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Measures for Administration on Foreign Investment in Commercial Fields
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Tuesday,June 01,2004 Posted: 20:43 BJT(43 GMT) MOFCOM |
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The Ministry of Commerce of the People''s Republic of China [2004] No.8
Measures for the Administration on Foreign Investment in Commercial Fields has been examined and approved at the sixth excutive meeting of the Ministry of Commerce of the People''s Republic of China and shall be promulgated. It shall be implemented as of June 1,2004.
Bo Xilai, Minister
Promulgated by the Ministry of Commerce on April 16, 2004 and effective as of June 1, 2004
Article 1 In order to further expand the opening up to the outside world and improve the construction of the market circulation system, these Measures are hereby formulated in accordance with the Law of the People’s Republic of China on Sino-Foreign Equity Joint Ventures, Law of the People’s Republic of China on Sino-Foreign Contractual Joint Ventures, Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises, Company Law and other relevant laws and administrative regulations.
Article 2 Where foreign companies, enterprises and other economic organizations or individuals (hereinafter referred to as “foreign investors”)establish foreign-funded commercial enterprises within the Chinese territory and undertake business activities, these Measures shall be observed.
Article 3 Foreign-funded commercial enterprises shall refer to enterprises with foreign investment that undertake the following business activities:
1.Commission agency: Selling agents, brokers, auctioneers or other wholesalers for goods, who sell goods to other people and provide relevant attaching services through collecting fees on the basis of contract;
2.Wholesaling: Selling goods to retailers, to industrial, commercial and institutional customers, or to other wholesalers and providing relevant attaching services;
3.Retailing: Selling goods for consumption and use of individuals or groups and offering relevant attaching services in fixed places or via television, telephone, mail order, internet, and automats;
4.Franchising: Authorizing pursuant to contract for the use of a trademark, business name, or business mode for gaining remuneration for franchising fees.
Foreign companies, enterprises, and other economic organs or individuals shall carry out business activities as prescribed in items 1,2,3 and 4 of the preceding paragraph through foreign-funded enterprises established within China.
Article 4 Foreign-funded commercial enterprises shall abide by laws, administrative regulations and relevant rules of the People’s Republic of China. Their lawful business activities and legitimate rights and interests shall be subject to the protection of Chinese laws.
Article 5 The competent commercial department of the state shall make supervision over and administration of foreign investment in commercial fields and business activities of foreign-funded commercial enterprises according to law.
Article 6Foreign investors in foreign-funded commercial enterprises shall have good credits standing, and have no acts in violation of Chinese laws, administrative regulations and relevant rules. Foreign investors who have strong economic strength, advanced experiences in business management and marketing technologies, and broad international marketing networks shall be encouraged to establish foreign-funded commercial enterprises in China.
Article 7 A foreign-funded commercial enterprise shall meet the following requirements:
1.Its minimum registered capital shall conform to relevant provisions of the Company Law.
2.Registered capital of the total investment in the enterprise shall conform to relevant provisions on the establishment of foreign-funded enterprises;
3.The term of operation of a foreign-funded commercial enterprise shall not exceed 30 years in general, except in central and western regions where the term of operation of a foreign-funded commercial enterprise shall not exceed 40 years in general.
Article 8 a foreign-funded commercial enterprise shall meet the following requirements when opening a store:
1.Where it applies for establishing a store at the same time when applying for establishing a commercial enterprise, it shall follow relevant provisions on city development and urban commercial development.
2.Where a foreign-funded commercial enterprise whose establishment has been approved applies for establishing additional stores, it shall, in addition to meeting the requirements of item1, meet the following conditions:
(1)It shall have taken part in the joint annual examination on enterprises with foreign investment and have passed the examination;
(2)Its registered capital has been fully paid.
Article 9Foreign-funded enterprises may operate the following businesses upon approval:
1.For foreign-funded retail commercial enterprises:
(1)Retail of commodities;
(2)Import of self-managed commodities;
(3)Purchase of domestic products for export;
(4)Other relevant accessory businesses.
