Relevant Administration of Qualifications in the Administration of Foreign-invested Construction Enterprises Provisions Implementing Measures

(Issued by the Ministry of Construction on April 8 2003.)

In order to implement the Administration of Foreign-invested Construction Enterprises Provisions (Order No.113 of the Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation) (the Provisions), these Measures are formulated.

I. Recipients of Foreign-invested Construction Enterprise Qualification Certificates

Construction enterprise qualification certificates shall be issued according to law to the following foreign-invested construction enterprises that have obtained the status of a Chinese enterprise legal person:

1. construction enterprises that are entirely capitalized from the investment of foreign investors;

2. construction enterprises established by foreign and Chinese investors through joint investment or cooperation; and

3. construction enterprises that are newly established by foreign-invested enterprises that are legally established in China who reinvest in China in their own name or construction enterprises formed by purchasing the equity of investors in another construction enterprise by such foreign-invested enterprises.

Construction enterprise qualification certificates shall not be issued to branch offices established in China by foreign enterprises or foreign enterprises together with other economic organizations.

II. Scope of Construction Activities for Foreign-invested Construction Enterprises

Construction activities referred to in Article 3 of the Provisions shall mean new construction, expansion and reconstruction activities in the fields of civil engineering, construction engineering, lines, pipelines and equipment installation, and refurbishment carried out in China in accordance with the PRC Construction Law and the Administration of the Quality of Construction Projects Regulations.

III. Ratification of the Qualifications of Foreign-invested Construction Enterprises

Applications for construction enterprise qualifications by foreign-invested construction enterprises shall be based on the Administration of Foreign-invested Construction Enterprises Provisions (Order No.113 of the Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation), the Administration of the Qualifications of Construction Enterprises Provisions (Order No.87 of the Ministry of Construction), the Administration of the Qualifications of Construction Enterprises Provisions Implementing Opinion (Jian Ban Jian [2001] No.24) and the Standards for Construction Enterprise Qualifications Levels (Jian Jian [2001] No.82), as well as other relevant rules and normative documents on the administration of construction enterprise qualifications.

1. Newly established foreign-invested construction enterprises shall be approved at the lowest level of qualification, which shall be valid for an interim period of one year.

2. Foreign-invested construction enterprises newly established by foreign enterprises that have already contracted construction projects in China may directly apply for the construction enterprise qualification of level two or higher if they have satisfied the following conditions in addition to the conditions specified by the construction enterprise qualification standards:

1) A foreign enterprise qualification certificate or construction project contracting approval certificate has been obtained from the Ministry of Construction, the administrative departments in charge of construction at the provincial level or the administrative department in charge of construction of a special economic zone or open coastal city before September 30 2003 in accordance with the Administration of the Qualifications of Foreign Enterprises that Contract Construction Projects in China Tentative Measures (Order No.32 of the Ministry of Construction);

2) In the application for the wholly foreign-owned construction enterprise qualification, the construction project contracting experience of a wholly foreign-owned construction enterprise in China shall meet the standards of construction project contracting experience required by the construction enterprise qualification being applied for, while in the application for the Sino-foreign equity or cooperative construction joint venture qualification, the combined construction project contracting experience of the foreign enterprise in China and the Chinese partner shall meet the standards of construction project contracting experience required by the construction enterprise qualification being applied for.

3. In the case where a foreign enterprise invests in the equity of a domestic construction enterprise, the enterprise nature of such domestic construction enterprise shall be changed into a Sino-foreign equity or cooperative construction joint venture and the enterprise's qualifications shall be ratified anew pursuant to the standards such enterprise has actually achieved.

4. In the case where a foreign enterprise acquires a domestic construction enterprise, the enterprise nature of such domestic construction enterprise shall be changed into a wholly foreign-owned construction enterprise and the enterprise's qualifications shall be ratified anew pursuant to the standards such enterprise has actually achieved.

5. After the Provisions take effect, Sino-foreign equity or cooperative construction joint ventures that were established before the Provisions took effect and could not satisfy the registered capital requirements of the on the Establishment of Foreign-invested Construction Enterprises Several Provisions (Jian Jian [1995] No.533) previously formulated jointly by the Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation may declare the appropriate level of construction enterprise qualifications.

IV. Qualifications for Foreign Service Providers in Foreign-invested Construction Enterprises

When declaring its qualifications, a foreign-invested construction enterprise shall submit legally executed labour contracts for foreign service providers employed as the technical engineering and economic management staff of such enterprise.

1. In the event that a foreign service provider is employed by a foreign-invested construction enterprise as an enterprise manager, the foreign service provider shall have construction management work experience as required by the construction enterprise qualification standards and relevant documentary evidence shall be provided.

