Hastings International and Comparative Law Review


One of the most important steps taken by the People's Republic of China in establishing its "open door" policy towards foreign businesses has been the establishment of four Special Economic Zones (SEZs). This Article outlines the objectives to be achieved through the SEZs, the extent to which these goals have been attained, and the advantages which accrue to foreign businesses by operating in SEZs. After enumerating the preferences available to foreign businesses that operate in the SEZs, the author describes the functions of the U.S. China Shantou Technology Trade Investment Resource, Ltd., which was established to facilitate entry into the Shantou SEZ by American and Canadian businesses. The author notes that, despite such resources, the United States lags behind other countries in trading with China because of American business attitudes. Finally, the author defines the five basic forms of direct foreign investment in the SEZs: joint ventures, coproduction, compensation trade, processing, and one hundred percent direct investment. The author recommends that small companies wishing to invest in China limit their activities to low-level, labor-intensive activities.