Measures for the Administration on Foreign Investment in Commercial
Fields
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 executive 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
April 16, 2004
Article 1 In order to further expand the open-up to the
outside world and improve the construction of market circulation
system. The present Measures are hereby formulated in accordance
with the Law of the People's Republic of China on Sino-foreign
Equity Joint Ventures, the 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, and the
Company Law, and other relevant laws and administrative regulations.
Article 2 Where a foreign company, enterprise and other
economic organization or individual (hereinafter referred to as
"foreign investors") establishes foreign-funded commercial
enterprises within the China territory and undertakes business
activities, the present Measures shall be observed.
Article 3 The "foreign-funded commercial enterprises" shall
refer to the enterprises with foreign investment which undertake the
following business activities:
1. Commission agency: selling agents, brokers, auctioneers or other
wholesalers for goods, who sell goods of other people and provide
relevant attaching services through collecting fees on the basis of
contract;
2. Wholesale: Selling goods to retailers, customers of industry,
commerce and organizations, or to other wholesalers or providing
relevant attaching services;
3. Retail: providing goods for consumption and use of individuals or
groups or offering relevant attaching services in the fixed places
or through television, telephone, mail order, internet, and
automats; or
4. Franchising: authorizing other people with using its trademark,
trade firm, or mode of management through signing contract for
gaining remunerations or franchising fees.
Foreign companies, enterprises, and other economic organs or
individuals shall carry out the 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 the relevant rules of the
People's Republic of China. Their proper business activities and
legal rights and interests shall be subject to the protection of the
Chinese laws.
Article 5 The competent commerce departments of the state
shall make supervision over and administration on foreign investment
in commercial fields and the business activities of foreign-funded
commercial enterprises according to law.
Article 6 The foreign investors of the foreign-funded
commercial enterprises shall have good credit standing, and have no
acts in violation of Chinese laws, administrative regulations and
the relevant rules. Foreign investors who have stronger economic
power, advance experiences and marketing technology in
business management, and broad international marketing networks
shall be encouraged to establish foreign-funded commercial
enterprises.
Article 7 A foreign-funded commercial enterprise shall meet
the following requirements:
1. The minimum registered capital shall conform to the relevant
provisions of the Company Law.
2. Conforming to the relevant provisions on the registered capital
and total investment of the enterprises with foreign investment. And
3. The term of operation of a foreign-funded commercial enterprise
shall not exceed 30 years in general, and the term of operation of a
foreign-funded commercial enterprise that is established in the
middle and western areas 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
the 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 item 1, meet the
following conditions:
(1) Taking part in the joint annual examination on enterprises with
foreign investment and having passed the annual examination; and
(2) The registered capital of the enterprise has been fully paid.
Article 9 Foreign-funded enterprises may operate the
following business upon approval:
1. For the foreign-funded commercial enterprises that undertake
retailing business:
(1) Retailing of commodities;
(2) Importing of self-managed commodities;
(3) Purchasing domestic products for export; and
(4) Other relevant matching businesses. And
2. For the foreign-funded commercial enterprises that undertake
wholesaling business:
(1) Wholesaling of commodities;
(2) Commission agency (excluding auction);
(3) Importing and exporting of goods; and
(4) Other relevant matching 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 project initiation, feasibility study report of the
foreign-funded enterprise, and the report and verification on the
establishment of the enterprises once altogether.
2. Except the provisions in items (3) and (4) of paragraph one of
the present Article, the investors of the foreign-funded commercial
enterprises to be established and the already established
foreign-funded commercial enterprises that apply for opening stores
shall submit respectively the application documents as prescribed in
Article 12 and Article 13 to the competent commerce department at
the level of the province where the foreign-funded commercial
enterprise makes registration. The said competent commerce
department at the provincial level shall, after making preliminary
examination on the document submitted, report to the Ministry of
Commerce within one month from the date of receiving all the
application documents.
The Ministry of Commerce shall make decision on whether to approve
the application within 3 months from the date of receiving all the
application documents. If it approves the establishment, the
Certificate of Approval for Foreign-funded Enterprises shall be
issued; if it does not approve it, the reasons thereof shall be
explained.
The Ministry of Commerce may authorize the competent commerce
departments at the provincial level to examine and approve the
foregoing applications in accordance with the present Measures.
3. Where a foreign-funded commercial enterprise, which undertakes
the retail business opens stores within the administrative region at
the level of the province of its locality, and meets the following
conditions and its business scope does not concern the sale of
television, telephone, mail order, internet, or automats, and the
commodities as enumerated in Articles 17 and 18 of the present
Measures, the said competent commerce department of the province
shall examine and approve it within the power of its examination and
approval and report it to and put it on records at the Ministry of
Commerce.
