As one of the fastest-growing and most lucrative e-commerce markets in the world, China can’t afford to be as restrictive on foreign ownership as it is with other markets. That’s why, in an attempt to encourage foreign investment and make the market more competitive, China has decided to allow foreign companies to have full ownership of some e-commerce businesses, though it’s still unclear how this will effect e-commerce companies already operating in the country.
China will allow full foreign ownership of some e-commerce businesses, aiming to encourage foreign investment and the development and competitiveness of the industry, the Ministry of Industry and Information Technology said on Friday. The move, effective immediately, will apply to “online data handling and trade handling services”, the ministry said in a statement on its website. It was not immediately clear how this would affect e-commerce companies already operating in China. China’s e-commerce industry has been booming, with companies like Alibaba Group Holding Ltd and JD.com Inc benefitting from a rising middle class with more disposable income. Other players include U.S. online retailer Amazon.com Inc, Vipshop Holdings Ltd and U.S. supermarket chain Wal Mart Stores Inc, through its stake in shopping site Yihaodian. Allowing full foreign ownership “supports our country’s e-commerce development, encourages and brings in the active participation of foreign investment, and further excites market competition,” the ministry said.