Administration of the Establishment of Foreign-invested Export Procurement Centres Procedures

(Promulgated by the Ministry of Commerce, General Administration of Customs, State Administration of Taxation, and State Administration of Foreign Exchange on November 17 2003 and effective 30 days after the date of promulgation.)

Article 1: In order to further promote the development of foreign trade, broaden the opening to the outside world and attract foreign investment, these Procedures have been formulated in accordance with laws and regulations of the People's Republic of China concerning administration of foreign investment and foreign trade. Investment in and establishment of foreign-invested export procurement centres in China by foreign investors shall be carried out in accordance with these Procedures.

Article 2: For the purposes of these Procedures, the term "foreign-invested export procurement centre" means foreign-invested enterprises engaged in export procurement business that are established in China by foreign investors in the form of wholly-owned enterprises or equity joint ventures with Chinese investors. Export procurement centres shall be limited liability companies.

Article 3: Foreign investors applying to establish foreign-invested export procurement centres shall have established an international marketing network and have the capacity for export procurement.

The Chinese investor of a foreign-invested export procurement centre established in the form of an equity joint venture shall have good creditworthiness and the financial resources necessary for establishment of procurement centres.

Article 4: The registered capital of a foreign-invested export procurement centre shall be no less than Rmb30 million. The capital contribution by foreign and Chinese investors shall be handled in accordance with relevant prevailing provisions.

Article 5: Foreign investors may invest in and establish export procurement centres through their companies with an investment nature established in China.

Article 6: To establish a foreign-invested export procurement centre, the following documents shall be submitted to the Ministry of Commerce for approval after preliminary examination and consent by the department in charge of commerce of the province, autonomous region, municipality directly under the central government or city with an independent development plan of the place where the proposed foreign-invested export procurement centre is to be established:

(1) an application;

(2) registration certificates (copies), legal representative certificates (copies) and verification documents on creditworthiness of the investing parties;

(3) feasibility study report and articles of association (equity joint export procurement centres shall also provide the joint venture contract);

(4) names and résumés of members of the board of directors; and

(5) notice of advance approval of enterprise name issued by the relevant administration of industry and commerce.

The Ministry of Commerce shall, upon receipt of the complete set of application documents, issue a written official reply on whether or not to approve the application within 30 working days.

Article 7: A foreign-invested export procurement centre may engage in the following businesses:

(1) procurement of domestic goods for export as well as warehousing, information consultancy and technical services related to export;

(2) import of raw and supplementary materials and the engaging of other enterprises to process for re-export; and

(3) import of samples needed for export procurement. The quantity and prices of the samples imported shall comply with relevant customs provisions on import of samples.

Article 8: To procure goods subject to state quota or licensing administration for export, the quotas or licences shall be applied for and obtained in accordance with relevant state provisions. Before export procurement of goods subject to state invitation for bids for quotas, a foreign-invested export procurement centre shall participate in the invitation for bids for exports in accordance with relevant provisions on invitation for bids for exports.

Article 9: Opening of foreign exchange accounts for receipt and payment of foreign exchange by foreign-invested export procurement centres shall be handled in accordance with prevailing provisions on foreign exchange administration.

Article 10: Tax rebates to foreign-invested export procurement centres established outside bonded zones shall, mutatis mutandis, be handled in accordance with relevant provisions on export of domestic products by foreign-invested companies with an investment nature. Tax rebates to foreign-invested export procurement centres established within a bonded zone shall be handled in accordance with relevant prevailing provisions on tax rebates to enterprises within bonded zones for export of products.

Article 11: Foreign-invested export procurement centres engaging in imports processing on entrustment for re-export shall, mutatis mutandis, be handled in accordance with relevant provisions on engaging in the same type of business by foreign trading equity joint ventures. Their products shall all be exported and shall in general not be sold domestically. If under special circumstances the products cannot be exported and need to be sold domestically, formalities for change to domestic sale shall be carried out in accordance with relevant provisions on processing trade. Such change shall be reported to the provincial-level department of commerce of the place where the foreign-invested export procurement centre is located for approval and issue of the approval documents for domestic sale and shall, at the same time, be filed with the Ministry of Commerce for the record. If import licensing documents are involved, import licensing documents shall be applied for in accordance with provisions. If verification and approval is required from the Ministry of Commerce, such shall be carried out in accordance with prevailing provisions.

Customs shall handle formalities for additional tax payment for domestic sale and check and release of the abovementioned domestically sold products on the strength of appropriate approval documents for domestic sale and valid import licensing documents.

Article 12: Unless provided otherwise, investment in and establishment of export procurement centres by investors from the Hong Kong and Macao Special Administrative Regions and the Taiwan region in other areas of China shall, mutatis mutandis, be handled in accordance with these Procedures.

Article 13: The Ministry of Commerce, General Administration of Customs, State Administration of Taxation and State Administration of Foreign Exchange shall be responsible for interpreting these Procedures.

Article 14: These Procedures shall be effective 30 days after the date of promulgation.