Distribution and agency—China—Q&A guide
Distribution and agency—China—Q&A guide

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • Distribution and agency—China—Q&A guide
  • 1. May a foreign supplier establish its own entity to import and distribute its products in your jurisdiction?
  • 2. May a foreign supplier be a partial owner with a local company of the importer of its products?
  • 3. What types of business entities are best suited for an importer owned by a foreign supplier? How are they formed? What laws govern them?
  • 4. Does your jurisdiction restrict foreign businesses from operating in the jurisdiction, or limit foreign investment in or ownership of domestic business entities?
  • 5. May the foreign supplier own an equity interest in the local entity that distributes its products?
  • 6. What are the tax considerations for foreign suppliers and for the formation of an importer owned by a foreign supplier? What taxes are applicable to foreign businesses and individuals that operate in your jurisdiction or own interests in local businesses?
  • 7. What alternative distribution relationships are available to a supplier?
  • 8. What laws and government agencies regulate the relationship between a supplier and its distributor, agent or other representative? Are there industry self-regulatory constraints or other restrictions that may govern the distribution relationship?
  • 9. Are there any restrictions on a supplier’s right to terminate a distribution relationship without cause if permitted by contract? Is any specific cause required to terminate a distribution relationship? Do the answers differ for a decision not to renew the distribution relationship when the contract term expires?
  • More...

Distribution and agency—China—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to distribution and agency in China published as part of the Lexology Getting the Deal Through series by Law Business Research (published: January 2021).

Authors: Ribeiro Hui—George Ribeiro; Dominic Hui

1. May a foreign supplier establish its own entity to import and distribute its products in your jurisdiction?

Under the current regulatory framework, a foreign supplier may establish its own entity (wholly owned) to import and distribute its products in China, subject to some exceptions, such as certain audiovisual work, agricultural products and gasoline, where joint venture arrangements remain the requisite structure to attain approval. There are some product categories that are still not open to foreign investors, such as gene diagnosis and therapy and military products, and local importers and distributors have to be engaged to import these products.

2. May a foreign supplier be a partial owner with a local company of the importer of its products?

A foreign supplier may enter into a joint ownership arrangement with a local company or importer to import its products, except for products that are still not open to local trading by foreign investors. There are two major joint ownership structures: joint ventures in China and limited liability companies invested by the parties in China. For a joint venture in China, there used to be a choice of two

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