social responsibility.
Recently, the Ministry of Commerce promulgated the "Provisions on the List of Unreliable Entities" in response to US sanctions. The purpose of these Provisions is to blacklist the following foreign companies or individuals: （1）Endangering China's national sovereignty, security and development interests;（2）Violating the normal market transaction principle, interrupting normal transactions with Chinese enterprises, other organizations or individuals, or taking discriminatory measures against Chinese enterprises, other organizations or individuals, thus seriously damaging the legitimate rights and interests of Chinese enterprises, other organizations or individuals. The Chinese government will prohibit any blacklisted entity from trading, investing and employing foreign staff in China.
In 2019, the Chinese government revised the Regulations for the third time (Revised Regulations). The Revised Regulations will have a significant impact on the investment of foreign high-tech enterprises in China. First of all, the new law forbids the compulsory transfer of technology, remove the provisions that the technology import contract shall not contain restrictive clauses and the ownership of the improved technology achievements, and offer the parties the discretion to decide the use of technology, the improvement of technology and the tort liability, rather than the previous mandatory provisions. There is no doubt that the new law has made a significant upgrade of technology access, which is more conducive to attracting sophisticated technology.
Present practice
In view of the above restrictions, many foreign technology companies have begun to form companies in Hongkong and then enter the Chinese mainland via a China's wholly foreign-owned enterprises to reduce operational risks.
In addition, for security reasons, foreign technology companies will set up a separate data storage facility in China. In fact, icloud's mainland branch is run b a local Chinese company. This arrangement enables Apple to continue to provide iCloud services to Chinese mainland customers.
In 2017, China's Ministry of Industry and Information Technology announced that all developers providing virtual private networks (VPNs) must obtain government permission. In response to the announcement, Apple removed about 25000 VPN applications that violated the rules.
Conclusion
There is no doubt that China is a huge market with potential for rapid growth, which is very attractive to foreign technology enterprises. The FIL and the Revised Regulations on the administration of technology import and export promote the entry of foreign technology companies into China. Foreign enterprises should be aware of the limitations under Chinese laws and the provisions of their home laws. It is strongly recommended that foreign companies should seek professional advice to enter the Chinese market and promote their business operations in China via joint ventures, minority shareholding, early investment in start-ups and other corporate structures that comply with both home and Chinese laws.
外国科技公司投资中国的法律规定及实践
2020年3月6日，美国发布了一则总统行政令，以危害美国国家安全为由，否决了某中国公司早在2018年已完成的对某美国酒店信息管理公司的收购，责令交易方在行政令发布120日内，完成对原有交易资产的全部剥离。随着各国针对中国企业在高科技领域的审查将日趋严格，希望进入中国市场的外国企业也应了解中国法律施加的限制。
中华人民共和国技术投资法规
（1） 市场进入限制
海外科技公司可以通过技术进口的方式进入中国市场，这是由2001年颁布的《中华人民共和国技术进出口管理条例》规定的。根据条例，技术分为以下三类：（一）禁止的；（二）限制的；（三）免费的。”禁止的“技术”不得进口（第9条），而“限制的”技术可根据许可机制进口（第10条）。至于“可自由进口”的技术，需要对进口协定进行登记。
外国科技公司与中国科技公司投资或者合并进入中国市场，应当遵守《外商投资法》（以下简称《外商投资法》）。《外国投资法》禁止外国投资者投资列入“负面清单”的行业，除非他们满足附加条件。根据《负面清单2020》第7类（与电信市场有关），任何外国公司在电信业务中的持股不得超过50%。基础电信业务由中国企业控制。
（2） 企业运营限制
即使一家外国科技公司已经成功进入中国市场，它也应该了解旨在对网络运营和数据流进行国家审查和监控的立法。
（i） 网络安全法
2016年，中国通过了《网络安全法》。对于网络运营商，第二十八条规定，应当“为公安机关和国家安全机关依法维护国家安全、侦查犯罪活动提供技术支持和帮助”。
数据传输和收集是大多数科技公司必不可少的方面。第37条要求，“关键信息基础设施运营商”在中华人民共和国境内运营过程中接收和生成的所有个人信息和/或重要数据必须存储在中华人民共和国境内。在业务操作过程中，数据向外传输时，需要进行安全评估。
（二）加密法
《网络安全法》出台后，2019年颁布的《密码法》放宽了对外国生产的商业加密产品的限制。例如，第23条明确主张“推动商业密码的国际标准化，参与商业密码国际标准的起草，推进商业密码中外标准的转换使用”。
第二十八条授权国务院商务主管部门和国家密码管理局为保护国家安全和社会公共利益，对商业密码实施进出口监管。
（3） 相关政策
2020年7月3日，全国人民代表大会发布了数据安全法草案，旨在为数据空间参与者制定规则，开展数据活动必须履行数据安全保护义务承担社会责任。
近日，商务部针对美国制裁颁布了《不可靠实体名单规定》。这些规定旨在将下列外国公司或个人列入黑名单：（一）危害中国国家主权、安全、发展利益；
（二）违反正常的市场交易原则，中断与中国企业、其他组织或者个人的正常交易，或者对中国企业、其他组织或者个人采取歧视性措施，严重损害中国企业、其他组织或者个人合法权益。中国政府将禁止任何被列入黑名单的实体在中国进行贸易、投资和雇用外国工作人员。
2019年中国政府对《中华人民共和国技术进出口管理条例》进行了第三次修订，最新修订将对外国高科技企业在中国的投资将产生重大的影响。首先，新法禁止强制转让技术，删去了其中关于技术进口合同不得含有限制性条款以及改进技术成果权属等规定，在使用技术、改进技术和侵权担保责任等方面赋予了当事人协商的自由，而不是强制性规定。新法无疑对技术准入做出明显的放宽，更有利于吸引高精尖的技术。
鉴于上述限制，很多外国科技公司已开始采用在香港设立公司，然后进入中国大陆，通过设立中国外商独资企业的控股结构，以降低运营风险。
此外，为了安全起见，外国科技公司会在中国建立一个单独的数据存储设施。事实上，iCloud的大陆分公司是由一家中国本土企业GCBD（爱宝云（贵州）科技有限公司）运营的。这样的安排使得苹果可以继续向中国大陆的客户提供iCloud服务。
2017年，中国工业和信息化部宣布，所有提供虚拟专用网络（VPN）的开发商必须获得政府许可。作为对这一宣布的回应，苹果删除了大约25000个违反该规定的VPN应用程序。
结论
毫无疑问，中国是一个庞大的市场并具有潜在的快速增长前景，这对外国科技企业非常有吸引力，外商投资法及新的技术进出口管理条例更是推动了外国科技公司进入中国的速度。外国企业应当了解中国法律的限制及本国法律的规定。强烈建议外国公司应寻求专业意见，以包括合资公司、少数持股以及在初创企业的早期投资及其他既符合本国法律又符合中国法律的公司结构进入中国市场，促进其在中国的业务运营。
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