1.Rules and Regulations Concerning Industry and Commerce Administration of
Foreign-Funded Enterprises

2.Foreign Exchange Control Policy and Regulations for Foreign-Funded Enterprises

3.Policy and regulations regarding financial management

4.Policy and Regulations on Labor Management

5.Policy and stipulations regarding the inspection of import & export goods

6.Visa

7.Polocy and regulations on real estate investment

After approval of the project and before signing of the contract and articles of association, a foreign-funded enterprise should apply to competent authoritites of industry and commerce administration for pre-registration in order to ensure protection of its right to use the name and that the name does not coincide with the name of another enterprise.

The following documents shall be submitted by a foreign-funded Enterprise in undergoing the procedure for pre-registration:

1. The form of application pre-registration of foreign-funded enterprises which is printed by the industry and commerce administration authorities and signed by the person responsible for the organization and establishment of the foreign-funded enterprises.

2.The official business license issued to the foreign investor by the government of the country or the region where the foreign investor is based.

3. Letter of authority for enterprise registration.

Occupational registration:

The investor of a foreign-funded enterprise shall, within 30 days, go through the procedure for occupational registration upon production of the approval certificate and other documents.

The following documents shall be supplied in going through the procedure:

1. Application for occupational registration signed by the chairperson and vice-chairperson(s) of the board of directors.

2. The contract and articles of association (the appendices included), the documents of examination and verification, and the certificate of approval.

3.The official business license issued to the foreign investor by the government of the country or region where the foreign investor is based.

4. Letter of credit issued by the investor's bank on the investor's latest credit standing in six months.

5. From of registration for the legal representative of the foreign-funded enterprises (along with half length, bareheaded, full-faced photos of the legal representative).

6. Personal profiles of the members of the board of the directors and the board of supervision and the general manager and deputy manager(s).

7. Photo-offset copies of the identity documents of the members of the board of directors and board of supervision and the general manager and deputy manage(s).

8. Letters of approval from the concerned authorities if the foreign-funded enterprise involves use of urban public utilities( use of land, supply of water, electric power and gas, and access to the telecommunications system) and environmental protection.

9. Documents certifying the foreign-funded enterprise's right to residence, property right certificates and contract of tenancy ( the contract period should be longer than one year)

10. Documents of approval issued by competent authorities if the enterprise engages in undertakings subject to stipulations specially prescribed by the state)

11. Letter of authority for the procedure for occupational registration, the foreign-funded enterprise shall receive the " People's Republic of China Business License for Corporate Entity" to be entitled to corporate entity status and legal business operation.

Alteration of registration:

A foreign-funded enterprise in need of changing any item in registration shall go through the procedure for alteration of of registration in good time. Application for alteration of registration shall be submitted to the authorities of registration within 30 days after the approval of the altered item by the original authorities of examination and approval.

To apply for alteration of registration, the following documents need to be supplied along with an application signed by the chairperson of the board of directors, the decision of the board on the alteration and the letter of authority for registration:

1. For alteration of the enterprise name:
The enterprise name registration form and letter of approval for the name, and documents of approval issued by the original authorities of examination and approval, all seals of original companies.

2. For alteration of residence:
Documents certifying the enterprise right to use of the new residence (including documents certifying the leasor's housing property right).

3. Increase in the registered capital:
Agreement on revision of the contract and articles of association, documents of approval issued by the original authorities of examination and approval, and assets auditing report.

4. Alteration of the type of the enterprise:
Agreement on revision of the contract and articles of association, documents of approval issued by original authorities of examination and approval, and assets auditing report.

5. Alteration of the board chairperson or vice chairperson(s) or the general manager or deputy general manager(s) or the new general manager or deputy general manager(s), photo-offset copies of their identity documents, and registration form for the legal representative.

6. Transfer of stock rights:
Agreement on transfer stock rights, agreement on revision of the contract and article of association, business license and bank-issued letter of credit for the party to receive the transfer, documents of approval issued by the original authorities of examination and approval.

7. Alteration of the scope of business:
Letters of approval issued by the competent authorities if the new item of business is subject to stipulations specially prescribed by the state, agreement on revision of the contract and the articles of association, documents of approval by the original authorities of examination and approval and assets auditing report.

