FICE APPLICATION PROCEDURES
Application Submissions
(I) Submissions for a General Commodity Distribution Application
1. Establishment of a new commercial (distribution) enterprise
(1) Application form
(2) Feasibility study report signed by all investing parties
(3) Contract and Articles of Association (only the latter is needed in the case of a commercial FIE application, applicable hereinafter) and their attachments
(4) Bank-issued credit standing certificates for all investing parties, registration documents (copies) and paper of the legal representative (copies). If the foreign investor is an individual, a valid ID shall also be provided.
(5) Auditing reports of all investing parties by accounting firms for the most recent year. (Enterprises established less than one year ago may skip this requirement).
(6) Appraisal report for state-owned assets proposed to be invested by the Chinese investor into a China-foreign joint equity or contractual commercial enterprise
(7) Catalogue of import and export commodities for the proposed commercial FIE
(8) Listing of directors on the board of the proposed commercial FIE and letters from various investing parties to appoint the directors
(9) A prior review and approval notice on the name of the enterprise provided by the competent administration of commerce and industry
(10) Land use right documents (copies) for the premise of the proposed outlet and/or rental agreements (copies), with the exclusion of outlets which operate on less than 3,000 square meters (the active operating area of the outlet does not include the office area, storage area and communal area of the enterprise, applicable hereinafter)
(11) Documents issued by the competent local commerce authority of where the proposed outlet is to be located which demonstrates the compliance with urban development and urban commercial development requirements (in the case that the proposed outlet is in a city of prefecture level or below, the document demonstrating the compliance with local commercial planning is unnecessary, applicable hereinafter)
In the event that the documents are signed by parties other than the legal representative, the power of attorney from the legal representative must be presented (applicable hereinafter)
2. Merger or acquisition with a domestic commercial (distribution) enterprise
(1) Application form
(2) Consensual decision of the shareholders, or a decision from the shareholders’ meeting of the target domestic corporate entity of limited liabilities endorsing the equity merger or acquisition with the foreign investor
(3) Contract and Articles of Association of the new FIE as a result of the merger or acquisition (only the latter is needed in the case of a commercial FIE application, applicable hereinafter) and their attachments
(4) Bank-issued credit standing certificates for all investing parties, registration documents (copies) and paper of the legal representative (copies). If the foreign investor is an individual, a valid ID shall also be provided.
(5) Agreement on the foreign investor’s purchase of shareholders’ equity from the domestic enterprise or capital injection subscription to the target domestic firm
(6) Financial auditing report of the target domestic firm for the most recent fiscal year; auditing reports of all investing parties by accounting firms for the most recent year. (Enterprises established less than one year ago may skip this requirement).
(7) A state-owned assets appraisal report and documentation shall be provided for a target domestic firm in possession of state-owned assets
(8) Catalogue of import and export commodities of the new enterprise as a result of the merger/acquisition
(9) Listing of directors on the board of the new FIE and letters from various investing parties to appoint the directors
(10) Land use right documents (copies) for the premise of the proposed outlet and/or rental agreements (copies), with the exclusion of outlets which operate on less than 3,000 square meters
(11) Documents issued by the competent local commerce authority of where the outlet is to be located which demonstrates the compliance with urban development and urban commercial development requirements
(12) Factual statements of enterprises with investment from the target domestic firm
(13) Business licenses (duplicate) of the target domestic firm and of the enterprises receiving investment from the domestic firm
(14) Displacement plan for employees of the target domestic firm
3. An already established enterprise applying for additions to its distribution scope
(1) Application form
(2) A consensual decision reached by the board of directors of the FIE on the addition to the distribution scope
(3) Agreement on the amendment to the contract and Articles of Association of the FIE
(4) Catalogue of import and export commodities for the FIE
(5) Certificate for the approval of the FIE and the business license (copies)
(6) Copies of the original contract and Articles of Association of the FIE
(7) A registered capital review report issued by a legally authorized capital review body showing full capitalization
4. An enterprise applying for reinvestment in establishing a commercial (distribution) enterprise
(1). Application form
(2). Bank-issued credit standing certificates for all investing parties, registration documents (copies) and paper of the legal representative (copies). If the foreign investor is an individual, a valid ID shall also be provided.
