Shanghai Free Trade Zone Allows Foreign Investment to Own A Majority Stake in An App Store

The long-awaited China (Shanghai) Pilot Free Trade Zone was officially opened yesterday (September 29). It is expected that, apart from finance, investment and trade, telecommunication and Internet industries will also enjoy much more liberalized regulations there.

It turns out, however, there are still a lot businesses in Internet that are not allowed, according to the detailed rules unveiled. But one thing worth-mentioning is foreign investments are allowed to take a majority stake in an app store. Also digital music is open for investments.

Here are cans and cannots on Internet sector,

• Apart from app stores, foreign investment in any other information tech-enabled service isn’t allowed to be over 50%.
• Foreign investment in a virtual private network service isn’t allowed to be over 50%.
• Foreign investment in an e-commerce or similar operation isn’t allowed to be over 55%.
• Foreign investment in an online data processing or transaction analytics service cannot be over 50%.
• Operations of news website, online video and audio, Internet cafe or other online cultural content (exclusive of music) are not open for investments.
• Direct or indirect operation of online games isn’t allowed.
• Investment in or operation of Internet data centers isn’t allowed.

It is reported that Chinese Ministry of Culture would remove a 13-year old ban on manufacture and sale of video game consoles for companies in the zone. It is speculated that that’s why Microsoft would establish a joint venture with BesTV.

Shanda turned out to be the first Internet company that obtained a license for establishing a company in the free trade zone. Besides bringing its existing Internet businesses to the zone, Shanda plans to expand to Internet finance sector there.