8. Alteration of the operational period:
Agreement on revision of the contract and the articles of association, documents of approval issued by the original authorities of examination and approval, and assets auditing report.

9. Establishment of new branches or offices in China:
Assets auditing reprot>

10. Establishment of branches or offices outside of China:
After obtaining approval from competent authorities of examination and approval, the enterprise should report this to the original authorities of examination and approval for the record.

Revisions of or addition to the contract which don not affect any registered item shall be reported to the original authorities of examination and registration for the record.

Cancellation of registration:

When terminating business operations due to business discontinuance, expiration of the operational period, declaration of bankruptcy and any other valid reason, a foreign-funded enterprise should go through the procedure for cancellation of registration within three months beginning as of the day of business discontinuance, or the expiration of the operational period, or when the approval certificate becomes invalid, or when the contracts terminates with approval of original authorities of examination and approval.

In going through the procedure, the following documents shall be supplied (in duplicates):
1. Application signed by the board chairperson and vice-chairperson(s) for cancellation registration.

2. Relevant decision of the board of directors.

3. Report on settlement of the creditor's rights and debts, or documents certifying responsibility for settlement of the creditor's rights and debts.

4. Documents issued by the taxation authorities and customs certifying complete payment of taxes and customs duties.

5. The business license (duplicates included) of the enterprise and all its seals and stamps shall be handed over to the proper authorities.

6. Letter of authority for enterprise registration. Whereas approval of the original authorities of examination and approval is a must according to law, documents of approval issued by such authorities for cancellation of registration should be supplied as well. Whereas cancellation of registration can not be referred to the board of directors for decision or should be subject to rules otherwise prescribed by the state, the matter shall be handed in accordance with the relevant stipulations of the state.

In case the enteprise fails to go through the procedure for cancellation of registration, the authorities of industry and commerce administration shall have the right to withdraw its business license and issue a public notice to this effect.

The annual inspection system:

Annual inspection of foreign-funded enterprises shall be conducted by the authorities of registration. The inspection shall cover: payment by the various parties of their pledged contributions to the capital investment, whether a given enterprise engages in normal production and business operation in conformity with its business scope and other registered items verified and approved by the authorities of registration, whether there is any act of spiriting out the registered capital, transfer of property or evasion of debt repayment during the operational period, and whether the enterprise has, in following the relevant rules and regulations, alteration and cancellation registration. The enterprise shall be obliged to hand in the annual inspection report and the annual balance sheet to proper authorities.

Supervision and administration:

The authorities of registration shall be obliged to supervise and check into implementation of the contracts and articles of association of foreign-funded enterprises. In case of failure of refusal on the part of a foreign-funded enterprise to set up accounting books in China or on the part of the viarious parties to pay their pledged capital contributions within the prescribed timelimit, the authorities of registration shall have the right to order the enterprise to suspend its business operations or withdraw its business license. The authorities of registration shall also have the right to see to it that foreign-funded enterprises follow the relevant rules and regulations for occupational, alteration and cancellation registration, conducted the kind of operations specified in their contracts and articles of association, and their legal representatives observe the relevant state laws and government decrees and polices.

Issuance of foreign exchange certificate for foreign-funed enterprises

Within 30 days of the issuance of the business license, the foreign-funded enterprise should apply for the Foreign Exchange Certificate from the local foreign exchange administration. The enterprise should fill in the foreign-funded enterprises basic information registration form and deliver the following documents:

1. Approval letter and certificate for the establishment of the foreign-funded enterprise.

2. Business license and a copy ratified and issued by the administration of industry and commerce.

3. Valid contracts or other agreements of the foreign-funded enterprises.

4. Other documents required by the Administration for Foreign Exchange Control. After considering the the materials submitted, the administration will grant the Foreign Exchange Certificate

Opening a foreign currency account in China

Foreign-funded enterprises may open a foreign currency account with a bank in the city where they registered for the Forein Exchange Certificate. The certificate and other relevant material must be presented with the application.

Foreign-funded enterprises may open a foreign currency settlement account and foreign currency capital account with a bank in the same city as registration was granted on presentation of the Foreign Exchange Certificate and proof of foreign currency account.