(3). Auditing reports of all investing parties by accounting firms for the most recent year. (Enterprises established less than one year ago may skip this requirement).
(4). A prior review and approval notice on the name of the enterprise provided by the competent administration of commerce and industry
(5). Land use right documents (copies) for the premise of the proposed outlet and/or rental agreements (copies), with the exclusion of outlets which operate on less than 3,000 square meters
(6). Documents issued by the competent local commerce authority of where the proposed outlet is to be located which demonstrates the compliance with urban development and urban commercial development requirements
(7). A consensual decision reached by the board of directors of the FIE on the investment plan
(8). Certificate for the approval of the FIE and the business license (copies)
(9). A registered capital review report issued by a legally authorized capital review body showing full capitalization
(10). Documents on income tax status of the FIE including tax reductions or exemption
(11). Articles of Association of the company receiving the investment
(12). Certificate for the approval of the FIE and the business license (copies)
(II) Submissions regarding the distribution of special commodities
1. Auto distribution
For a general dealer:
(1) An official notification document from the competent provincial commerce authority of where the proposed enterprise is located or a business group under direct state planning
(2) Application document signed by all investing parties for the establishment of the enterprise. It mainly covers:
a. Project profile: name of the enterprise and where it is registered, addresses of its subsidiaries, total investment, registered capital, profiles of the investing parties, shareholding structure and form, business scope, size and term of the enterprise
b. Construction and related information: major facilities, sources of the distributed commodities, mode of purchasing and delivery, environmental friendliness and fire prevention and security contingencies.
c. Professional auto marketing capability analysis: market research, marketing plan, advertising and promotion, network building and guidance, product related services, technical training and consulting, accessory supply, logistics management, organizational structure, staffing and type of employees.
In particular, the layout, scale and progress of the network building shall be clearly indicated in the network building section.
(3) The General Auto Dealer Authorization Letter issued by the auto producer (see Annex 1 for a sample). In the case that the auto producer is an overseas company, its registration documents (copies) and the paper of the legal representative (copies) shall be provided.
(4) Bank-issued credit standing certificates for all investing parties, registration documents (copies) and paper of the legal representative (copies). If the foreign investor is an individual, a valid ID shall also be provided;
Auditing reports of all investing parties by accounting firms for the most recent year
(5) Appraisal report for state-owned assets proposed to be invested by the Chinese investor into a China-foreign joint equity or contractual commercial enterprise
(6) Listing of directors on the board of the proposed commercial FIE and letters from various investing parties to appoint the directors
(7) A prior review and approval notice on the name of the enterprise provided by the competent administration of commerce and industry
For a brand dealer:
(1) An official notification document from the competent provincial commerce authority of where the proposed enterprise is located or a business group under direct state planning
(2) Application document signed by all investing parties for the establishment of the enterprise. It mainly covers:
a. Project profile: name of the enterprise and where it is registered, addresses of its subsidiaries, total investment, registered capital, profiles of the investing parties, shareholding structure and form, business scope, size and term of the enterprise
b. Construction and related information: number of subsidiaries (including outlets), operating area, opinion issued by the competent local commerce authority on the compliance of a proposed outlet with urban commercial development planning, major facilities, sources of the distributed commodities, mode of purchasing and delivery, environmental friendliness and fire prevention and security contingencies.
c. Analysis relating to the scope, scale and location of the auto distribution, facilities and professional technical staff
(3) Auto Brand Dealership Authorization Letter (see Annex 2 for a sample) issued by an auto supplier (auto producer or general auto dealer, applicable hereinafter). In the case the distributed autos are imported, an Auto Brand Dealership Authorization Letter issued by the domestic general dealer of the auto supplier shall be provided.
