China (Tianjin) Pilot Free Trade Zone makes efforts to better facilitate foreign investment

By Zhu Hong from People’s Daily

China (Tianjin) Pilot Free Trade Zone, the first of its kind in northern China, is firmly implementing China’s strategy of opening wider to the world by enhancing efforts of innovation and building new platforms of reform and opening up.

The photo shows the Tianjin Airport Economic Area of China (Tianjin) Pilot Free Trade Zone. (Photo from the official website of China (Tianjin) Pilot Free Trade Zone)

Foreign-invested online recruitment platform Liepin.com is one of the many that have benefited from the free trade zone.

“The permit for conducting Internet information services (IIS) and the human resource service license for Sino-foreign joint ventures posed as two major problems for us when we established the company,” said Yu Ting, government affairs director of Liepin.com.

In 2014, when Liepin.com built its headquarters at Tianjin Economic-Technological Development Area (TEDA), foreign-invested companies were not allowed to acquire ISS licenses, and only the companies whose shareholders had over three years of experiences in the human resource industry could get the human resource service permit, Yu introduced.

However, most of the internet companies failed to meet the requirements as many of them received venture capital from foreign countries.

Thanks to the establishment of the China (Tianjin) Pilot Free Trade Zone, Liepin.com and companies of the similar type finally found a solution to the issue of qualification approval.

An expert team was set up at the TEDA for research, and a policy allowing foreign capitals to be engaged in the ISS industry was piloted, which fully demonstrated the pioneering characteristics of the free trade zone.

Thanks to the innovative and ground-breaking policy, Liepin.com became the first foreign-invested internet company in Tianjin to conduct telecom value-added services. It was also the first Sino-foreign joint venture in Tianjin receiving the human resource business permit.

“Without the two permits, our company couldn’t have been established,” Yu recalled.

“Such qualification approval had no precedence in Tianjin, but it is not a problem in the free trade zone,” said Tang Zhongfu, deputy director of the general office of China (Tianjin) Pilot Free Trade Zone Administration.

The China (Tianjin) Pilot Free Trade Zone has introduced the pre-establishment national treatment and negative list system for foreign investors.

Statistics indicated that from the opening of pilot free trade zone on April 21, 2015 to the end of 2018, 2,159 foreign-invested companies were established at the zone, with contractual foreign capital amounting to $47.55 billion. 99 percent of them were established via a document filing mechanism.

The pilot free trade zone also replaced the examination and approval procedures with a document filing system for overseas investment projects less than $300 million, and all the formalities can be finished within a day.

The free trade zone has established a one-stop service platform for overseas investment and cooperation. 227 overseas enterprises and organizations registered on the platform from the opening of the free trade zone to the end of 2018.

At the end of January 2018, Liepin.com went public. Completing the structuring of the Variable Interest Entities (VIE), overseas direct investment, and IPO in just 5 months, the company made a new record as the fastest company to offer IPO on the Hong Kong Exchanges and Clearing Limited (HKEX).

“TEDA has established a special team made up of professionals to provide comprehensive services for the IPO of enterprises,” said Xu Lili, chief financial officer of the recruitment website Liepin.com.

The team has met with relevant departments and enterprises to discuss enterprise listing services, said Xu, noting that to accelerate listing procedures, they have taken full advantage of the favorable financial policies offered to the free trade zone to facilitate inflow and outflow of capital, reducing the time needed for capital inflow and outflow by half.

Investment opportunities are fleeting, said Xu, adding that in the past, it took about two months for companies to go through overseas investment management procedures.

Companies needed to submit documents on the source of foreign exchange for review and gain investment approval from commerce departments before they finally got registered and became able to remit money at foreign exchange department, explained Xu.

With a planning area of 119.9 square kilometers, the China (Tianjin) Pilot Free Trade Zone accounts for about 1 percent of the total area of Tianjin municipality. Compared with other free trade zones in China, the predominant feature of the Tianjin free trade zone is that it serves the coordinated development of the Beijing-Tianjin-Hebei region.

Tang expressed that with great efforts on advanced manufacturing industry and modern service industry, the free trade zone in Tianjin will further boost opening up and make bold efforts to take the initiative in exploring new prospects, trying new measures, and carrying out reforms.

The free trade zone will set up a fund for cross-border mergers and acquisitions to support enterprises in the Beijing-Tianjin-Hebei region to expand business at the global market, so as to better promote the national strategy of the country, disclosed Tang.

In the past 4 years, the free trade zone in Tianjin has reported to the central government a total of 127 items of piloting experiences and 40 cases of innovative practices in 4 batches. 15 items of the experiences and 3 cases, including those on promoting the synergetic customs integration of the Beijing-Tianjin-Hebei region, were spread nationwide.

Thanks to the customs integration, enterprises from Beijing and Hebei have seen customs clearance time reduced by three days at the ports of Tianjin. A unified online tariff service platform also facilitated mutual acceptance of qualifications, mutual administrative assistance and information connectivity among the three districts.

In May 2018, the State Council of China approved a plan for further deepening reform and opening-up in the China (Tianjin) Pilot Free Trade Zone, enabling the free trade zone to explore new approaches and models to comprehensively deepen reform and expand openness in broader fields and at higher levels.

“97 of the 128 tasks in the plan had been completed by the end of last year, which was equivalently 76 percent of the whole plan,” said Tang.

According to the plan, the free trade zone in Tianjin will take the initiative to establish an institutional system which will be in line with the prevailing rules of international investment and trade by 2020, so as to form a favorable business environment that features the rule of law, internationalization, and convenience, Tang disclosed.

Tianjin will make great efforts to build a new open economy, create new internationally competitive advantages, so as to build the free trade zone into a demonstration zone of the coordinated development of the Beijing-Tianjin-Hebei region.

So far, the free trade zone is home to 53,000 registered market entities, which is 2.4 times that of the total number in Tianjin before the establishment of the free trade zone.

With 1 percent of the area of Tianjin, the free trade zone has contributed 10 percent to the city’s economy, used one fourth of the foreign investment received by the city, created nearly one third of the city’s import and export volume, and made more than 60 percent of the city’s outbound investment.

The free trade zone will make full use of the favorable policies in the free trade zone and make greater efforts to promote institutional innovation, said Yang Maorong, head of the Binhai New Area of Tianjin and executive deputy director of the China (Tianjin) Free Trade Zone Administration.

Yang noted that the free trade zone will be built into a new platform for reform and opening-up so as to make new contributions to boosting the in-depth integration of the Beijing-Tianjin-Hebei region into the global economic system.