"Foreign Investments : Business Guidelines – the Management Approach" clearly stipulates that foreign-invested commercial enterprises are those engaged in the following business activities:-
- 1. Commission agency: sales agents, brokers, auctioneers or other wholesalers through which a fee on the basis of the contract for sales of goods of others and related ancillary services ;
- 2. Wholesale: For retailers and industrial, commercial , institutional and other users or to other wholesalers and related subordinated services or sales of goods ;
- 3. Retail: at a fixed location or through television, telephone, mail order, Internet, vending machines, for individuals or groups for consumer goods used sales and related ancillary services ;
- 4. Franchising: For rewarding or franchise fee by signing a contract which was awarded to others to use its trademarks, trade names, business model and so on. Foreign companies, enterprises and other economic organizations or individuals, it must set up another China's foreign-invested enterprises from the matters preceding paragraph ( 1 ) , ( 2 ) , ( 3 ) , ( 4 ) operating activities as required.
"Foreign Investment in Commercial Fields - the Management Approach" clearly stipulates that foreign-invested commercial enterprises by foreign investors should have a good reputation, no violation of Chinese laws, administrative regulations and relevant rules such kind of behavior. It encourages a strong economic strength, with advanced management experience and commercial marketing techniques, extensive international sales network from foreign investors which holds foreign-invested commercial enterprises.
I. Foreign invested commercial enterprises shall comply with the following conditions:-
- i. Minimum registered capital requirement in accordance with "Company Law", the relevant provisions.
- ii. To meet the relevant provisions concerning foreign-invested enterprises registered capital and total investment.
- iii. Usually, the operation period of foreign-invested commercial enterprises is not more than 30 years in the Midwest, the establishment of foreign-invested commercial enterprises and its operating period are not more than 40 years.
II. Foreign invested commercial enterprises set up shop shall meet the following conditions:-
i. While establishing a commercial enterprise for the application, it also apply to open a store and should be in consistent with urban development and urban commercial development regulations.
ii. It has approved the establishment of foreign-invested commercial enterprises to apply for open a store. In addition to comply with ( i ) the entry requirements, it also has to fulfill the following conditions:-
(1) To participate in the joint annual inspection of foreign-invested enterprises on time and the annual examination;
(2) The registered capital is paid in full.
For the foreign-invested commercial enterprises operate the following goods, in addition to comply with "Foreign Investment: Business Guidelines – the Management Approach", it must meet the following requirements :-
- 1. Foreign-invested commercial enterprise which has management books, newspapers, periodicals, should follow the "Foreign- invested books, newspapers, periodicals distribution business Management approach ".
- 2. Foreign-invested commercial enterprises which engage in the business of refined oil retail stations, it should have a stable oil supply channels in accordance with local gas station construction planning. Business facilities must comply with existing national standards and metrological verification regulations, in compliance with fire and environmental protection to requirements, specific implementation measures. It shall be formulated separately by the Commerce Department.
- 3. Foreign-invested commercial enterprises which operate drugs must comply with the relevant pharmaceutical sales management practices. Specific measures for implementation of these business affairs.
- 4. Foreign-invested commercial enterprises which operate vehicles should be operated within the approved business scope. Specific implementation measures prepared by the Ministry of Commerce are separately fixed.
- 5. Article 18. Except as otherwise provided in this section, and foreign investment in the establishment of agricultural products, agricultural production materials from commercial enterprises, geographic, equity ratio and the amount of investment restrictions.
- 6. For wholesaling foreign-invested commercial enterprises, with effect from 11 December 2004, it shall not operate pharmaceuticals, pesticides and plastic sheeting. Before 11 February 2006, it cannot operate chemical fertilizers, processe oil and crude oil.
- 7. For retailing foreign-invested commercial enterprises, with effect from 11 December 2004, it shall not operate pharmaceuticals, pesticides and oil. Before 11 December 2006, it shall not operate fertilizers.
- 8. For those wholesaling foreign-invested commercial enterprises, it may manage salt, tobacco, retailing foreign-invested commercial enterprises that shall not smoke grass.
- 9. For the same foreign investors set up shop in the territory accumulated for over 30, if the goods including books, newspapers, magazines, automotive (with effect from 11 December 2006, there is the abolition of restrictions), pharmaceuticals, pesticides, fertilizers, oil, food, vegetable oil, sugar, cotton and other commodities, and the above commodities are of different brands from different suppliers, foreign investors ownership may not exceed 49%.