Article 1 For the purpose of opening further to the outside world and developing the market circulation system, the said Measures are formulated in accordance with the laws and administrative regulations including the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, Law of the People’s Republic of China on Chinese-foreign Contractual Cooperative Enterprises, the Law of the People’s Republic of China on Enterprises Operated Exclusively with Foreign Capital and the Company Law.

Article 2 Foreign companies, enterprises and other economic organisations or individuals (hereinafter referred as “foreign investors”) that establish the foreign invested commercial enterprises in the territory of China and are engaged in the business operations shall abide by the Measures.

Article 3 The foreign invested commercial enterprises refer to the foreign invested enterprises engaged in the following business operations:
(I) Commission agency: sales agents, brokers, auctioneers or other wholesalers selling other’s goods and providing relevant auxiliary services based on the contract for gaining commission fee;
(II) Wholesale: selling the goods of the retailers and industrial, commercial and institutional users or other wholesalers and providing relevant auxiliary services;
(III) Retail: selling goods and providing relevant auxiliary services for consumption by individuals and groups at the fixed place or through television, telephone, mail order, Internet and vending machine;
(IV) Franchise: authorizing others to use one’s own trademark, trade name and business mode by signing the contract for purpose of receiving the compensation or franchise fee.
Foreign companies, enterprises and other economic organisations or individuals shall undertake the business operations provided in (I), (II), (III) and (IV) aforementioned through the foreign invested enterprises established in the territory of China.

Article 4 The foreign invested commercial enterprises shall abide by the laws, administrative regulations and relevant rules of the People’s Republic of China and their legitimate business operations and legal rights and interests shall be protected by the Chinese laws.

Article 5 The state commercial administrative authorities shall supervise and manage the investment in the commercial fields by foreign investors and business operations of the foreign invested commercial enterprises according to laws.

Article 6 The foreign investors of the foreign invested commercial enterprises shall enjoy the good credit standing and not engage in any act in contradiction with the Chinese laws, administrative regulations and relevant rules. The foreign investors that have the strong economic strength, advanced experience in business operation and management and marketing technique as well as extensive international sales network are encouraged to set up the foreign invested commercial enterprises.

Article 7 The foreign invested enterprises shall meet the following conditions:
(I) The minimum registered capital shall meet the relevant regulations provided in the Company Law.
(II) The registered capital and total amount of investment shall meet the relevant regulations provided for the foreign-invested enterprises.
(III) The operating term of the foreign invested commercial enterprises shall not exceed 30 years in general and the operation term of the foreign invested commercial enterprises established in China’s central and western regions shall not exceed 40 years in general.

Article 8 The foreign invested commercial enterprises that establish stores shall meet the following conditions:
(I) Those applying for establishment of the commercial enterprises and stores simultaneously shall meet the relevant regulations on the urban development and urban commercial development.
(II) The foreign invested commercial enterprises already approved that further apply for establishing stores shall meet the following conditions in addition to the requirement provided in this Item (I).
1. Take part in the joint annual inspection on foreign invested enterprises on time and pass the annual inspection;
2. The registered capital of the enterprises has been paid up.

Article 9 After approval, the foreign invested commercial enterprises may conduct the following business:
(I) The foreign invested commercial enterprises engaged in the retail business:
1. commodity retail;
2. import of commodities for self-marketing;
3. purchase of the domestically made products for export;
4. other relevant supporting business.
(II) The foreign invested commercial enterprises engaged in the wholesale business:
1. commodity wholesale;
2. commission agency (excluding auction);
3. commodity import and export;
4. other relevant supporting business.
The foreign invested commercial enterprises can authorise others to set up stores by means of franchise operation.
After approval, the foreign invested commercial enterprises can be engaged in one or more line(s) of sales business, and the types of the commodities sold shall be specified in the business scope provided in the contract and articles of association.

