In sectors such as information technology, which has an overlap with education, foreigners are not allowed to set up wholly foreign-owned enterprises. A Chinese joint-venture partner is required, said Arlo Kipfer, an attorney at law firm Harris Sliwoski.
Kipfer focuses on helping international school and business clients navigate foreign regulatory environments.
In these situations, navigating compliance is key, he said, and companies would need to work with an expert in Chinese regulations to answer questions such as how government officials in specific regions handle foreign direct investment opportunities, and the sensitivities of the education infrastructure under the Chinese government.
“There are certainly still opportunities, but you have to have someone who knows if you’re set up properly — with a Chinese partner being a majority partner in control,” he said, “and knowing all the laws about how your data has to be accessible to the government.”
Many government-imposed regulations can complicate the work of foreign education providers. For instance, a series of Chinese laws enacted over the past decade mandate that Chinese businesses and citizens support and facilitate government access to the collection, transmission, and storage of data.
That means that there are no restrictions against the Chinese government obtaining data from any company’s server at any given time, whereas in the U.S., a legal process must be followed to justify their access.
Western companies who work in China must realize that their stored information can be accessed by the government at any time, Kipfer said.
“There are no access protections, which means there are no secrets,” he said. “Your company information can be used against you.”