Local Content Requirement Sample Clauses

Local Content Requirement. Local content requirement, unlike export performance requirement, is on the illustrative list of trade-related investment measures noted in the TRIMs Agreement as inconsistent with WTO policies. Unlike export performance, local content obligations are not statutorily imposed on wholly foreign-owned enterprises, Sino-foreign joint ventures or Sino- foreign cooperative ventures. Chinese regulations xxxxx XXXx freedom to source inputs both in China and abroad, though priority is given to Chinese products when conditions are equal.64 Chinese regulations forbid the imposition of “unreasonable” geographical, price, or quantity restrictions on the marketing of a licensed product. The foreign venture, thus, retains the right to purchase equipment, parts, and raw materials from any source.65 However, the local content requirement in China functions similarly to that for export performance. Chinese officials strongly encourage localization of production. Investment contracts often call for foreign investors to commit themselves gradually to increase the percentage of local content. Such provisions and plans for sourcing production inputs are factors considered by Chinese officials in the approval process for foreign investment projects. Local content obligations are not a transparent statutory requirement but rather part of internal guidance for achieving a level of local 63 As Note 61, above. 64 The Law of the People’s Republic of China on Chinese-Foreign Equity Joint Venture, Article 9; the Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures, Article 19; and the Law of the People’s Republic of China on Foreign Capital Enterprises, Article 15.