What the term covers
A foreign invested enterprise, often shortened to FIE, is a company in a host country that is wholly or partly owned by foreign investors. In China, the Foreign Investment Law that took effect in 2020 replaced the older laws governing joint ventures and wholly foreign-owned enterprises, and FIEs are now organized under the same company law as domestic firms. Companies formed under the old laws were given a transition period to update their governance documents. Foreign investment in some sectors remains restricted or prohibited under a negative list that is revised from time to time. Other countries, including Vietnam, use similar terms under their own rules.
Issues for a U.S. parent
Setting up or acquiring an FIE raises questions on both sides of the border. In the host country, there are registration steps, capital contribution obligations, foreign exchange procedures for moving money in and out, and licenses for the business activities. On the U.S. side, sending technology or software to the enterprise may require export control review, and investments by U.S. persons in certain sensitive technology sectors in China can fall under the U.S. outbound investment rules. Intellectual property should be registered in the host country before it is shared, and licenses between parent and subsidiary should be in writing.
How we work on these matters
Our role is on the U.S. side of the investment: the parent's structure, contracts with the FIE, U.S. regulatory questions, and coordination with licensed counsel in the host country, who advise on local law. We help you organize the questions for that local counsel and review how their advice fits with your U.S. obligations. For an existing enterprise, we can review the intercompany agreements, export control compliance, and plans for restructuring or exit. Bring the FIE's formation documents, its ownership chart, and any agreements between the parent and the enterprise. Because local rules change, we ask local counsel to confirm the current position before decisions are made.
