Few markets in the world are more exciting than that of China. The Middle Kingdom is home to the world's oldest continuous civilization and one fifth of mankind. The country has been the world's fastest growing economy for most of the past three decades and foreign investment continues to flow into China at unprecedented levels. The China of today is very different from that which existed even a few years ago. Important business developments are continuing to unfold with the most important being the role of foreign direct investment in transforming large parts of the economy from state-owned to foreign owned and the emergence of the private sector.

Beginning with Deng Xiaoping in the late 1970s, China's leaders have gradually steered China's economy away from a centrally planned system to a more market oriented one. Additionally, China's accession to the World Trade Organization means it must follow through on its commitments to further develop its economic and legal structure. This perspective creates challenging new opportunities for global players as the Chinese market opens additional doors to international investors. Changes to the laws affecting foreign direct investment, joint ventures and privatization of state-owned enterprises have been particularly rapid in recent years.

China's legal system is a civil law based system. The current constitution of China, adopted in 1982, is the highest law of the country. Law which is to have a general impact is enacted by the National People's Congress or its Standing Committee. Administrative legislation is enacted by the State Council and administrative law plays an inordinately important role in China's legal system. The system requires foreign investors to unravel vague laws and practices and navigate around numerous restrictions that do not apply to their local competitors. Although slowly improving, complex approval processes, layers of government bureaucracy and inconsistent interpretation and enforcement of laws are still currently factors that must be dealt with when investing or doing business in China.

Although many foreign investors successfully participate in China’s economy, new investors need to be aware that certain fundamental economic, political and social challenges remain. Additionally, important cultural considerations must be taken into account when entering the China market. Although perhaps not as crucially important as is often believed, one to one personal relationships in China can greatly facilitate many aspects of doing business there. More important is having a long-term perspective as transactions in China often take a great amount of time and patience. Additionally, people in China tend to be much more subtle in their business dealings than many foreign investors may be accustomed to, resulting in a more difficult environment for interpreting the outcomes of such dealings.

Throughout this transformation of the world’s most promising market, Angela Wang & Co has been working closely with both foreign and Chinese companies to assist with their inbound and outbound investments. We are committed to ensuring our clients’ objectives are realized in this constantly changing environment.

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