“E-Business in China.”

That’s the title of a SwissCham Beijing event last week, but what speakers really talked about was – gasp – how foreigners can make new media in China.

Whoa, back up. Isn’t media – even online – one of those untouchable industries in China?

Yes, it is restricted.

But wait to judge the industry’s prospects until you hear Stephane J. Grand, president of Beijing-based S. J. Grand Financial and Tax Advisory, talk about the loopholes through which foreigners can jump to operate in online media here.

Clearly foreign media people aren’t a bunch of communist sympathizers or yahoos in the wrong industry. They do make Enron’s offshore accounting scheme look basic.

Let’s make this clear: Mr. Grand has a legal background and prescribes a foreign new media regimen that has solid legal footing.

Here are some of his pearls of wisdom:

• The joint venture route to new media is a red herring. “In theory, according to Chinese law, a company with 50 percent foreign investment at the most could apply for [an Internet Content Provider license – critical for operating a website in China to do business],” Mr. Grand said. “In practice, it is extremely difficult for a joint venture to obtain an ICP license.” It would take about a year to get such a license. And the company also would own the domain name – which could NEVER be purchased, sold or transferred. So much for that IPO.
• Use a domestic company with no foreign investment. This company would own the domain name and get the ICP license. However, you would also form a wholly owned foreign enterprise (WFOE), which would generate the content, provide management services to the domestic company, and receive payments from the domestic company. Importantly, the domestic company would not own the trademarks and intellectual property.
• You have a holding company to “capture the value of the venture in a more hospitable environment,” like in Hong Kong. This is what Sina.com does. The holding company is what establishes the aforementioned WFOE. The money also would flow back into the holding company via dividends paid by the WFOE.

Mr. Grand’s advice in more detail can be found in this week’s Powwow podcast.

    Channel: Local Wisdom     |