The State Council and the Ministry of Industry and Information Technology (MIIT) recently announced a series of policies which aim to relax foreign investment restrictions on call centre outsourcing by allowing a foreign investor to set up a wholly foreign owned enterprise or an equity joint venture without any cap on the foreign investor’s shareholding. Before the announcement of this new policy, call centre outsourcing, being a value-added telecoms service, was subject to the restriction that a foreign investor must set up an equity joint venture with a PRC partner and the foreign investor’s interest must be capped at 50%.

The new policy allows foreign investors to operate call centres in 21 model cities in China on a trial basis, without having to partner with a PRC company. To qualify for the relaxation, however, the clients that engage the call centre outsourcing service provider must be based outside China and the target customers of the call centre service must also be based outside China. This qualification seems consistent with the overall policy of encouraging the development of offshore business process outsourcing services.

The key features of the new policy are the delegation of the approval authority of the MIIT and Ministry of Commerce (MOFCOM) to their respective local counterparts, and the simplified procedure for a call centre offshore business duly set up in a model city to open branch offices in other model cities.

Other requirements under the existing telecoms regulatory regime still apply, which include (1) the registered capital requirement of at least RMB 1 million; and (2) the proven track record qualification requirement on the major investor (ie holding at least 30% of the shareholding in the call centre offshore business). The validity term of a trial call centre offshore business approval is five years, which is the same as the term granted to a telecoms licence for value-added telecoms business.