2.For foreign-funded wholesale commercial enterprises:
(1)Wholesale of commodities:
(2)Commission agency (excluding auction);
(3)Import and export of goods;
(4)Other relevant accessory businesses.
A foreign-funded commercial enterprise may authorize others to open stores by way of franchising.
A foreign-funded commercial enterprise may, upon approval, undertake one kind or several kinds of sales businesses. The kinds of commodities it manages shall be specified in the contents regarding business scope as prescribed in the contract or articles of association.
Article 10 The following procedures shall be followed when handling the establishment and opening of stores by a foreign-funded commercial enterprise:
1.The application and the examination and approval of the project, the feasibility study report and the establishment of a foreign-funded commercial enterprise shall be carried out in one step.
2.Except as otherwise prescribed by provisions in items (3) and (4) of this Article, investors of the foreign-funded commercial enterprise to be established and the already established foreign-funded commercial enterprises that applies for opening stores shall submit application documents as prescribed in Article 12 and Article 13 of these Measures to the competent commercial department of the province where the foreign-funded commercial enterprise makes registration. The said provincial department shall, after making preliminary examination on the documents submitted, report to the Ministry of Commerce within one month form the date of receiving all the application documents.
The Ministry of Commerce shall make a decision on whether to approve the application or not within three months from the date of receiving all the application documents. If it approves the establishment, the Certificate of Approval for Foreign-funded enterprise shall be issued; If it does not approve it, the reasons thereof shall be explained.
The Ministry of Commerce may authorize provincial competent commercial departments to examine and approve the foregoing applications in accordance with the Measures.
3.Where a foreign-funded retail commercial enterprise opens stores in regions under the jurisdiction of the provincial government of its locality, and meets the following conditions and its business scope does not involve the sales through televisions, telephone, mail order, internet or automats and the commodities as enumerated in Article 17 and Article 18 of these Measures, the said provincial competent commercial department shall examine and approve the application within its power of examination and approval and report it to the Ministry of Commerce for putting on records.
(1)The business area of a single store does not exceed 3,000 square meters, the number of stores does not exceed three, and the total number of stores in the same class opened by the foreign investor in China through foreign-funded commercial enterprises does not exceed 300.
(2)The business area of a single store does not exceed 300 square meters, the number of stores does not exceed 30, and the total number of stores in the same class opened by the foreign investor in China through foreign-funded commercial enterprises does not exceed 300.
4.Where the owners of the trademark or business name of a Sino-foreign equity or contractual joint venture commercial enterprise are Chinese-funded enterprises of Chinese natural persons, and the Chinese investors hold controlling shares in the foreign-funded commercial enterprise, and the business scope of the foreign-funded commercial enterprise does not involve the commodities as enumerated in Article 17 and Article 18 of these Measures, its applications for establishment and opening stores shall be examined and approved by the provincial competent commercial department of its locality.
Where a foreign-funded commercial enterprise opens stores in a different province, the opinions of the competent commercial department of the province where the planned stores are located shall also be solicited.
The provincial competent commercial department shall not transfer the power for examination and approval by itself as prescribed in items(3)and (4) of this Article to a lower department without the authorization of the Ministry of Commerce.
Article 11 The investors shall, within one month after receiving the approval certificate, go through registration formalities at the administrative department for industry and commerce by the Certificate of Approval for Foreign-funded Enterprise.
