Trading WFOEs in Waigaoqiao: End of the Road or New Opportunities?

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clpstaff &clp articles

Granting of trading and distribution rights are among the most important market opening measures China agreed to in its commitments to join the WTO. How does liberalization of trading and distribution affect the operation of enterprises in the free trade zones that have been key to China's economic growth over the years?

By John Li, Allens Arthur Robinson, Shanghai

According to China's WTO commitments, foreign-invested enterprises (FIEs) were to be granted the right to trade in most goods throughout the customs territory of China at the end of 2004. Although FIEs in Waigaoqiao Free Trade Zone (hereafter, the WFTZ), including existing trading wholly foreign-owned enterprises (WFOEs), may include import and export of goods and technology excluding distribution) in their business scope after approval has been received, they still are not permitted to carry out an import business with all domestic entities in their own right unless they are granted such a right by the Ministry of Commerce.

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