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Measures for The Administration of Foreign-invested Enterprises in

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The project proposal, feasibility report and application for the establishment of the Commercial FIE shall be examined and approved or rejected after one

Measures for The Administration of Foreign Investment in The Commercial Sector

Article 1 These Measures are formulated in accordance with such laws and regulations

    as s Republic of China on Chinese and Foreign Equity Joint

    Ventures>, s Republic of China on Chinese and Foreign Cooperative Joint Ventures>, s Republic of China on Wholly Foreign-Owned Enterprises>, and s Republic of China>.

Article 2 These Measures apply to Commercial foreign-invested enterprises

    (Commercial FIES) established by foreign companies, enterprises, or other economic

    entities or individuals (Foreign Investors) in the PRC.

Article 3 Commercial FIES refers to FIES engaging in:

(1) Commission agency: Where an agent, broker, auctioneer, or other distributors

    engage in the sale of goods of others and provide the auxiliary services by agreement

    and in exchange for fees.

(2) Wholesaling: Sale of goods to retailers, industrial, commercial, and institutional

    customers, or other distributors, and provision of the related services.

(3) Retailing: Sale of goods to individual or group customers at a fixed geographic

    location, on television, by phone, by mail, on the World Wide Web, through

    automated vending machines, and provision of the related services.

(4) Franchising activities: Granting the right to use ones trademark, trade name or

    operating model to others by agreement and in exchange for remuneration or

    franchising fees.

Foreign companies, enterprises, and other foreign economic entities or individuals may only

    engage in the business activities in Clauses 3(1), 3(2), 3(3) and 3(4) above through the

    establishment of Foreign Invested Enterprises (FIES).

Article 4 Commercial FIES shall abide by the laws, rules, and regulations of the PRC.

    Their legitimate business activities and legal rights shall be protected by the laws, rules, and

    regulations of the PRC.

Article 5 The Ministry of Commerce (MOFCOM) and its regional departments are

    the competent approval and supervision authority.

Article 6 Foreign investors must have good standing and credit, and must not have

    violated Chinese laws, rules, or regulations. Foreign investors that possess comparatively

    strong economic power, advanced marketing skills and managing experiences, and wide

    international marketing network are encouraged to establish Commercial FIES in the PRC.

Article 7 Commercial FIES shall meet the following conditions:

(1) Minimum registered capital under the s Republic of

    China> and the related regulations;

(2) Abiding by the relevant regulations on the registered capital, and on the total amount

    of investment for FIES; and

(3) In general, the operating period shall not exceed 30 years, 40 years for central and

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    western regions.

    Article 8 Where Commercial FIES seek to open stores, the following conditions shall be met:

(1) Where the application to establish a Commercial FIE and the application to open a

    store are submitted at the same time, such arrangement must adapt to the commercial

    development plans of the cities where they are located.

(2) Where an approved Commercial FIE applies to open a store, in addition to meeting

    the condition set out in Clause 8(1), the following conditions shall also be met:

    (i) The Commercial FIE shall participate in the annual inspection for

    Commercial FIES in a timely manner, and shall pass the inspection; and

    (ii) The Commercial FIEs registered capital shall be fully paid up.

    Article 9 Subject to approval, Commercial FIES may engage in the following business activities: A retailing Commercial FIE is allowed to engage in the retail of merchandise, to

    import merchandise for its own use, to procure domestic products for exportation and to carry

    out other auxiliary activities. A wholesaling Commercial FIE may carry out wholesaling,

    commission agency (excluding auctions), import and export, and other auxiliary activities.

Commercial FIES may transfer franchising rights to third parties to open stores.

Subject to approval, Commercial FIES may engage in one or more of the sales activities

    mentioned above. The types of merchandise shall be specified under the business scope in

    the joint venture contract or the articles of association of the Commercial FIE, as the case may

    be.

    Article 10 The following procedures shall be followed for the establishment of Commercial FIES and the opening of stores:

(1) The project proposal, feasibility report and application for the establishment of the

    Commercial FIE shall be examined and approved or rejected after one review;

(2) Except where Clause 10(3) or Clause 10(4) provides otherwise, investors proposing

    to establish a Commercial FIE, or established Commercial FIES proposing to open a

    new store shall submit the documents listed under Article 12 or Article 13 (as the case

    may be) to the provincial level commercial authority of MOFCOM overseeing the

    Commercial FIEs place of registration or proposed place of registration. After a

    preliminary review by the provincial level commercial authority of MOFCOM, all of

    the application documents would be transferred to MOFCOM within one month of

    the submission of the application documents. MOFCOM shall make a final decision

    as to approve or to reject the application within three months of receiving all of the

    application documents. A Commercial FIE Approval Certificate will be issued in

    respect of an approved application, and MOFCOM will state the reasons for each

    rejected application.

