In this article, we’re explaining what is a foreign-invested enterprise.
This article is part of our free series on business banking, including how to find the best bank to open a business account in top jurisdictions around the world.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Foreign Invested Enterprise
- Invested Enterprise vs Direct Investment
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
Foreign Invested Enterprise
Foreign-invested enterprise (FIE) refers to a specific corporate structure, which includes joint ventures, foreign-owned enterprises, and foreign-invested companies. An FIE is an enterprise that is either partially or wholly owned by a foreign corporation. FIEs are common in China, where economic participation in the country is tightly controlled.
Not surprisingly, governments closely monitor and control foreign-invested enterprise. Likewise, they do not have permission to operate in any industry. Like foreign direct investment laws in other countries, foreign-invested enterprise laws tend to tightly control the specific industries that FIEs can operate in.
However, the specific industry is not the only limiting aspect of FIEs. FIEs may also face government control over the amount of profit foreign owners can receive, the decision-making power that foreign owners have, and the legal protections afforded to foreign owners.
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Invested Enterprise vs Direct Investment
The main difference between an invested enterprise and a direct investment is that a foreign-invested enterprise refers to a company that is structured for the purpose of investing in a local market, while foreign direct investment refers to an investment in a foreign jurisdiction irrespective of the corporate structure.
However, both foreign-invested enterprises and foreign direct investment are typically tightly controlled by countries. These controls include limitations on the specific industries and regions that foreign investors can participate in.
Foreign Invested Enterprises
Foreign-invested enterprises (FIE) are legal structures that facilitate direct investment into a specific economy, like China. In short, FIEs are approved corporate structures that governments use to strategically direct foreign investment into prioritized areas of the local economy.
Foreign Direct Investment
Foreign direct investment (FDI) refers to a direct investment by a foreign corporation (or other investor). More specifically, it occurs when a foreign enterprise has influence and control over a domestic enterprise. In most cases, there is heavy regulation over foreign direct investment. This regulation includes restrictions over industries that impact national security and other key sectors.
Frequently Asked Questions
Below are a few of the most common questions we receive from people looking into what a foreign-invested enterprise is. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Is a Foreign Invested Enterprise?
A foreign-invested enterprise, or FIE, is a type of legal structure. It facilitates foreign investment into a country. FIEs usually face tight restrictions, can only participate in certain industries, and encourage the growth of domestic participants while offering profitability to foreign corporations.
What Is an Example of a Foreign Investment?
An example of foreign investment is anytime a foreign corporation directly invests in a local (domestic) company, otherwise known as FDI. Foreign direct investment (FDI) is one way that companies can quickly win market share, establish strategic partnerships, and expand their operating base into new jurisdictions.
What Is the Foreign Invested Law in Brazil?
The foreign investment law in Brazil refers to legislation that restricts foreign investment into several key industries. The industries that the law restricts include health care and medicine, media and telecommunications, air transport, insurance maritime services, and more. This law is the FDI law of Brazil. FDI stands for Foreign Direct Investment.
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