Article 10 the establishment of the foreign invested commercial enterprises and their opening of stores shall follow the following procedures:
(I) The project proposal and feasibility study report of the foreign invested commercial enterprises and establishment of the enterprises are subject to one-time application and verification.
(II) Unless otherwise specified in (III) (IV) of this Article, the investors intending to establish the foreign invested commercial enterprises and the established foreign invested commercial enterprises applying for setting up stores shall submit the application documents provided in Article 12 and 13 to the provincial commercial administrative authorities of the place where the foreign invested commercial enterprises are registered. After preliminary review of the submitted documents, the provincial commercial administrative authorities shall submit the application documents to the Ministry of Commerce within one month after receipt of all application documents. The Ministry of Commerce shall make the decision as whether to approve the application within three months after receipt of all application documents and issue the certificate of approval for establishment the foreign invested enterprises to the applicator approved and explain the reasons of rejection to the applicator rejected.
The Ministry of Commerce can authorise the provincial commercial administrative authorities to approve the above-mentioned application according to the Measures.
(III) Where the foreign invested commercial enterprises engaged in the retail business apply for establishing the stores in the provincial administrative area and meet the following conditions and their lines of business do not include the products sold through television, telephone, mail order, internet and vending machine as well as commodities listed in Article 17 and 18 of the Measures, the provincial commercial administrative authorities shall examine and approve the application within its authority and file it to the Ministry of Commerce.
1. the business area of the single store does not exceed 3000m2, and the number of the stores dose not exceed three, and the total number of the similar stores established in China by the foreign investors through the foreign invested commercial enterprises does not exceed 30;
2. the business area of the single store does not exceed 300m2, and the number of the stores dose not exceed 30, and the total number of the similar stores established in China by the foreign investors through the foreign invested commercial enterprises does not exceed 300.
(IV) where the owner of the trade mark and trade name of the Chinese-foreign joint invested and cooperative commercial enterprises is the domestically invested enterprise and Chinese natural person, and the Chinese investors hold the stocks of the foreign invested commercial enterprise which does not sell the commodities listed in Article 17 and 18 of the Measures, the application for establishing such foreign invested commercial enterprises and stores may be examined and approved by the provincial commercial administrative authorities having jurisdiction in the district of the enterprise within its authority. If the stores are established across the provinces, the application shall also be approved by the local commercial administrative authorities at the provincial level where the enterprise proposed will be located.
Without the authorization of the Ministry of the Commerce, the provincial commercial authority shall not delegate the power of approval stipulated in (III) and (IV) of this Article.

Article 11 The investors shall go through the registration procedures at the administrative authority for industry and commerce with the certificate for approval of the foreign invested enterprises within one month after receipt of the certificate of approval.

Article 12 The following documents shall be submitted in applying for the establishment of the foreign invested commercial enterprises:
(I) Application form
(II) Feasibility study report jointly signed by all investors;
(III) Contract, articles of association (foreign-capital commercial enterprises only submit the articles of association) and appendices;
(IV) Bank certificate of creditworthiness and registration certificate (copy) of the investors, legal representative certificate (copy); the ID certificate shall be presented if the foreign investor is an individual;
(V) Audit report of each investor for the previous year audited by the accountant’s firm;
(VI) Evaluation report on the state-owned assets to be invested in the Chinese-foreign equity joint commercial enterprises and contractual cooperative commercial enterprises by the Chinese investors;
(VII) Imported and exported commodities catalogue of the foreign invested commercial enterprises proposed;
(VIII) List of the members of the board of directors of the proposed foreign invested commercial enterprises and the power of attorney for the directors from the investors;
(IX) Pre-verification notification of the enterprise name issued by the administrative authority for industry and commerce;
(X) Certificate of the land for the proposed store (copy) and (or) house lease agreement (copy), except for stores with a business area below 3,000m2;
(XI) Document explaining the compliance with the requirements of urban development and urban commercial development issued by the commercial administrative authorities of the local government where the proposed store will be located.
If any document is signed by non legal representative, the power of attorney from the Legal Representative shall be issued.

Article 13 If the foreign invested commercial enterprises already established apply to open stores, the following documents shall be submitted:
(I) Application form;
(II) If the contract and articles of association are modified, the modified contract and articles of association shall be submitted;
(III) Feasibility study report pertaining to opening of the stores;
(IV) Resolutions by the board of directors on opening of the stores;
(V) Audit report of the enterprise for the previous year;
(VI) Capital verification report of the enterprise (copy);
(VII) the registration certificate (copy) of each investor and legal representative certificate (copy);
(VIII) Certificate of the land for the proposed store (copy) and (or) house lease agreement (copy), except for stores with a business area below 3,000m2;
(IX) Document explaining the compliance with the requirements of urban development and urban commercial development issued by the commercial administrative authorities of the local government where the proposed store will be located.
If any document is signed by non legal representative, the power of attorney from the Legal Representative shall be issued.

Article 14 The legal documents including the trademark, trade name license contract, technology transfer contract, management contract and service contract signed by foreign invested commercial enterprises shall be submitted as the appendices of the contract.(as for the foreign-capital commercial enterprises, the said documents shall be regarded as the appendices of the Articles of Association)

Article 15 The land used for opening the stores by the foreign invested commercial enterprises shall be acquired through methods such as public bidding, auction and listing in accordance with the relevant state laws and administrative regulations on land management.

Article 16 Foreign invested commercial enterprises that sell the commodities subject to the state specialized regulations and imported and exported commodities under the quota and license management shall go through the formalities according to the relevant state regulations.