     MOFCOM reserves the right to delegate its approval authority to its provincial level

    commercial authorities.

(3) Where a retail Commercial FIE purports to open a store in the provincial jurisdiction

    where it is located, provided that the following conditions are satisfied, and that its

    business scope does not include sale of goods on television, by phone, by mail, on the

    2 #36537 v1

    World Wide Web, through automated vending machines, or any merchandise listed in

    Article 17 or Article 18 of these Measures; the provincial level commercial authority

    of MOFCOM could approve the application in lieu of MOFCOM. The provincial

    level commercial authority of MOFCOM should then file records of the application

    with MOFCOM.

    (i) The business area of any single store of the Commercial FIE is 3,000 square

    meters or less, and the total number of stores does not exceed 3; furthermore,

    the total number of stores of the same kind opened by the same foreign

    investor in China through establishing Commercial FIES does not exceed 30;

    (ii) The business area of any single store of the Commercial FIE is 300 square

    meters or less, and the total number of stores does not exceed 30; furthermore,

    the total number of stores of the same kind opened by the same foreign

    investor in China through establishing Commercial FIES does not exceed

    300.

(4) Where the trademark or trade name of the Chinese foreign equity joint venture or

    Chinese foreign cooperative joint venture is owned by domestic enterprises or

    Chinese natural persons, and where Chinese investor(s) is/are the controlling

    shareholder(s) of the Commercial FIE, and the Commercial FIEs business scope

    does not encompass any merchandise listed in Article 17 or Article 18 of these

    Measures, then an application to establish the Commercial FIE or to open an

    associated store could be submitted to the provincial level commercial authority of

    MOFCOM overseeing the place where the Commercial FIE is located. The opinion

    of the provincial level commercial authority of MOFCOM in the jurisdiction where

    the store is intended to be located must also be sought for an application to open a

    store in a province or province equivalent territory other than in the province or

    territory where the Commercial FIE is located.

Provincial level commercial authorities of MOFCOM must not exercise any of the approval

    authorities referred to in Clause 10(3) and Clause 10(4) above without first receiving

    MOFCOMs express delegation of authority in this regard.

Article 11

The investor shall, within ONE month of receiving the approval certificate from the relevant

    commercial authority, bring the Commercial FIE Approval Certificate to proceed with

    registration at the local Administration of Industry and Commerce.

    Article 12 The following documents should be submitted in order to establish a Commercial FIE:

(1) Application letter;

(2) Feasibility report compiled by all operators;

(3) Joint venture contract and articles of association (articles of association only in the

    case of Wholly Owned Commercial Foreign Invested Enterprises (Commercial

    WFOES)) and schedules;

    (4) Banks certification on property and credit, certificate of registration (photocopy),

    legal representative certificate (photocopy); where the foreign investor is an

    individual, the individuals identification documents;

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(5) The audited financial reports of all operators for the most recent financial year;

(6) (If Chinese operator makes investment with State-owned property) the confirmation

    document of state-owned property managing departments on the assessing report

    concerning the Chinese operators investing state-owned property;

    (7) The Commercial FIEs draft import and export merchandise list;

(8) The list of the members of the board of directors of the Commercial FIE, and letters

    of appointment of the directors of all operators;

(9) Business name approval document issued by the relevant local authority of the

    Administration of Industry and Commerce;

(10) Land use right certificate (photocopy) and/ or lease agreement (photocopy) for the

    space where the store to be opened would be located, unless the stores business area

    is less than 3,000 square meters;

(11) Documents issued by the local government overseeing the planned location for the

    store, showing that the project meets the commercial development plans and

    requirements of the city where the store will be located.

Document not signed by the legal representative must be accompanied by a power of attorney

    signed by the legal representative.

