Rule to handle foreign firms' complaints

China will implement a new rule for handling the complaints of foreign-invested enterprises on Oct 1, as part of its efforts to build a market-oriented and law-based international business environment, the Ministry of Commerce said on Monday.

The rule consists of five chapters and 33 articles, further refining the requirements of the Foreign Investment Law and its implementing regulations and updating and optimizing of its system for handling foreign companies' complaints.

The regulation is meant to implement article 26 of China's Foreign Investment Law, which provides that the State establishes working mechanisms for complaints by foreign-invested companies, promptly handles the issues raised by them or their investors and coordinates and improves policy measures in question, said Zong Changqing, director-general of the ministry's Department of Foreign Investment Administration.

He said the rule has broadened the scope of complaints that can be made by foreign companies. It has clarified that global companies can apply to agencies that handle complaints for coordination and settlement of their legal rights and interests that may be infringed by administrative actions. The companies also can report to the government units that they are having problems in running their business.

In addition to global companies' right to suggest the government improve relevant policies and measures, foreign chambers of commerce can also report issues concerning China's investment environment to authorities that handle complaints.

Actively promoting foreign investment and consolidating the protection of the legal rights and interests of foreign investment are the biggest highlights of the Foreign Investment Law and related rules, said Jiang Chenghua, deputy director-general of the ministry's Department of Treaty and Law.

The laws and regulations stipulate various substantive rights of foreign investors and strengthen the nation's legal system to ensure fair competition between domestic and foreign companies, he said.

Global firms also should apply policy measures introduced by the government to support their business growth in accordance with the law, and participate fairly in the setting of industrial standards and government procurement activities, said Li Yong, deputy director-general of the China Investment Promotion Agency.

In terms of protecting intellectual property, penalties for infringement have been reinforced, government branches are prohibited from using administrative means to forcibly transfer technology and protection of commercial confidential information has been enhanced, he said.

The rule has helped in setting up a working group coordinated by the Ministry of Commerce and related government branches to handle foreign businesses' complaints. The local governments at or above the county level must designate departments or agencies to handle complaints.

To protect the legitimate rights of foreign firms and create a stable, fair and transparent business environment, the ministry released a draft for public comment of rules for foreign investment complaints in March. The draft rules updated regulations issued by China in 2006.

The implementation and enforcement of the new Foreign Investment Law and related rules will further level the playing field and strengthen multinational companies' confidence in investing in China in the long term, said Connell Zhang, executive vice-president of Ecolab, the United States-based health and hygiene giant.

"China is further opening up its market to foreign investors by lifting entry barriers. We hope the expanded pilot program, laws and rules will further promote cross-border investment in transportation, education, healthcare, finance and professional services," said Gavin Guo, international partner of the Shanghai-based Kewei Law Firm.

Many cities and regions have also promulgated detailed policies and measures to attract and facilitate foreign investment, he said, adding the expanded China (Shanghai) Pilot Free Trade Zone has continued to demonstrate flexibility and innovation in regulating foreign investment.