Laws of the People's Republic of China

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

Provisions of the State Administration for Industry and Commerce and the Ministry of Foreign Trade and Economic Cooperation on the Establishment of Foreign-Funded Advertising Enterprises

GongShangGuanZi [1994] No.304

November 3, 1994

Article 1

The provisions are formulated to promote the opening of China's advertising business to the outside world and make sure that the quality of the foreign-funded advertising enterprises will reach a certain standard so as to guarantee the healthy development of the country's advertising sector.

Article 2

The foreign-funded advertising enterprises referred to in these provisions should be limited to the Sino-foreign equity and contractual joint ventures that are engaged in advertising business.

Article 3

The foreign-funded advertising enterprises should be established in accordance with "The Law of the People's Republic of China on the Chinese-foreign Equity Joint Ventures", "The Law of the People's Republic of China on the Chinese-foreign Contractual Joint Ventures", "Advertising Law of the People's Republic of China", "The Regulations on the Administration of Advertising", "The Ratified Phraseology Standards for Advertiser's Natural Endowment Norms and Advertising Scope" and other relevant laws, decrees and regulations.

Article 4

The project proposal and the feasibility study report on establishing a foreign-funded advertising enterprise are to be examined and approved by the State Administration for Industry and Commerce. Business scope of such an enterprise is to be examined and approved by the same administration in accordance with "The Ratified Phraseology Standards for Advertiser's Natural Endowment Norms and Advertising Scope" and in line with the business scope of foreign advertising as ads designing, preparing, issuing and as agents for domestic and foreign advertising. Its contract and articles of association are to be examined and approved by the Chinese Ministry of Foreign Trade and Economic Cooperation.

Article 5

The establishment of the foreign-funded advertising enterprise shall follow the following procedures:

(1)

The Chinese partner of the foreign-funded advertising enterprise (joint equity or contractual venture) shall present the project proposal and feasibility study report of the enterprise to the local administrative department for industry and commerce which has the power to approve and register the establishment of foreign-funded enterprises for primary consideration and the department concerned shall send the documents with its own proposal and report to the administration of the province, the autonomous region, the municipality directly under the Central Government or the municipality separately listed on the State plan for a check and then the documents shall be turned up to the State Administration for Industry and Commerce for final examination and approval. The Chinese partner, if it is an enterprise directly under a ministry, a commission or a bureau of the State Council shall report the project proposal and the feasibility study report to its own department in charge for a check and if agreed, the department shall transfer the documents to the State Administration for Industry and Commerce for final examination and approval. The State Administration for Industry and Commerce shall decide whether to approve or disapprove the documents within 30 days beginning from the date of receiving all the documents.

(2)

After the State Administration for Industry and Commerce issues"Opinions on Approving the Establishment of the Foreign-Funded Advertising Enterprise", the Chinese partner shall present to the local foreign trade and economic cooperation department of a province, an autonomous region, a municipality directly under the Central Government or a municipality separately listed on the State plan the contract and the articles of association on establishing the enterprise and after a check by the department the documents shall be sent to the Ministry of Foreign Trade and Economic Cooperation for final examination and approval. The Chinese partner, if it is an enterprise directly under a ministry, or a commission or a bureau of the State Council shall report the contract and articles of association on establishing a foreign-funded advertising enterprise to its own department in charge for a check and if agreed, the documents will be sent to the Ministry of Foreign Trade and Economic Cooperation for final examination and approval. The Ministry of Foreign Trade and Economic Cooperation shall decide whether to approve or disapprove the documents within a deadline according to the relevant State laws and regulations governing foreign investment.

(3)

With "Opinions on Approving the Establishment of the Foreign-Funded Advertising Enterprise" issued by the State Administration for Industry and Commerce, the approval certificate issued by the Ministry of Foreign Trade and Economic Cooperation, and other documents which are required by relevant laws and regulations, the Chinese partner shall go to the State Administration for Industry and Commerce or the local administrative departments for industry and commerce which has the power to check and register foreign-funded enterprises to go through the enterprise registration formalities as an enterprise legal person in accordance with relevant regulations governing the enterprise registration. When a foreign-funded advertising enterprise applies for establishing affiliations, the foreign trade and economic cooperation department of a province, an autonomous region, a municipality directly under the Central Government or a municipality separately listed on the State plan, or a ministry, a commission or a bureau under the State Council if agrees after a check, shall report the matter to the Ministry of Foreign Trade and Economic Cooperation. The Ministry of Foreign Trade and Economic Cooperation shall decide whether to approve or disapprove the establishment of the affiliations after solicitation of opinion from the State Administration for Industry and Commerce.

Article 6

For establishing a foreign-funded advertising enterprise, the partners must have the following qualifications apart from conditions required by relevant laws and regulations:

(1)

They must be legal persons which are engaged in a fairly big advertising business as their main undertaking;

(2)

They can import advanced international advertise producing technology advertise equipment;

(3)

They have the ability of market survey, advertise planning and advertise effect monitoring;

(4)

They can train Chinese employees in ads planning, creating, designing, producing and management; and

(5)

Their registered capital for the enterprise is not less than US$300,000.

Article 7

A foreign-funded advertising enterprise which applies for the establishment of affiliations should have the following qualifications:

(1)

It has paid all the registered capital;

(2)

Its annual business turnover is not less than RMB20 million; and

(3)

There must be more than three comparatively regular advertising clients in the area where the affiliation locates.

Article 8

While applying for the establishment of a foreign-funded advertising enterprise, the Chinese partner shall present the following documents to the State Administration for Industry and Commerce in accordance with the procedures set in Article 5 of these provisions:

(1)

The report on applying for the establishment of the foreign-funded advertising enterprise;

(2)

The approval document of the department in charge of the Chinese partner;

(3)

The project proposal on the establishment of the foreign-funded advertising enterprise;

(4)

The feasibility study report jointly prepared by all the partners;

(5)

The registration certificates of all the partners;

(6)

The capital credit certificate of all the partners;

(7)

The certificate indicating the major producing equipment and technology to be used and their origin;

(8)

The management system governing advertising; and

(9)

The primary opinions of the local administrative department for industry and commerce.

Article 9

While applying for the establishment of a foreign-funded advertising enterprise, the Chinese partner should present the following documents to the Ministry of Foreign Trade and Economic Cooperation in accordance with the procedures stipulated in Article 5 of these provisions:

(1)

Documents of the local foreign trade and economic cooperation department, the ministry, the commission or bureau directly under the State Council;

(2)

"Opinions on Approving the Establishment of Foreign-funded Advertising Enterprises" issued by the State Administration for Industry and Commerce;

(3)

The contract and articles of association on establishing the foreign-funded advertising enterprise;

(4)

The project proposal and feasibility study report;

(5)

The registration certificates of all the partners;

(6)

The capital credit certificates of all the partners;

(7)

The certificate of approval of the name of the foreign-funded advertising enterprise issued by local administrative department for industry and commerce; and

(8)

The list of names of the board directors and their certificates of appointment by the respective parties.

Article 10

A foreign-funded advertising enterprise should report for approval in one of the following cases in line with the procedures set in Article 5 of these provisions after it has been examined and gets the certificate of approval:

(1)

Change the partner; and

(2)

Change the business scope.

Article 11

These provisions can also apply to the application of a foreign-funded advertising enterprise for expanding its business scope.

Article 12

These provisions shall enter into force as of January 1, 1995.