Article 13

Where an established Commercial FIE applies to open a store, the following documents shall

    be submitted:

(1) Application letter;

(2) Revised joint venture contract or articles of association, if any;

(3) Feasibility report concerning the opening of the store;

(4) Board resolution to open the store;

    (5) The Commercial FIEs audited financial report for the most recent financial year;

    (6) The Commercial FIEs asset verification report (photocopy);

(7) Certificate of registration (photocopy) and legal representative certificate (photocopy)

    of all operators;

(8) Land use right certificate (photocopy) and/ or lease agreement (photocopy) for the

    space where the store to be opened would be located, unless the stores business area

    is less than 3,000 square meters;

(9) Documents issued by the local government overseeing the planned location for the

    store, showing that the project meets the commercial development plans and

    requirements of the city where the store will be located.

Document not signed by the legal representative must be accompanied by a power of attorney

    signed by the legal representative.

    4 #36537 v1

    Article 14 Where the Commercial FIE has entered into an agreement concerning the use of trademark and trade name, technological transfer, management agreements, service

    agreements, such agreements shall be attached to the joint venture contract (or the articles of

    association of Commercial WFOE) as a schedule, and be submitted to the relevant

    commercial authority altogether.

    Article 15 Commercial FIES shall acquire the land to be used for the business operations of their stores through public tender, auction or publicly listed sale, in accordance

    with the relevant laws and regulations on land management.

    Article 16 Commercial FIES trading in merchandises that are subject to special regulations, or in import or export merchandises that are subject to state imposed quotas or

    permits must abide by the relevant state regulations in that regard.

    Article 17 Where the business scope of the Commercial FIE encompasses the following merchandises, the following regulations must be followed in addition to these Measures:

    Where the business scope of a Commercial FIE encompasses books, newspapers, and

    periodicals, the

    Periodicals Distribution Enterprises> must be followed.

Where a Commercial FIE operates in gas stations that engage in the retail distribution of

    finished oil products, the Commercial FIE must ensure that it has a stable source of supply of

    finished oil products, that it respects local regulations on the construction of gas stations, that

    the facilities and equipment involved respect national standards and regulations, and that the

    relevant fire and environmental protection requirements have also been met. The detailed

    implementation measures in this regard will be separately set out by MOFCOM.

Where a Commercial FIEs business scope encompasses pharmaceutical products, the

    national laws and regulations on the sale of pharmaceutical products must be respected. The

    detailed implementation measures in this regard will be separately set out by MOFCOM.

Where a Commercial FIEs business scope encompasses motor vehicles, the Commercial FIE

    shall respect the approved business scope. The detailed implementation measures in this

    regard will be separately set out by MOFCOM.

Except where this Article or Article 18 of these Measures provides otherwise, Commercial

    FIES engaging in the trade of agricultural byproducts, agricultural production materials or

    data will not be subject to any geographic restrictions, or any restrictions with respect to the

    proportion of shareholding or the amount of investment.

Wholesale Commercial FIES may not engage in the trade of pharmaceuticals, pesticides and

    mulching films before December 11, 2004, and may not engage in the trade of fertilizers,

    finished oil products or crude oil before February 11, 2006.

Retail Commercial FIES may not engage in the trade of pharmaceuticals, pesticides,

    mulching film, or finished oil products before December 11, 2004, and may not engage in the

    trade of fertilizers before December 11, 2006.

Wholesale Commercial FIES may not engage in the trade of salt or tobacco, and retail

    Commercial FIES may not engage in the trade of tobacco.

    Article 18 A foreign investor that has opened a total of more than 30 stores in the PRC will not be allowed to hold more than 49% equity interests in a joint venture Commercial FIE

    if the goods it sells include books, newspapers, magazines, motor vehicles (this restriction

    5 #36537 v1

will be lifted as of December 11, 2006), pharmaceuticals, pesticides, mulching films,

    fertilizers, finished oil products, grain, vegetable oil, sugar for human consumption, and

    cotton, etc which are of various brands and from different suppliers.

    Article 19 Commercial FIES that authorize others to open franchise stores must abide by these Measures and other national regulations on franchising activities.

Article 20 Commercial FIES engaging in auction activities must abide by the

    Law>, the and other relevant laws, and subject to the approval of

    MOFCOM. The detailed implementation measures in this regard will be set out by

    MOFCOM.

    Article 21 The establishment of Commercial WFOES will be permitted as of December 11, 2004.

Article 22 Before December 11, 2004, retail Commercial FIES and its stores must be

    established in provincial capitals, capitals of autonomous regions, municipalities directly

    under the Central Government, municipalities separately listed on the State Plan or special

    economic zones. As of December 11, 2004, there will no longer be any geographic

    restrictions on the establishment of retail Commercial FIES and its stores.

