China eases foreign investment restrictions for Guangzhou’s social survey industry

The policy aims to further develop China’s services industries and is being piloted in six cities: Shenyang, Nanjing, Hangzhou, Wuhan, Guangzhou, and Chengdu. Effective from 11 July, administrative regulations and ministry rules related to foreign investment have been adjusted for these cities and will apply for the next three years.

Of the six cities, Guangzhou is the only one that has lifted restrictions on businesses providing social survey services. Under the new policy, foreign investors can now invest in social survey businesses in the city if their share in the business is capped at 33%, and their legal representative has Chinese nationality.

China’s move to ease restrictions for this industry is not entirely new. Market survey and social survey services have seen changes which have gradually opened the industry to foreign investors since 2022. According to the Special Administrative Measures (Negative List) for Access of Foreign Investments to Pilot Free Trade Zones (2021 Edition), foreign investors are already permitted to invest in social survey businesses in certain pilot free trade zones, using the same measures applied under the latest policy. Now, these liberalisation measures have been extended to the entire city of Guangzhou.

While the Chinese government has shifted its stance on foreign investors conducting social survey businesses from total prohibition to conditional allowance, foreign investors still face regulatory challenges if they wish to participate in this industry.

Changed rules for foreign-related social survey businesses in Guangzhou

Under the ‘Measures for the Administration of Foreign-Related Surveys’, China implements a system for the accreditation of survey institutions with foreign shareholders – known as ‘foreign-related’ – and a system for the examination and approval of foreign-related social survey projects.

To engage in social survey businesses in Guangzhou, foreign investors – in addition to adjusting their shareholding structure and legal representative in line with China’s new policy and updating their business license – must obtain a foreign-related survey license.

Companies applying for foreign-related survey permits must meet the requirements set out in the measures, including having conducted at least three survey items or having at least RMB 300,000 (US$41,274) of survey turnover in the year before the date of application.

As foreign investors were previously not allowed to engage in the social survey industry, these requirements could pose challenges for them in the license application process. It is currently not certain whether the track record requirements only apply to social survey projects, or whether the applicant can also apply their experience and turnover generated by their market survey businesses. This requires clarification from the relevant statistics authority.

In addition, after obtaining their foreign-related survey permit, the foreign-related survey company must apply for project approval before conducting any foreign-related social survey projects. A foreign-related survey company wishing to conduct a foreign-related social survey must apply to the National Bureau of Statistics of China if it covers more than one province-level area, or to the local statistics authority at the province-level if it covers just one province-level area.

During the project application process, the relevant statistics departments will carefully review the scope and content of the application and – as set out in article 7 of the measures - will not approve any foreign-related social survey that endangers national unity, sovereignty, and territorial integrity; steal, spy on, buy or divulge state secrets or intelligence, endanger national security or national interests; or carry out fraudulent activities or infringe on the legitimate rights and interests of others.

The pilot liberalisation measures in Guangzhou will provide foreign investors with more options to invest in social survey businesses, but the effective implementation of the policy still needs to be further clarified by the relevant departments.

Foreign companies interested in Chinese social survey businesses would benefit from seeking assistance to verify the practical feasibility of conducting social survey business in Guangzhou.

Co-written by Lesley Ji of Pinsent Masons.