Laws of the People's Republic of China

The State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation, the State Administration for Industry and Commerce

Circular of the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce on Further Enhancing the Check-up and Rectification of Non-pilot Commercial Enterprises with Foreign Investment of the State Economic and Trade Commission

GuoJingMaoWaiJing [2001] No.787

August 6,2001

The economic and trade committees (economic committees), committees (departments, bureaus, foreign investment committees) of foreign trade and economic cooperation, administrations for industry and commerce, and the relevant local commerce committees (industry offices) of all provinces, autonomous regions, municipalitie directly under the Central Government and municipality separately listed on the State plan:

The General Office of the State Council issued the Notice on the Check-up and Rectification of Non-pilot Commercial Enterprises with Foreign Investment (GuoBanFa [1998] No.98, hereinafter referred to as the No.98 Document) on July 1, 1998, and had made separate decisions of approving, rectifying and improving, and cancelling (revoking) the non-pilot commercial enterprises with foreign investment established upon the approval of the localities without authorization. However, No.98 Document hasn't been earnestly carried out in some areas yet, there are still some localities continuing to examine and approve without authorization the establishment of commercial enterprises with foreign investment as well as their branches. Up to the present, the localities have, without authorization, approved the establishment of 316 non-pilot commercial enterprises with foreign investment, among which 65 have changed from foreign-funded to domestic-funded, or have no longer run commcial business, or have been cancelled (revoked), and 251 are still running business. In order to safeguard the consistency and seriousness of the policies on pilot units using foreign investment in commcial business, and to ensure the healthy and orderly progress of utilizing foreign investment in the area of commcial business, the matters concerning further enhancing the follow-up work of the check-up and rectification are notified as follows upon the approval of the State Council:

1.

All the enterprises, which have been brought into the category needing rectification and improvement in No.98 Document while having not completed the rectification and improvement and which have been established upon the approval of the localities without authorization after the distribution of No.98 Document, shall be rectified and improved strictly according to the provisions of the Measures for Pilot Commercial Enterprises with Foreign Investment(hereinafter referred to as the Measures for Pilot Units). Every place shall finish the rectification and improvement by the end of 2001, and shall report the results of the rectification and improvement to the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce for examination. The enterprises that fail to finish the rectification and improvement upon the expiration of the time limit and that fail to meet the requirements of rectification and improvement after examination shall be ordered to suspend their business for rectification. Those still failing to meet the requirements of the rectification and improvement after suspension of business for rectification shall be given a time limit within which they shall make the registration of cancellation, or even the business licenses of them shall be revoked.

2.

The Chongqing Jiangtian International Business Square Co., Ltd. that has been brought into the category needing cancellation (revocation) in No.98 Document while still having not been cancelled (revoked) shall be cancelled (revoked) according to the provisions. With respect to the Chengdu Carrefour Chain Supermarket Co., Ltd. and the Shanghai Longhua Happy Daily Shopping Co., Ltd. established upon approval without authorization after the promulgation of the Notice on Immediately Stopping the Examination and Approval without Authorization and the Establishment in Disguised Form of Commercial Enterprise with Foreign Investment (GuoJingMaoWaiJing [2000] No.1072) by the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the former State Administration for Industry and Commerce on November 13, 2000, the foreign parties shall transfer their stock rights and withdraw from the operation. Every place shall fulfill the aforesaid measures by the end of 2001, and shall report the results to the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce for archivist purpose.

3.

With respet to the the 65 enterprises that have changed from foreign-funded to domestic-funded, or have no longer run commercial business, or have been cancelled, every place shall conduct further check-up and implementation, and shall, by the end of 2001, report the results to the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the State Administration of Industry and Commerce for archivist purpose.

4.

The 32 enterprises that have been brought into the category of approval in No.98 Document and the enterprises that meet the requirements of rectification and improvement after examination according to article 1 of this Notice shall be included in the pilot units step by step. Among which, the enterprises that are set up in the pilot cities, that have relatively advanced marketing skills and have relatively good performance with respect to the purchase of Chinese products by the foreign parties may be changed to pilot enterprises after being reported and approved according to the provisions of the Measures for Pilot Units. At the present, the enterprises set up in the non-pilot cities shall not be changed to pilot enterprises before there are new provisions promulgated, and the supervision and control over them shall be strengthened according to the provisions of No.98 Document, namely they "shall not enjoy the power of management over import and export businesses, shall not run wholesale business, shall not expand the business scope and construction scale, shall not establish branches or extend the cooperation period, and shall not enjoy the policies of tax reduction and exemption of imported equipment for self use and raw materials" (hereinafter referred to as "5 shall-nots"). If these enterprises establish branches in the pilot cities in the western areas, they may be changed to pilot enterprises after being approved according to the provisions of the Measures for Pilot Units.

5.

The enterprises established with the investment of the Carrefour Corporation of France shall be dealt with according to the Notice Concerning the Opinions on the Disposition of Carrefour Corporation of France Engaged in Commercial Businesses in Violation of Rules of Our Country (GuoJingMaoWaiJing [2001] No.354) of the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the former State Administration of Industry and Commerce.

6.

With respect to the non-pilot commercial enterprises with foreign investment that haven't been reported yet, every place shall make up the report within 1 month after the distribution of this Notice. Those that haven't been reported shall, once found out, be cancelled or their business licenses be revoked by the registration departments.

7.

As the Danis General Store Co., Ltd., ZhengZhou, Henan Province, in violation of the Measures for Pilot Units, established branches without authorization, its qualification of pilot enterprise shall be suspended. The Economic and Trade Committee, the Department of Foreign Trade and Economic Cooperation and the Administration of Henan Province shall rectify that enterprise and, as soon as possible, report the results of rectification to the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce for examination. And it shall be supervised and controlled according to the "5 shall-nots" provisions of No.98 Document before it is rectified to be qualified.

8.

From now on, the establishment of commercial enterprises with foreign investment and the branches thereof shall be reported to the State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation for approval, and shall be registered at the State Administration for Industry and Commerce or the local administrations for industry and commerce authorized by the State Administration for Industry and Commerce. At the same time, every place shall not establish commercial enterprises with foreign investment in various disguised forms. Such cases shall be dealt with seriously once found out, and the relevant personnel in charge shall be investigated for administrative responsibilities.

Every place shall take the check-up and rectification of non-pilot commercial enterprises with foreign invetment as an important work of the rectification of market order, and lose no time in carrying it out according to the new situation that our country is going to join the WTO soon. And every place shall learn lessons from mistakes, strictly execute the policies and regulations of the State on the use of foreign investment in commercial business, regulate the acts of foreign businessmen investing in commercial business, execute every order without fail, and ensure the healthy and orderly progress of the utilization of foreign investment in commercial business.

Attachment:

1.List of 216 Non-pilot Commercial Enterprises with Foreign Investment Needing Rectification and Improvement(omitted)

2.List of 65 Non-pilot Commercial Enterprises with Foreign Investment that have changed from Foreign-funded to Domestic-Funded, have no longer Run Commercial Business or have been Cancelled(omitted)

3.List of 32 Non-pilot Commercial Enterprises with Foreign Investment Brought into the Category of Approval in No.98 Document(omitted)