Wholesale Commercial FIES will no longer be subject to any geographic restrictions as of the

    date these Measures come into force.

Article 23

FIES that purport to invest in the domestic commercial sector should abide by the

     in

    addition to abiding by these Measures.

Article 24

FIES other than Commercial FIES that purport to engage in the business activities described

    in Article 3 shall abide by these Measures, and adjust their business scope accordingly.

Article 25 The establishment of Commercial FIES in the mainland of China by investors

    from Hong Kong, Macao and Taiwan shall be dealt with in accordance with these Measures,

    modified as follows:

(1) As of January 1, 2004, commercial service providers from Hong Kong and Macao

    may establish Commercial WFOES in the mainland of China;

(2) Hong Kong and Macao commercial service providers may establish retail

    Commercial FIES in regional and county level municipalities in the province of

    Guangdong, and in regional level municipalities in the rest of mainland China.

(3) As of January 1, 2004, Hong Kong and Macao commercial service providers may

    apply to establish Commercial FIES in the mainland of China to engage in retail

    distribution of motor vehicles in accordance with these Measures and the related

    regulations subject to the following requirements: The average annual sales volume

    of the applicant Hong Kong or Macao commercial service provider must be at least

    USD100 million for the three years immediately preceding the application, with total

    assets of at least USD10 million in the year immediately preceding the application,

    and the registered capital of the proposed motor vehicle retail distribution FIE must

    be at least RMB10 million or RMB6 million in central and western regions of the

    6 #36537 v1

    mainland of China.

(4) Hong Kong and Macao permanent residents who are Chinese citizens may set up

    personal businesses to engage in commercial retail activities (except those activities

    where special business permits are required) in accordance with the laws, regulations,

    and rules of mainland China, with a business area not exceeding 300 square meters.

    (5) For the purpose of these measures, Hong Kong and Macao service providers shall

    meet the definition of, and the requirements for, Hong Kong and Macao service

    providers as set out in the

    Mainland and Hong Kong> or in the

    between the Mainland and Macao>, as the case may be.

Article 26 Commercial FIES are encouraged to participate in the relevant trade

    associations to strengthen self-governance.

    Article 27 MOFCOM is the competent authority for the interpretation of these Measures.

    Article 28 These Measures enter into force on June 1, 2004.

    Article 29 These Measures hereby replaces the Investment in Commercial Enterprises> promulgated by the former State Economic and Trade

    Commission and the Ministry of Foreign Trade and Economic Cooperation as of the date

    these Measures enter into force.

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     第一条 为进一步扩大对外开放,完善市场流通体系的建设,根据《中华

    人民共和国中外合资经营企业法》、《中华人民共和国中外合作经营企业法》、《中

    华人民共和国外资企业法》及《公司法》等法律、行政法规,制定本办法。

     第二条 外国公司、企业和其它经济组织或者个人(以下简称外国投资)在中国境内设立外商投资商业企业,从事经营活动,遵守本办法。

     第三条 外商投资商业企业是指从事以下经营活动的外商投资企业:

     (一)佣金代理:货物的销售代理商、经纪人或拍卖人或其他批发商通过

    收取费用在合同基础上对他人货物进行的销售及相关附属服务;

     (二)批发:对零售商和工业、商业、机构等用户或其他批发商的货物销

    售及相关附属服务;

     (三)零售:在固定地点或通过电视、电话、邮购、互联网络、自动售货

    机,对于供个人或团体消费使用的货物的销售及相关附属服务;

     (四)特许经营:为获取报酬或特许经营费通过签订合同授予他人使用其

    商标、商号、经营模式等。

     外国公司、企业和其它经济组织或者个人必须通过在中国境内设立的外商

    投资企业从事前款第(一)、(二)、(三)、(四)项所规定的经营活动。

     第四条 外商投资商业企业应遵守中华人民共和国法律、行政法规及相关

    规章,其正当经营活动及合法权益受中国法律的保护。

     第五条 国家商务主管部门依法对外商投资商业领域及外商投资商业企业

    的经营活动进行监督和管理。

     第六条 外商投资商业企业的外国投资者应有良好的信誉,无违反中国法

    律、行政法规及相关规章的行为。鼓励具有较强的经济实力、先进的商业经营管

    理经验和营销技术、广泛的国际销售网络的外国投资者举办外商投资商业企业。

     第七条 外商投资商业企业应当符合下列条件:

