MOFTEC Delivers: Foreign Majority Ownership Permitted in International Freight Forwarding Companies

On December 11 2002 the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) issued the Administration of Foreign-invested International Freight Forwarding Agencies Provisions (the New Provisions). The New Provisions became effective on January 10 2003, and replace the short-lived Order No. 31 - Administration of Foreign-invested International Freight Forwarding Agencies Provisions (the 2001 Freight Forwarding Provisions), which were issued by MOFTEC and effective from January 1 2002.

Under the New Provisions, foreign investors can now apply to establish a 75% stake in a new international freight-forwarding joint venture. This is an increase from the 49% stake that foreign investors were previously allowed in such international freight forwarding joint ventures. In addition, the New Provisions also expressly provide that foreign parties in existing international freight-forwarding joint ventures can now apply to increase their stake to 75%.

There has been some slight "clarification" concerning the areas that foreign-invested international freight forwarding enterprises are allowed to operate. The revision essentially reflects changes brought about as a result of the dispute between China Post/EMS and certain foreign-invested express courier companies. Foreign-invested express courier companies must now apply to the Ministry of Post for a Postal Entrustment Certificate in order to engage in the transport of mail and postal articles. The carriage of personal letters and most types of government-related documents is still expressly prohibited.