Article 12 The following documents shall be submitted when applying for establishing a foreign-funded commercial enterprise:
1.Application letter;
2.Feasibility study report jointly signed by each investor;
3.Contract, articles of association(for a foreign-funded commercial enterprise, only articles of association shall be submitted) and their appendices;
4.Letter of creditworthiness, registration certificate (photocopy)and proof of identity of the legal representative (photocopy) of each investor; proof of identity shall be provided where the foreign investor an individual;
5.Audit report of each investor in the recent one year as audited by an accountant firm;
6.Evaluation report on state-owned assets invested in the Sino-foreign equity or contractual joint venture commercial enterprise by the Chinese investor;
7.Catalogue of import and export commodities of the planned foreign-funded commercial enterprise;
8.Name list of members of the board of directors of the planned foreign-funded commercial enterprise and the appointment letters for the directors issued by each investor;
9.Notice of business name pre-registration as issued by the administrative department for industry and commerce;
10.Certificated of land use right of the land designated for the store to be opened and (or) the premises lease contract (photocopy), except when the business area of the store opened is less than 3,000 square meters; and
11.Explanatory letter as issued by competent commercial department of the locality of the planned store stating the store complies with the requirements for city development and urban commercial development.
In case the documents are signed by a person who is not the legal representative, a power of attorney of the legal representative shall be issued.
Article 13 Were an already established foreign-funded commercial enterprise applies for opening a store, it shall submit the following document:
1.application letter;
2.Revised contract or articles of association shall be submitted in case amendments to the contract or articles of association are involved;
3.Feasibility study report on opening the store;
4.Resolution of the board of directors on opening the store;
5.Audit report of the enterprise in the recent one year;
6.Capital verification report of the enterprise (photocopy);
7.Registration certificate (photocopy) and proof of identity of the legal representative (photocopy) of each investor;
8.Certificate of land use right of the land designated for the store to be opened and (or) the premises lease contract (photocopy), except when the business area of the store opened is less than 3,000 square meters;
9.Explanatory letter as issued by competent commercial department of the locality of the planned store stating the store complies with the requirements for city development and urban commercial development.
In case the documents are signed by a person who is not the legal representative, a power of attorney of the legal representative shall be issued.
Article 14 Contracts for authorized use of trademark or business name, technology transfer contracts, management contracts and service contracts signed by a foreign-funded commercial enterprise and other legal documents shall be deemed as appendices of the contract (for a foreign-funded commercial enterprise as the appendices of articles of association) and shall be submitted along with all other documents.
Article 15 A foreign-funded commercial enterprise shall, when opening a store, obtain the land for commercial use by way of public tender, auction, listing or other means in accordance with the provisions of relevant laws and administrative regulations of the state on land management.
Article 16 Where a foreign-funded commercial enterprise commodities on which the state has special provisions and the import and export goods involving quota or license administration, it shall go through formalities in accordance with relevant state provision.
Article 17 A foreign-funded commercial enterprise shall, when managing the following commodities, conform to following prescriptions in addition to the provisions of these Measures:
Where a foreign-funded commercial enterprise manages books, newspapers or periodicals, it shall conform to the Measures for the Administration of Foreign-funded Distribution Enterprises of Books, Newspapers, or Periodicals.
Where a foreign-funded commercial enterprise manages gas stations and deals with retail of refined oil, it shall have stable channel for supply of refined oil, conform to the local construction plan of oil stations, ensure its business facilities correspond with existing state standards and the provisions on measurement and inspection procedures, and meet the requirements for fire control and environmental protection, etc. The specific implementation measures shall be formulated by the Ministry of Commerce separately.
Where a foreign-funded commercial enterprise manages automobiles, it shall manage within the approved business scope. The specific implementation measures shall be formulated by the Ministry of Commerce separately.
Except as otherwise prescribed in Article 18 of these Measures and this Article, foreign-funded commercial enterprises managing farm products and by-products and agricultural production materials shall not be subject to restrictions on geographical location, equity ratio and amount of investment.
Foreign-funded wholesale commercial enterprises may not manage drugs, pesticides and agricultural films prior to December 11, 2004, and may not manage fertilizers, refined oil and crude oil prior to February 11, 2006.
Foreign-funded retail enterprises may not manage drugs, pesticides, agricultural films and refined oil prior to December 11, 2004, and may not manage fertilizers prior to December 11, 2006.
Foreign-funded wholesale commercial enterprises may not manage salt and tobacco.