Article 17 Foreign invested commercial enterprises selling the following commodities shall conform to the following regulations in addition to the regulations of the Measures:
Foreign invested commercial enterprises selling the books, newspapers and periodicals shall conform to the “Methods on the Management of Foreign Invested Enterprises for the Distribution of Books, Newspapers and Periodicals”.
Foreign invested commercial enterprises that operate the gas station and are engaged in the retail of product oil shall have stable supply channel of product oil and conform to the local gas stations construction planning, and their operating facilities shall meet the existing state standards and the provisions of the metrological verification rules as well as the fire control and environmental protection requirement. The detailed implementation Measures shall be formulated by the Ministry of Commerce separately.
Foreign invested commercial enterprises selling the medicine shall conform to the relevant state regulations on the management of the sales of medicine, and the detailed implementation Measures shall be formulated by the Ministry of Commerce separately.
Foreign invested commercial enterprises selling the automobiles shall operate the business within its approved scope of business, and the detailed implementation Measures shall be formulated by the Ministry of Commerce separately.
Unless otherwise stipulated in Article 18 and this Article of the Measures, the commercial enterprises invested by the foreign investors to sell the agricultural and sideline products and capital goods in the agricultural sector are not subject to the restriction of the location, proportion of shares and amount of the investment.
Foreign invested commercial enterprises engaged in the wholesale business shall not sell the medicine, pesticide and agricultural film before Dec. 11th, 2004, and shall not sell the chemical fertilizer, product oil and crude oil before Dec.11st, 2006.
Foreign invested commercial enterprises engaged in the retail business shall not sell the medicine, pesticide, agricultural film and product oil before the Dec.11th, 2004 and shall not sell the chemical fertilizer before Dec.11th 2006.
Foreign invested commercial enterprises engaged in the wholesale business shall not sell the salt and tobacco, and the foreign invested commercial enterprises engaged in the retail business shall not sell the tobacco.

Article 18 Where the total number of the stores opened by the same foreign investor within the territory of China exceed 30, and the commodities they sell includes books, newspapers, magazines, automobiles (the restriction will be lifted as of Dec.11th, 2006), medicine, pesticide, agricultural film, chemical fertilizer, product oil, grain, vegetable oil, sugar, and cotton which are of different brands and come from different suppliers, the proportion of contribution by the foreign investor shall not exceed 49%.

Article 19 The foreign invested commercial enterprises authorizing others to open the stores by means of franchise operation shall observe the regulations otherwise stipulated by the state pertaining to the franchise operation in addition to the Measures.

Article 20 The foreign invested commercial enterprises engaged in the auction business shall conform to relevant laws including the “Auction Law” and “Cultural Relics Law”, and be approved by the Ministry of Commerce. The detailed implementation Measures shall be formulated by the Ministry of Commerce separately.

Article 21 The foreign-capital commercial enterprises can be established as of Dec. 11th, 2004.

Article 22 The location of the foreign invested commercial enterprises engaged in the retail business and of the stores they open are limited to the provincial capitals, capitals of the autonomous regions, municipalities directly under the Central Government, cities with economic planning directly supervised by the State Council and special economic zones before Dec. 11th, 2004. The restrictions of location are lifted as of Dec. 11th, 2004.
The restrictions of location on the foreign invested commercial enterprises engaged in the wholesale business shall be lifted as of the implementation of the Measures.

Article 23 Foreign invested commercial enterprises invested in the commercial field within the territory of China shall conform to the “Interim Regulations on Investment by Foreign Invested Enterprises within the Territory of China”, and follow the procedures provided in the Measures.

Article 24 Foreign invested enterprises other than the foreign invested commercial enterprises engaged in the operation listed in Article 3 of the Measures shall conform to the regulations set forth in the Measure and alter the scope of business according to the law.

Article 25 Investors from Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan region investing in other provinces, autonomous regions, and municipalities directly under the Central Government of China to establish the commercial enterprises shall conform to the Measures.
(I) Commercial service providers from Hong Kong and Macao can establish foreign-capital commercial enterprises in the mainland since Jan. 1st, 2004.
(II) The scope of location of the retail enterprises set up the commercial service providers from Hong Kong and Macao are expanded to include the cities at the district level and to the cities at the county level in Guangdong.
(III) Commercial service providers from Hong Kong and Macao can apply to establish commercial enterprises engaged in the automobile retail business in the mainland according to the relevant provisions in the Measures since Jan. 1st, 2004. However, their average sales volume for the three years prior to the application shall not be lower than $0.1 billion; and the amount of the asset in the year prior to the application shall not be lower than $10 million; the minimum registered capital for the automobile retail enterprises established in the Mainland is RMB10million, and the minimum registered capital for the automobile retail enterprises established in the middle and western region of China is RMB 6 million.
(IV) Chinese citizens among the permanent residents in Hong Kong and Macao are allowed to set up small industrial or commercial businesses to do the retail business according to the relevant laws, regulations and rules of the Mainland (except for the franchise operation), and their business area shall not exceed 300m2.
(V) The commercial service providers from Hong Kong and Macao stipulated in this Article shall accord with the definitions on “service provider” and requirements of the relevant regulations provided in the “Closer Economic Partnership Arrangement of Hong Kong and the Mainland” and “Closer Economic Partnership Arrangement of Macau and the Mainland”.

Article 26 The foreign invested commercial enterprises are encouraged to join the relevant trades’ societies to reinforce the self-discipline of enterprises.
Article 27 The interpretation of these Measures shall be vested in the Ministry of Commerce.
Article 28 These Measures are implemented as of June 1st, 2004.

Article 29 The former “Experimental Measures on the Foreign Invested Commercial Enterprises” jointly promulgated by the State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation shall be abolished as of the date for the implementation of these Measures.