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.
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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.
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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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