Article 18 Where the same foreign investor opens more than 30 stores accumulatively within China that sell books, newspapers, magazines, automobiles ( this restriction shall be cancelled asof December 11, 2006), drugs, pesticides, agricultural films, fertilizers, refined oils, food, vegetable oil, sugar, cotton and other commodities of different brands from different suppliers, the proportion of capital contribution of the foreign investor shall not exceed 49 percent.
Article 19 Where a foreign-funded commercial enterprise authorized others to open stores by way of franchising, it shall, in addition to observing the provisions of these Measures, observe the special provisions of the state on franchising if any.
Article 20 Where a foreign-funded commercial enterprise manages auction business, it shall accord with the Auction Law, the Law on Cultural Relics and other relevant laws, and shall be examined and approved by the Ministry of Commerce. The specific implementation measures shall be formulated separately.
Article 21 The establishment of wholly foreign-owned commercial enterprises shall be allowed as of December 11, 2004.
Article 22 Foreign-funded retail commercial enterprises and their stores shall be restricted to capital cities of provinces and autonomous regions, municipalities directly under the Central Government, cities specially designated in the state plan and special economic zones prior to December 11, 2004. Geographical restrictions shall be cancelled from the date of implementation of these Measures.
Article 23 Where an enterprise with foreign investment invests in commercial fields within China, it shall accord with the Interim Provisions on Investment of Foreign-funded Enterprises in China, and refer to these Measures.
Article 24 Foreign-funded non-commercial enterprises undertaking the business activities as enumerated in Article 3 of these Measures shall conform to the provisions of these Measures, and alter by law their business scopes accordingly.
Article 25 Where investors from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan invest in establishing commercial enterprises in other provinces, autonomous regions and municipalities directly under the Central Government, they shall refer to these Measures in addition to the following prescriptions:
1.As of January 1, 2004, commercial service providers from Hong Kong and Macao shall be allowed to establish foreign-funded commercial enterprises in the mainland.
2.The geographic scope of retail enterprises establish in the mainland by Hong Kong and Macao commercial service providers shall be extended to cities at prefecture level nationwide, except in Guangdong where it is extended to cities at county level.
3.As of January 1, 2004, commercial service providers from Hong Kong and Macao shall be allowed to apply according to relevant articles of these Measures to establish commercial enterprises managing automobile retail business, provided the investor has an average annual sales volume no less than $100 million in the preceding three years prior to the application and assets no less than $10 million in the previous year prior to the application. The minimum registered capital of an automobile retail enterprise established in the mainland shall be 10 million yuan, except in central and western regions where the minimum registered capital of an automobile retail enterprise shall be 6 million yuan.
4.Chinese citizens among Hong Kong and Macao permanent residents shall be allowed to establish individual businesses according to relevant laws, regulations and rules to undertake commercial retail activities (excluding franchising). The business areas thereof shall not exceed 300 square meters.
5.Hong Kong/Macao commercial service providers as mentioned in this Article shall conform to definitions of and relevant requirements for “service providers” as prescribed in the Mainland/Hong Kong Closer Economic Partnership Arrangement and the Mainland/Macao Closer Economic Partnership Arrangement.
Article 26 Foreign-funded commercial enterprises shall be encouraged to join in relevant trade associations to strengthen self-discipline of the enterprises.
Article 27 The power to interpret these Measures shall remain with the Ministry of Commerce.
Article 28 These Measures shall be implemented as of June 1, 2004.
Article 29 The Measures for the Trial Establishment of Foreign-funded Commercial Enterprises as promulgated jointly by the former State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation shall be repealed as of the date of implementation of these Measures.
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Ningxia TLH Group Co., Ltd.All rights reserved.
Add：No.12-5, Minzu South Street, Xingqing District, Yinchuan, Ningxia, China
Tel: 86-951-5124500 Fax: 86-951-5124500，Ext.805 Mobile:17395175258 ; Post Code: 750006
Website: www.tlh-group.com E-mail: sales@tlh-group.com，export@tlh-group.com
Msn: tlh-group@hotmail.com; Skype: tlh-group; tlh_group;
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