Ministry of Commerce, Certain Issues Concerning the Inclusion of Distribution Business in the Business Scope of Foreign-invested Non-commercial Enterprises Circular

Issued: April 2 2005

Main contents: The Circular sets forth the procedures for including distribution business (wholesale, retail and commission agency) in the business scope of foreign-invested non-commercial enterprises. If opening of retail stores, or distribution of products not produced by a newly established foreign-invested enterprise, is involved, approval shall be carried out in accordance with relevant provisions of the Administration of Foreign Investment in the Commercial Sector Procedures. In the case of engagement in franchising, approval shall be carried out in accordance with the Administration of Commercial Franchising Procedures and specific requirements will be formulated separately. Production-type enterprises that do not change their nature after the change in business scope shall in general have its income from the distribution business not exceeding 30% of the enterprise's total sales volume. For those that are changed to non-production type enterprises, there is no limit on the ratio of income from the distribution business.
Related legislation: Administration of Foreign Investment in the Commercial Sector Procedures, Apr 16 2004, CLP 2004 No.4 p24 and Administration of Commercial Franchising Procedures, Dec 31 2004, CLP 2005 No.2 p26