(4) Contract and Articles of Association (only the latter is needed in the case of a commercial FIE application) and their attachments
(5) Bank-issued credit standing certificates for all investing parties, registration documents (copies) and paper of the legal representative (copies). If the foreign investor is an individual, a valid ID shall also be provided;
Auditing reports of all investing parties by accounting firms for the most recent year
(6) Appraisal report for state-owned assets proposed to be invested by the Chinese investor into a China-foreign joint equity or contractual commercial enterprise
(7) Listing of directors on the board of the proposed commercial FIE and letters from various investing parties to appoint the directors
(8) A prior review and approval notice on the name of the enterprise provided by the competent administration of commerce and industry
(9) Land use right documents (copies) for the premise of the proposed outlet and/or rental agreements (copies), with the exclusion of outlets which operate on less than 3,000 square meters
2. Distribution of processed oil
Besides submissions required in a general commodity distribution application, the following shall also be submitted for an application of a processed oil wholesaling enterprises:
(1) Documents demonstrating stable channels of supply of processed oil;
(2) Documents demonstrating the possession of a wholly foreign-owned or majority foreign-held processed oil storage with a capacity of no less than 4,000 cubic meters and that the storage was constructed in accordance with the Oil Storage Design Specifications (GBJ74—84);
(3) Documents demonstrating the existence of facilities such as transmission pipelines, special rail lines or water transport docks for receiving or unloading processed oil;
(4) Documents demonstrating that the storage and other facilities comply with the national standards for safe production and environmental protection;
(5) Documents demonstrating the availability of professional technical staff for processed oil testing, measuring, storage and fire prevention operations;
(6) Documents demonstrating the compliance with the development of network for processed oil wholesaling;
(7) Miscellaneous documents on managerial affairs.
Besides submissions required in a general commodity distribution application, the following shall also be submitted for an application of a processed oil retailing enterprises:
(1) Stable channels of supply of processed oil and an oil supply agreement with a processed oil distributor with wholesaling qualifications;
(2) Documents demonstrating the compliance with the development of local gas stations
(3) Documents demonstrating the compliance of the design and construction of the gas station with relevant state standard requirements.
(4) Documents demonstrating the compliance of the construction of the gas station with relevant station regulations on land management, fire prevention and security and environmental protection;
(5) Documents demonstrating the availability of professional technical staff for processed oil testing, measuring, storage and fire prevention operations;
(6) In the case of an on-water gas station (supply vessel) supplying processed oil to ships, documents demonstrating the compliance with port and water transport safety and water pollution prevention regulations shall also be provided in addition to the above-mentioned documents.
3. Distribution of pharmaceuticals
Besides submissions required in a general commodity distribution application, a consent referral from a provincial drug supervisory administration, or consent on the establishment of the enterprise or drug distribution license has to be provided.
4. Distribution of audiovisual products
To apply for an enterprise wholesaling audiovisual products, the following submissions have to be prepared.
(1) Application for the establishment
(2) A project proposal or feasibility study prepared or endorsed by the parties to the enterprise and approved by the Ministry of Culture
(3) Acceptance document issued by the Ministry of Culture for the project
(4) Contract and Articles of Association of the proposed China-foreign contractual audiovisual product distribution enterprise signed by authorized representatives of the parties to the enterprise
(5) In the case that the Chinese partner predicates the partnership on state-owned assets, a confirmation issued by a state-owned assets administrator of the appraisal report on the proposed input of state-owned assets by the Chinese investor has to be provided.
(6) Business licenses or registration documents, credit standing certificates of all investing parties and a valid paper of the legal representative
(7) A prior review and approval notice on the name of the contractual joint venture provided by the competent administration of commerce and industry
(8) Listing of the chairman, vice chairman, directors or joint management committee director, vice director and members of the contractual joint venture appointed by the parties to the enterprise after consultation.
