China relaxes constraints on foreign communications services

China’s Ministry of Industry and Information Technology will permit foreign firms to offer services in Shanghai and allow them to take full ownership of their businesses in the country, according to state news agency Xinhua.

The government will allow seven telecom value added services to be set up using foreign capital in the Shanghai Free Trade Zone, and five of those services will be allowed to be fully owned by foreign investors.

The five value added services that foreign firms will be able to offer with full ownership in China are: app stores, store and forward, domestic multi-party communication, call centres and home internet access, according to Xinhua.

The move is part of China’s pledges to the World Trade Organisation to open certain information services with a 50 per cent cap on foreign ownership.

Firms that successfully apply to offer the services must register and base themselves in Shanghai, but will be allowed to offer their services nationwide, with the exception of home internet access which will be confined to Shanghai’s Free Trade Zone.

In January last year, China’s MIIT issued a draft proposal to allow mobile virtual network operators (MVNOs) to set up in the market in a bid to encourage direct foreign investment into the country.