China will allow full foreign ownership of some e-commerce companies

BEIJING (Reuters) – China will allow full foreign ownership of some e-commerce companies, 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 and transaction services,” the ministry said in a statement on its website. It was not immediately clear how it would affect e-commerce companies already operating in China. China’s e-commerce industry is booming, with companies such as Alibaba Group Holding Ltd and JD.com Inc tapping a growing middle class with greater 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 a stake in online shopping site Yihaodian. Allowing full foreign ownership “supports the development of e-commerce in our country, encourages and attracts active participation from foreign investment, and further stimulates market competition,” the ministry said. In recent years, the government has propped up the industry by keeping taxes low and easing restrictions on cross-border trade, among other concessions. E-commerce and the broader internet sector have been the stars of China’s industry. Companies such as Alibaba, social networking and online entertainment company Tencent Holdings Ltd and search engine leader Baidu Inc account for hundreds of billions of dollars in stock market capitalization. Their success comes as the world’s second-largest economy grows at its slowest pace in three decades and Beijing seeks to catalyze a shift away from a reliance on manufacturing toward higher-value services. (Reporting by Paul Carsten and Judy Hua; Editing by Jane Merriman and David Holmes)