Robert; In regard to your previous question about restricting JV ownership to 49%, since joining the WTO in late 2001, China has been easing their foreign investment guidelines. In actual practice the rules are set by industry, subsections within the industry, and even by location, with foreign majority ownership often (but not always) being allowed.
The following is a good summary of the rules for what is classified as telecommunications. The classification, however, refers to services rather than equipment manufacturing. As described, although complicated, eventually foreign ownership will be limited to 49% for basic services, and 50% for add on services. As a separate matter in regard to manufacturing mobile phones, a government license is required, and the issuance of these licenses has been limited.
Telecommunications With China's market of 150 million telephone lines, 100 million mobile phone users and over 25 million Internet users, [1] the telecommunications sector is one of the jewels in China's economic crown and was among the most contested areas during negotiations for China's WTO accession. Pre-WTO China severely restricted sales of telecommunications services and banned foreign investment. The U.S.-China Agreement marked China's first commitment to open its telecommunications sector by broadening the scope of services and by permitting direct investment in telecommunications services. Under the agreement, China committed to phase out all geographic restrictions for paging and value-added services within two years, for mobile services within five years, and for domestic basic services within six years. China also agreed to allow 50% foreign ownership for value-added and paging services in two years, for mobile services, 49% in five years, and for international and domestic services, 49% in six years. China's key telecommunications services corridor in Beijing, Shanghai and Guangzhou, which represents approximately 75% of all domestic traffic, will open at accession to 30% foreign ownership for all value-added and paging services. There were only minor changes between the Working Party Report and the U.S.-China Agreement. One important exception is that the Working Party Report establishes a more aggressive timeline for opening China's mobile services market to foreign investors than the U.S.-China Agreement did. Under the Working Party Report, foreign service providers will be permitted to own up to 25% of a joint venture ("JV") [2] in and between the cities of Beijing, Shanghai and Guangzhou upon accession, instead of one year after accession, as agreed to in the U.S.-China Agreement. Within one year, instead of three years under the U.S.-China Agreement, 35% foreign ownership will be permitted and the geographic scope will be expanded to a further 14 cities. [3] Within three years, instead of five years under the U.S.-China Agreement, 49% foreign ownership will be permitted and all geographic restrictions will be lifted.
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