what we think

By Fabian Knopf and Connie Chen

Given the 31 March 2024 deadline set by the Ministry of Industry and Information Technology (MIIT) in their notice on registering mobile internet applications (APPs but also Mini Programs), companies hosting content on servers outside of China's Mainland may have to rethink their strategy.

Situation post 31 March 2024

• For APPs (incl. Mini Programs; same as below) that are pre-installed on a smart phone or downloaded by a user: Registration should be completed through the relevant network access service provider. For example, the holder of an APP hosted on Tencent Cloud’s cloud service should conduct registration through the Tencent Cloud portal.
• APPs hosted outside of China's Mainland cannot be registered, which means these APPs will need to convert to local servers and domain names to continue running in China's Mainland.
• APPs will be removed if the holder fails to register before the deadline.
• MIIT is expected to conduct an enforcement drive from April to July 2024.

What about APPs hosted outside of China's Mainland?

While APPs that are hosted outside of China's Mainland cannot complete the registration, will the enforcement actions affect them?

The simple answer is that we do not yet know. In general, APPs hosted outside of China's Mainland must also fulfill the registration obligation, even if this is not possible through the current registration process – and there is no expectation that this will change in the future.

While hosting can be done through a third party, the holder of the content has to be a company registered in China's Mainland. So merely moving the content onto servers of a hosting service provider in China's Mainland will not suffice.

We do not expect APPs hosted outside of China's Mainland will get the same scrutiny from the enforcement of authorities as APPs hosted in China's Mainland. However, consider the situation with websites: Websites hosted on Chinese Mainland servers must be registered locally, and while there is no uniform approach, everyone knows examples of enforcement. Considering the similarities between websites and APPs, a similar enforcement approach may apply.

What options do companies have?

Foreign companies that do not have a subsidiary in China's Mainland but want to make sure that their APPs remain accessible in China's Mainland, may need to consider some of the options we have discussed in our article on foreign SaaS businesses in: Opportunities for Foreign SaaS Companies in China

Here’s a quick recap of the options:

1. Stay offshore and hope for the best.
2. Set up a subsidiary in China's Mainland to host your APP.
3. Find a Chinese partner to support the hosting.
4. Set up a variable interest entity (VIE) structure.

These options are not mutually exclusive and so can be combined. For example, the company can stay offshore while it is considering any of the other options, starts preparing one of them and then switches over once the new option has been implemented. Another example is that the subsidiary in China's Mainland and the Chinese partner become part the essential elements of a VIE structure.

Key take-aways

1. APPs that are distributed from platforms in China's Mainland and that are not registered by 31 March 2024, are expected to be removed.
2. APPs hosted outside of China's Mainland are also required to register, but it is unclear what consequences may follow the passing of the deadline.
3. MIIT is expected to carry out intensive enforcement actions for three months from April 2024.
4. Companies with APPs hosted outside of China's Mainland may want to consider the options mentioned in this article to ensure accessibility to their content inside China's Mainland.

R&P's technology team frequently assists international companies with regulatory registrations and compliance for SaaS and related businesses. They also work with partners to implement and localize distribution of apps and software in China. Feel free to contact Mr. Fabian Knopf (knopf@rplawyers.com), Ms. Connie Chen (chenyan@rplawyers.com) or your familiar contact at R&P to discuss how they can help you.