(9) Other documents requested by the Ministry of Commerce
To apply for an enterprise retailing audiovisual products, the following submissions have to be prepared:
(1) Application for the establishment
(2) A project proposal or feasibility study prepared or endorsed by the parties to the enterprise and approved by the Ministry of Culture
(3) Acceptance document for the project issued by a competent provincial cultural authority
(4) Contract and Articles of Association of the proposed China-foreign contractual audiovisual product distribution enterprise signed by authorized representatives of the parties to the enterprise
(5) In the case that the Chinese partner predicates the partnership on state-owned assets, a confirmation issued by a state-owned assets administrator of the appraisal report on the proposed input of state-owned assets by the Chinese investor has to be provided.
(6) Business license or registration documents, credit standing documents and a valid paper of the legal representative of the parties to the enterprise
(7) A prior review and approval notice on the name of the contractual joint venture provided by the competent administration of commerce and industry
(8) Listing of the chairman, vice chairman, directors or joint management committee director, vice director and members of the contractual joint venture appointed by the parties to the enterprise after consultation.
(9) Other documents requested by the competent provincial commence authority.
5. Distribution of books, newspapers and periodicals
(1) Application documents requested in Article 11 of this Measures and approval documents from the press and publication administration of the State Council;
(2) Contract and Articles of Association of the foreign invested distributor of books, newspapers and periodicals signed by the various investing parties or their authorized representatives;
(3) Listing of the directors on the board of the proposed foreign-invested distributor of books, newspapers and periodicals and their credentials;
(4) A prior review and approval notice on the name of the enterprise provided by the competent administration of commerce and industry;
(5) Other documents required by the laws and regulations
6. Distribution of commodities subject to quota licensing and specific administration
Besides submissions required in a general commodity distribution application, the business scope of the enterprise shall specify “in the event that the commodities to be distributed are subject to quota licensing and specific administration, the application shall be processed in accordance with relevant state regulations”.
Note: please refer to relevant regulations in the annexes for details
IV. Others
(I) Taxation for Foreign Invested Commercial (Distribution) Enterprises
According to the Notice of the State Taxation Administration of 1994 Regarding Tax Incentives to FIEs Engaged in Both Production and Non-production Activities and the Notice of the Ministry of Commerce on Matters Relating to Additions to Distribution Business Scope of Foreign Invested Non-commercial Enterprises, after an already existing production FIE is approved to make additions to its distribution business scope and within the period for tax reduction and exemption starting from the year in which the FIE profits, provided its operating revenues from productive activities exceed 50% of its total business revenues, it may apply for and enjoy tax reduction or exemption for the year upon the approval of a competent taxation authority.
In the event that a newly-established FIE has a business scope encompassing both production and distribution, it may apply for tax reduction and exemption to a competent taxation authority provided it complies with the Notice of the State Taxation Administration Regarding Tax Incentives to FIEs Engaged in Both Production and Non-production Activities.
(II) Applications by FIEs in Bonded Zones for Distribution Business
An FIE in a bonded zone may apply for distribution right in accordance with relevant laws. Once approved and the distribution right is gained, the FIE may proceed with customs declaration and foreign exchange check-out on its own and distribute its commodities out of the zone but within the Chinese territory in the capacity of a foreign trade operator.
Upon the approval of a competent commerce authority, an FIE in a bonded zone may set up an operational subsidiary outside the zone.
In the case that an FIE in a bonded zone makes an application to its initial approval authority for changing the registration location (outside the zone), its business scope has to be changed accordingly (the business activities which are only allowed in a bonded zone have to be removed). After the initial approval authority seeks the opinion of the competent commerce authority of where the enterprise is to be relocated and concedes to the change, the FIE may then change its registration location outside the bonded zone.
(III) Franchise Outlets
Upon approval, an FIE authorizing the outlets of another party to conduct commercial activities in the form of franchise is not subject to the restrictions set forth in Article 18 of Decree No.8 provided the accumulative number of authorized outlets is over 30.
Note: please refer to relevant regulations in the annexes for details
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