2. In the event that a foreign service provider is employed by a foreign-invested construction enterprise as technical engineering or economic management staff, the foreign service provider shall satisfy the corresponding conditions required by the technical position specified in the construction enterprise qualification standards.

3. A foreign-invested construction enterprise that employs as technical engineering or economic management staff foreign service providers with undergraduate or higher degrees and more than ten years of related professional work experience may declare that it has staff with senior professional titles when declaring its qualifications. When the staff have undergraduate or higher degrees from a professional training college and more than five years of related professional work experience, the enterprise may declare it has staff with middle-level professional titles when declaring its qualifications.

4. In the event that a foreign service provider is employed by a foreign-invested construction enterprise as a project manager, if the service provider has satisfied the following conditions and can provide appropriate documentary evidence, the service provider may be approved by the qualification administration department as having the appropriate level of project manager qualifications when the enterprise declares its qualifications.

1) When declaring that a foreign service provider is qualified as a level one project manager, the foreign service provider shall have worked as the primary person in charge of construction management for a construction project that has met the requirements of level one construction enterprise qualification standards or for two construction projects that have met the requirements of level two construction enterprise qualification standards.

2) When declaring that a foreign service provider is qualified as a level two project manager, the foreign service provider shall have worked as the primary person in charge of construction management for two construction projects, at least one of which shall have met the requirements of level two construction enterprise qualification standards.

3) When declaring that a foreign service provider is qualified as a level three project manager, the foreign service provider shall have worked as the primary person in charge of construction management for two construction projects, at least one of which shall have met the requirements of level three construction enterprise qualification standards.

The number of foreign service providers approved as project managers of an enterprise according to the provisions of this Article shall not exceed one-third of the number of project managers required by the construction enterprise qualification standards.

5. Each of the foreign service providers employed by any foreign-invested construction enterprise as technical engineering and economic management staff shall stay in China for an accumulated period of at least three months each year.

V. Ratification of the Project Contracting Experience of Foreign-invested Construction Enterprises

After the Provisions take effect, in the event that the foreign investor of a foreign-invested construction enterprise contracts a construction project outside of China jointly with a Chinese construction enterprise or subcontracts a construction project to a Chinese construction enterprise, the experience of that contracted construction project may be taken as the construction project contracting experience of that foreign-invested construction enterprise when applying for construction enterprise qualifications or in the annual qualification inspection.

VI. The Scope of Construction Project Contracting for Foreign-invested Construction Enterprises

"Jointly contracted by Chinese and foreign construction enterprises" specified in Item (4) of Article 15 of the Provisions shall mean that a wholly foreign-owned construction enterprise may contract a construction project jointly with domestic construction enterprises or Sino-foreign equity or cooperative construction joint ventures.

VII. Timing for Accepting and Processing Qualification Applications from Foreign-invested Construction Enterprises

The period from December 1 2002 to October 1 2003 shall be a transitional period for the simultaneous implementation of Order No.32 of the Ministry of Construction and the Provisions. During this transitional period, qualification administration departments shall accept and process qualification applications from foreign-invested construction enterprises at any time.

From October 1 2003 onwards, qualification applications from foreign-invested construction enterprises shall be accepted and processed according to the same time frame for accepting and processing qualification applications from domestic construction enterprises.

VIII. Relationship between the Provisions and Former Order No. 32 of the Ministry of Construction

In accordance with the provisions of Article 26 of the Provisions, construction projects contracted in China by foreign enterprises before October 1 2003 shall still be carried out according to former Order No.32 of the Ministry of Construction - the Administration of the Qualifications of Foreign Enterprises that Contract Construction Projects in China Tentative Measures.

1. Foreign enterprises that have obtained foreign enterprise construction project contracting qualification certificates may continue to contract construction projects in China (including approved construction projects that have not been completed), continue to apply to expand the construction project contracting region and continue to apply for the extension of their qualification certificates according to the provisions of the Administration of the Qualifications of Foreign Enterprises that Contract Construction Projects in China Tentative Measures.

2. Foreign enterprises that have not obtained a foreign enterprise construction project contracting qualification certificate may apply for the foreign enterprise qualification certificate in accordance with the provisions of the Administration of the Qualifications of Foreign Enterprises that Contract Construction Projects in China Tentative Measures.

3. From October 1 2003 onwards, qualification administration departments shall no longer accept and process applications from foreign enterprises for qualifications for construction project contracting in China and shall not approve renewal of qualification certificates or the expansion of construction project contracting regions. Foreign enterprises may continue to finish construction projects, the contracts for which were executed before such date, if the contract term or actual performance period extends beyond October 1 2003.

1 Translation provided by Freshfields Bruckhaus Deringer.