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Business
Rules for Establishing Enterprises 1

To expand the opening-up drive, to promote the reform and development of Chinese commercial enterprises and construction of the domestic market, and to facilitate the experiments with the utilization of foreign investment in the commercial sector, the State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation have worked out and promulgated Experimental Measures for Foreign-funded Commercial Enterprises. Currently, the Measures only permit foreign companies and enterprises to set up with Chinese companies and enterprises Chinese-foreign equity and contractual joint venture commercial enterprises in China. Wholly foreign-invested commercial enterprises are not allowed yet. Major stipulations are as follows:

1). The equity and contractual joint venture commercial enterprises to be established must comply with the commercial development plan of the locale city and should have the capacity to introduce world-advanced marketing techniques and management experience, advance local commercial modernization, propel exportation of domestic products and produce good economic and social results.

2). As stipulated by the State Council, the areas where equity and contractual joint venture commercial enterprises may be established are limited temporarily to provincial capital cities, capitals of autonomous regions, municipalities directly tender the jurisdiction of the central government, cities listed as independent units in the state plan, and special economic zones (hereafter referred to as pilot areas).

3). Investors in commercial joint ventures should meet the following requirements:

a. Foreign joint ventures or main foreign joint ventures (hereafter referred to as foreign joint ventures) should have comparatively high economic strength, advanced management experience and marketing techniques in commercial operations, broad international distribution channels, sound credit and good performance. In addition, they should help promote Chinese exports through the establishment of their joint ventures.

Foreign joint ventures applying foe" the establishment of joint ventures operating retail business should record all average annual sales volume of US$2.0 billion or more in the three years prior to the year of the application and should have assets of no less than US$200 million in the year prior to the year of the application.

Foreign joint ventures applying for the establishment of joint ventures operating wholesale business should record an average annual wholesale volume of US$2.5 billion or more in the three years prior to the year of the application and should have assets of no less than US$300 million in the year prior to the year of the application.

b. Chinese joint ventures or main Chinese joint ventures (hereafter referred to as Chinese joint ventures) should be distribution enterprises with comparatively high economic strength and operation capacities. The amount of their assets in the year prior to the application should be more than 50 million yuan (30 million yuan for central and western regions). For Chinese joint ventures who are commercial enterprises, the average annual sales volume in the three years prior to the application should be no less than 300 million yuan (200 million yuan for central and western regions). For foreign trade enterprises, the average annual self-operated export and import volume should be no less than US$50 million (exports should amount to no less than US$30 million).

 
   
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