(1) The business area of a single store does not exceed 3,000 square
meters, and the number of stores does not exceed 3, and the total
number of the similar stores established by foreign investors of the
stores within China through the foreign-funded commercial
enterprises they have established does
not exceed 30; and
(2) The business area of a single store does not exceed 300 square
meters, and the number of stores does not exceed 30, the total
number of similar stores opened in China by foreign investors of
these stores through the foreign funded commercial enterprises they
have established does not exceed 300. And
4. Where the owners of the trademark or business name of a
Sino-foreign equity joint venture or cooperative commercial
enterprise are Chinese-funded enterprises or Chinese natural
persons, and the Chinese investors have the controlling shares in
the foreign-funded commercial enterprise, and the business scope of
the foreign-funded commercial enterprise does not concern the
commodities as enumerated in Articles 17 and 18 of the present
Measures, its applications for establishment and opening stores
shall be examined and approved by the competent commerce department
at the level of the province where the enterprise is located.
If a store is opened in a different province, the opinions of the
competent commerce department at the level of the province where the
planned store is located shall also be consulted.
The competent commerce department at the provincial level shall not
transfer the power for examination and approval as prescribed in
items (3) and (4) of paragraph 1 of the present Article by itself to
a lower level without the authorization of the Ministry of Commerce.
Article 11 The investors shall, within one month after
receiving the certificate of approval, go through the registration
formalities at the administrative department for industry and
commerce upon the strength of the Certificate of Approval for
Foreign-funded Enterprises.
Article 12 The following documents shall be submitted when
applying for establishing a foreign-funded commercial enterprise:
1. Application letter;
2. Feasibility study report signed by all the investors together;
3. Contract, articles of association (for a foreign-funded
commercial enterprise, only the articles of association should be
submitted) and the attachment;
4. Bank credit certificates of all investors, registration
certificate (photocopy), certificate of the legal representative
(photocopy), if the foreign investor is an individual, his/her
identity certificate shall be
provided;
5. The audit report of all investors in the recent one year, which
is audited by accountant firms;
6. The evaluation report on state-owned assets invested into the
Sino-equity joint venture or contractual joint venture commercial
enterprises by Chinese investors;
7. Catalogues of import and export commodities of the planned
foreign-funded commercial enterprise;
8. Name list of the members of the board of directors of the planned
foreign funded commercial enterprise and the power of attorney for
directors of each investor;
9. Notice of pre-approval of the enterprise name as issued by the
administrative department for industry and commerce;
10. The certificate documents (photocopy) of the use right of the
land used for the planned store and (or) house lease agreement
(photocopy), except when the business area of the store to be opened
is less than 3,000 square meters;
and
11. The documents of statement in conformity with the requirements
for city development and urban commercial development as issued by
the competent commerce department of the government at the locality
of the store.
In case that the documents are signed by a person who is not the
legal representative, the power of attorney of the legal
representative shall be issued.
Article 13 Where an already established foreign-funded
commercial enterprise applies for opening a store, it shall submit
the following documents:
1. Application letter;
2. The revised contract or articles of association shall be
submitted in case the amendments to the contract or articles of
association are involved;
3. Feasibility study report on opening the store;
4. Resolutions of the board of directors on opening the store;
5. The audit report of the enterprise in the recent one year;
6. The capital verification report of the enterprise (photocopy);
7. Registration certificate (photocopy) of all the investors, and
the certificate of the legal representative (photocopy);
8. Certificate documents of the use right of the land that is used
for the store to be opened and (or) house lease agreement
(photocopy), except when the business area of the store opened is
less than 3,000 square meters; and
9. The documents of statement in conformity with the requirements
for city development and the commercial development of the city as
issued by the government where the planned store is located. In case
the document is signed by the person who is not the legal
representative, the power of attorney of the legal representative
shall be issued.
Article 14 The license contract for use of a trademark or a
business name, technology transfer contract, management contract and
service contract signed by a foreign-funded commercial enterprise,
and other legal documents shall be deemed as the attachment of the
contract (for a foreign-funded commercial
enterprises, it shall be deemed as the attachment of the articles of
association) and be submitted along with all the other documents.
Article 15 The foreign-funded commercial enterprises shall,
when opening a store, obtain the land for commercial use by way of
public invitation of bidding, auction or listing in accordance with
the provisions of the relevant laws and administrative regulations
of the state on land management.
Article 16 Where a foreign-funded commercial enterprise
manages the commodities on which the state has special provisions
and the import and export goods involving quota or license
administration, it shall go through the formalities in accordance
with the relevant state provisions.
Article 17 A foreign-funded commercial enterprise shall, when
undertaking the following commodities, conform to the following
prescriptions in addition to the provisions of the present Measures:
Where a foreign-funded commercial enterprise undertakes 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 undertakes gas station
and deals with retail of refined oil, it shall have stable channel
for supply of refined oil, conform to the construction plan of the
local oil station, with the business establishments thereof
corresponding with the existing state standards and the provisions
on computation and checking procedures, and meet the requirements
for fire control and environmental protection, etc. In addition, the
specific implementation measures shall be formulated by the Ministry
of Commerce.