    8 #36537 v1

    (一)最低注册资本符合《公司法》的有关规定。

     (二)符合外商投资企业注册资本和投资总额的有关规定。

     (三)外商投资商业企业的经营期限一般不超过30年,在中西部地区设立外商投资商业企业经营期限一般不超过40年。

     第八条 外商投资商业企业开设店铺应当符合以下条件:

    (一)在申请设立商业企业的同时申请开设店铺的,应符合城市发展及城

    市商业发展的有关规定。

    (二)已批准设立的外商投资商业企业申请增设店铺的,除符合第(一)

    项要求外,还应符合以下条件:

    1 按时参加外商投资企业联合年检并年检合格;

    2 企业的注册资本全部缴清。

    第九条 经批准,外商投资商业企业可以经营下列业务:

    (一)从事零售业务的外商投资商业企业:

    1 商品零售;

    2 自营商品进口;

    3 采购国内产品出口;

    4 其它相关配套业务。

     (二)从事批发业务的外商投资商业企业:

     1、商品批发;

     2、佣金代理(拍卖除外);

     3、商品进出口;

     4、其它相关配套业务。

     外商投资商业企业可以授予他人以特许经营方式开设店铺。

     外商投资商业企业经批准可以从事以上一种或几种销售业务,其经营的商品

    种类应在合同、章程有关经营范围的内容中注明。

     第十条 外商投资商业企业的设立与开设店铺,按照下列程序办理:

     (一)外商投资商业企业的立项、可行性研究报告和企业设立一次性申报和

    核准。

    9 #36537 v1

     (二)除本条第一款第(三)、(四)项另有规定外,拟设立外商投资商业企

    业的投资者、申请开设店铺的已设立的外商投资商业企业需向外商投资商业企业

    注册地的省级商务主管部门分别报送第十二条和第十三条所规定的申请文件。省

    级商务主管部门对报送文件进行初审后,自收到全部申请文件之日起一个月内上

    报商务部。商务部应自收到全部申请文件之日起三个月内作出是否批准的决定,

    对于批准设立的,颁发《外商投资企业批准证书》,对于不批准的,应说明原因。

     商务部可以依照本办法授权省级商务主管部门审批上述申请。

     (三)从事零售业务的外商投资商业企业在其所在地省级行政区域内开设店

    铺,如符合以下条件且经营范围不涉及电视、电话、邮购、互联网络、自动售货

    机销售及本办法第十七条、十八条所列商品的,由该省级商务主管部门在其审批

    权限内审批并报商务部备案。

     1、单一店铺营业面积不超过3000平方米,且店铺数量不超过3家,其外国投资者通过设立的外商投资商业企业在中国开设同类店铺总数不超过30家;

     2、单一店铺营业面积不超过300平方米,店铺数量不超过30家,其外国投资者通过设立的外商投资商业企业在中国开设同类店铺总数不超过300家。

     (四)中外合资、合作商业企业的商标、商号所有者为内资企业、中国自然

    人,且中国投资者在外商投资商业企业中控股、该外商投资商业企业的经营范围

    不涉及本办法第十七、十八条所列商品的,其设立及开店申请由企业所在地省级

    商务主管部门在其审批权限内审批。如跨省开设店铺,还应征求拟开设店铺所在

    地省级商务主管部门的意见。

    未经商务部授权,省级商务主管部门不得自行下放本条第一款第(三)、(四)项

    所规定的审批权。

     第十一条 投资者应当自收到批准证书之日起一个月内,凭《外商投资企业

    批准证书》,向工商行政管理机关办理登记手续。

     第十二条 申请设立外商投资商业企业,应当报送下列文件:

     (一)申请书;

     (二)投资各方共同签署的可行性研究报告;

     (三)合同、章程(外资商业企业只报送章程)及其附件;

     (四)投资各方的银行资信证明、登记注册证明(复印件)、法定代表人证

    明(复印件),外国投资者为个人的,应提供身份证明;

     (五)投资各方经会计师事务所审计的最近一年的审计报告;

     (六)对中国投资者拟投入到中外合资、合作商业企业的国有资产的评估报

    告;

     (七)拟设立外商投资商业企业的进出口商品目录;

     (八)拟设立外商投资商业企业董事会成员名单及投资各方董事委派书;

     (九)工商行政管理部门出具的企业名称预先核准通知书;

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