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China opens door for full foreign ownership of e-commerce companies

New Chinese reforms allow foreign investors 100 percent ownership of their e-commerce companies in Shanghai's Free Trade Zone.

New rules for e-commerce players based in China's Shanghai Free Trade Zone.Nicholas Poon, CC BY 2.0

Wealth begets wealth, and Shanghai's Free Trade Zone entered a new dimension of economic reform on 14 January, allowing foreign investors to fully own e-commerce companies, according to Chinese state-owned media Xinhua News Agency. The new policy was announced by China's Ministry of Industry and Information Technology.

Foreign investors originally needed a Chinese partner to break into the online shopping market, and were only allowed to have a maximum of 55 percent stake.

The FTZ in Shanghai was launched in September 2013. Currently, the zone is home to more than 12,000 companies, including 1,677 foreign-funded firms. The Chinese e-retail market is lucrative, with 330 million online shoppers and a trade volume of 5.66 trillion yuan ($910 billion) in the first half of 2014.

This comes as a relief for non-Chinese e-commerce giants such as Amazon as they continue to struggle for traction in China against local online shopping titans such as JD.com Inc. and Alibaba. In return, this move of goodwill will likely promote China's links towards retailers and consumers outside of the Mainland.

China is looking at further extending Shanghai's Free Trade Zone arrangements into the city's financial district, as well as three new trade zones in cities Guangdong, Fujian, and Tianjin.