Where a foreign-funded commercial enterprise manages drugs, it shall
conform to the relevant standards for the administration of the drug
sale.
In addition, the specific implementation measures shall be
formulated by the Ministry of Commerce.
Where a foreign-funded commercial enterprise manages automobiles, it
shall manage within the approved business scope. In addition, the
specific implementation measures shall be formulated by the Ministry
of Commerce.
Except the special provisions in Article 18 of the present Measures
and the present Article, if foreign investors establish commercial
enterprises of farm products and by-products, and agricultural
production materials, they shall not be restricted by the region,
proportion of share, and the amount of investment.
No wholesaling foreign-funded commercial enterprises may manage
drugs, pesticides and agricultural films before December 11, 2004,
nor shall they manage fertilizers, refined oil and crude oil before
February 11, 2006.
No retailing foreign-funded enterprises may manage drugs,
pesticides, agricultural films and refined oil before December 11,
2004, nor shall they manage fertilizers before December 11, 2006.
No wholesaling foreign-funded commercial enterprises may manage salt
or tobacco, and no retailing foreign-funded commercial enterprises
may manage tobacco.
Article 18 Under the circumstance that the same foreign
investor opens more than 30 stores accumulatively within China, if
the goods it manages include books, newspapers, magazines,
automobiles (this restriction shall be cancelled from December 11,
2006), drugs, pesticides, agricultural films, fertilizers, refined
oils, food, vegetable oil, sugar, cotton, and other commodities, and
the above commodities are of different brands and come from
different suppliers, the proportion of capital contribution of the
foreign investors shall not exceed 49%.
Article 19 Where a foreign-funded commercial enterprise
authorizes others to open stores by way of franchising, it shall, in
addition to observing the provisions of the present 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, Laws
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 additionally.
Article 21 The establishment of foreign-funded commercial
enterprises shall be allowed from December 11, 2004.
Article 22 The regions where a foreign-funded retail
commercial enterprise and its stores may be established shall be
restricted to the provincial capital cities, metropolis of
autonomous regions, municipalities directly under the Central
Government, cities directly under state planning, and special
economic zones before December 11, 2004, and the regional
restrictions shall be cancelled after December 11, 2004.
Regional restrictions on foreign-funded wholesaling commercial
enterprises shall be cancelled from the date of implementation of
the present Measures.
Article 23 Where an enterprise with foreign investment
invests in commercial fields within the territory of China, it shall
accord with the Interim Provisions on Investment of Foreign-funded
Enterprises in China, and refer to the present Measures.
Article 24 Other foreign-funded enterprises undertaking the
business activities as enumerated in Article 3 of the present
Measures except the foreign-funded commercial enterprises, shall
conform to the provisions of the present Measures, and alter by law
the business scope accordingly.
Article 25 Where investors from Hong Kong Special
Administrative Region, Macao Special Administrative Region, and from
Taiwan region, who invest to establish commercial enterprises in
other provinces, autonomous regions, and municipalities directly
under the Central Government, shall refer to the present Measures in
addition to the following prescriptions:
1. From January 1, 2004, commercial service providers of Hong Kong
and Macao may establish foreign-funded commercial enterprises in the
Mainland.
2. The regional scope of retail enterprises established in the
Mainland by Hong Kong and Macao commercial service providers shall
be extended to cities at the prefecture level, and the cities at the
county level in Guangdong province.
3. From January 1, 2004, the commercial service providers of Hong
Kong and Macao may apply according to the relevant articles of the
present Measures to establish commercial enterprises that undertake
automobile retail business, but their average sales volume per annum
in the past three years before application shall be no less than one
hundred million dollars; and the amount of capital in the previous
year before application shall be no less than 10 million dollars;
the minimum registered capital of an automobile retailing
enterprise, which is established in the Mainland shall be RMB 10
million Yuan,
and the minimum registered capital of an automobile retailing
enterprise, which is established in the middle and western districts
shall be RMB 6 million Yuan.
4. The Chinese citizens among the Hong Kong and Macao permanent
residents are allowed to establish individual business according to
the relevant laws, regulations and rules to undertake commercial
retail activities (excluding franchising), the business areas
thereof shall not exceed 300square meters.
5. The Hong Kong/Macao commercial service providers as mentioned in
this Article shall conform to the definitions of and the relevant
requirements for "service providers" as prescribed in the
"Mainland/Hong Kong Closer Economic Partnership Arrangements" and
the "Mainland/Macao Closer Economic Partnership Arrangements".
Article 26 The foreign-funded commercial enterprises shall be
encouraged to join in the relevant trade associations to strengthen
self-discipline of the enterprises.
Article 27 The responsibility to interpret the present
Measures shall be remained with the Ministry of Commerce.
Article 28 The present Measures shall be implemented as of
June 1, 2004.
Article 29 The Measures for Trial Implementation of the
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 abolished as of the
date of the implementation of the present Measures.
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