FDI: China to Re-define Small and Micro Enterprises

FDI: China to Re-define Small and Micro Enterprises

FDI: China to Re-define Small and Micro Enterprises

In China, small and micro enterprises (SMEs) are entitled to enjoy a series of local preferential policies1. Recently, a draft legislation for public comments was issued to amend the classification standards of SMEs (the “Draft”)2. We summarize the following for your better understanding of the Draft:

1. What are the major changes in the Draft?

We just take three important industries as examples:

2. How to check if an enterprise is on the list of SMEs?

 The official website for checking is: http://xwqy.gsxt.gov.cn/4

 You can enter your company name to see if it is on the list of SMEs.

 There is no need for an enterprise to file an application to be added in the list of SMEs. The enterprise only needs to perform the requested annual filing5, and information will be transferred/updated automatically.


E-Commerce: China to Regulate Livestreaming Shopping

Online livestreaming shopping is booming in China amid the Covid-19 epidemic. According to the latest statistics, till December 2020, users of livestreaming shopping in China reached 388 million, accounting for 39.2% of the country’s total internet users6. To better regulate the booming livestreaming shopping, on April 24, 2021, China issued trial measures which will enter into force on May 25, 2021. We highlight the following points for your attention:

1. Restrictions on age

For livestreaming operators/sales persons, young persons who are not reaching the age of 16 are not allowed anymore.

For young persons who reach 16 but is still under 18, their parents’ consent shall mandatorily be obtained.

2. Blacklist

The livestreaming platforms shall establish a blacklist for individuals who breach the laws and regulations during the livestreaming shows (e.g. infringing IP rights, promoting pyramid selling, falsifying transaction records, etc.). The blacklist shall be further shared with governmental bureau in charge7.


Civil Code: SPC Further Clarifies Civil Code

On April 25, 2021, the Supreme People’s Court (“SPC”) issued working minutes8 for implementing the Civil Code (the “Minutes”), in which few uncertain issues are clarified, we highlight the following two points for your attention:

1. Liquidated damages

Pursuant to Civil Code, if the amount of liquidated damages agreed in contract is “excessively higher” than the actual loss suffered, upon request of the defaulting party, the court/arbitral tribunal may reduce the amount of liquidated damages appropriately.9 Previously, it is not clear on how to define “excessively higher”.

It is clearly explained in the Minutes now that if the liquidated damages are higher than 30% of the loss10 calculated, then it is defined as “excessively higher”.

2. “Coercion”

Under Civil Code, if a civil juristic act is performed under coercion, the suffering party is entitled to request the court/arbitral tribunal to revoke such act.11However, Civil Code only stipulates that coercion means an act performed by a party which is against his/her real intention.

The Minutes add more details on coercion, which are:

(1) threatening people by causing damage on his/her life, body, health, reputation, honor, privacy, or property.

(2) threatening people by causing damage on his/her relatives’ life, body, health, reputation, honor, privacy, or property.

(3) threatening organizations12 by causing damage on reputation, honor, or property of organizations.



Should you have any inquiry about the above, please contact us at asiallians@asiallians.com.

As always, Asiallians remains at your service and our teams are currently mobilized in all our offices in Mainland China, in Hong Kong and in Taipei.


1. See our previous newsletters for an example: Tax: New Preferential CIT Policy for Small and Micro Enterprises.

2. The Chinese name of the Draft Legislation: 中小企业划型标准规定(修订征求意见稿). The Draft Legislation solicits public comments by May 23, 2021.

3. See details via http://xwqy.gsxt.gov.cn/mirco/regu_info.

4. See more details: https://mp.weixin.qq.com/s/JafIokqADI_9tkqcElYnIg.

5. Annual filing at Administration of Market Regulation and the deadline is June 30 each year.

6. See page 52 of the 47th China Statistical Report on Internet Development issued in February 2021.

7. See more details on Article 14 and 18 of the trial measures.
The blacklist is not available to public yet. To be further checked if in the future a national blacklist concerned will be available to public.

8. Working minutes are not regarded as Court interpretation, but for court systems’ internal use. however, normally the judge shall refer to it during a trial.

9. Article 584 and 585 of Civil Code.

10. See Article 584 of Civil Code for how to calculate the loss.

11. Article 150 of Civil Code.

12. Legal person or non-legal person.


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