The foreign exchange settlement account can be used for current receipts and payments and other expenses ratified by the Administration for Foreign Exchange Control.

Foreign-funded enterprises can open a special account to deposit loans acquired overseas, and a foreign currency account for foreign currency loans granted by domestic Chinese financial institutions.

Foreign-funded enterprises can open a special account for debt taken on overseas, an account to convert the foreign debt into loans and an account for repaying foreign currency loans with interest to domestic Chinese financial organizations. As part of their application, enterprises need to present the respective notices by the Administration for Foreign Exchange Control.

Enterprises with a reasonable cause for wanting to open a special bank account in a city other than its registered city must apply at their registered foreign exchange administration and report to the local foreign exchange administration where they want to open the account. The authorization must deposited with the local foreign exchange administration for the record. After the application examined and confirmed by the administration, the enterprises can open an account at a local bank.

Starting from December 1, 1996, China began to implement the obligations stipulated by the International Monetary Fund to realize the convertibility of the RMB in the current account.

Management of foreign exchange of current account items

The foreign currency settlement account or foreign-funded enterprises can be used to handle receipts and payment of current account items in foreign currency and other capital items approved by the Foreign Exchange Bureau Administration.

The income of current account items in foreign currency must be maintained within the limits approved by the Administration for Foreign Exchange Control. The enterprise can sell any surplus to the designated bank or sell through the foreign currency redistribution center. The National Administration for Foreign Exchange Control will adjust the limit of the foreign currecy settlement account of foreign-funded enterprises according to the actual invested capital and the demand of the capital turnover in foreign currency for current account items.

With relevant certificates and documents, current account payments in foreign exchange for trade and non-trade business of foreign-funded enterprises can be directly settled through their bank or remitted through the designated bank.

Foreign-funded enterprises can remit profits and extra dividends after tax directly into their bank account or cash them at the designated bank on presentation of the profit distribution agreement by the board of directors or other valid documents.

Salary in RMB after tax and other earnings of overseas Chinese and empolyees from Hong Kong, Marco, and Taiwan can be cashed at the designated bank with valid testimonial.

Payments can be drawn from the foreign currency bank account or cashed in the designated foreign currency bank. Payments in foreign currency by foreign-funded enterprises in the following case should first be examined by the Administration for Foreign Exchange Control:

When deposits exceed 15% of the total contracted payment for imports and the sum is more than 100,000USD, when overt commission is 2% more and covert commission is 5% more than the total contracted payment for exports and the sum is more than 10,000USD, when advance payment is made in entrepot trade, for the repayment of interest of foreign currency debt, when the cash drawn exceeds 10,000USD.

Management of capital in foreign exchange

The capital invested in cash in foreign currency by investors of foreign-funded enterprises can be deposited into the capital account in the bank. Payment from the capital account can be used for relevant current account items and other expenses approved by the Administration for Foregn Exchange Control.

Foreign-funded enterprises can arrange their own foreign currency loans. Within 15 days after signing a foreign currency loan in a foreign country, enterprises should go to the Administration for Foreign Exchange Control to register the foreign debt with the copy of the contract, and get a foreign debt registration card.

When the borrowing unit receives the loan form overseas, it needs to apply for a special foreign debt cash account to National Administration for Foreign Exchange Control.

When the borrowing units repays the capital with interest, the unit should go to the Administration for Foreign Exchange control for checking and present the foreign debt registration card and document for repaying the loan with interest. The unit can receive money through the special foreign debt cash account or the special cash account for repaying debt with interest.

If the loan needs to be guaranteed, the procedure will be carried out according to the Regulations on the Management of Domestic Oganizations Guarantee for Foreign Organizations.

Foreign currency in the following cases can not be settled without approval of the Administration for Foreign Exchange Cotrol

1. Foreign currecy remitted by a foreigner or legal person as investment.

2. Capital invested in foreign-funded enterprises by both Chineses and foreign sides in cash in foreign currency.

3. Foreign currency obtained through foreign currency loans from foreign countries, foreign currency bond issues and shares.

4. Other foreign currency income under the capital account without approval of the National Administration for Foreign Exchange Control.

The following foreign exchange under the capital account of foreign-funded enterprises can be applied for at the Administration for Foreign Exchange Control. The following documents need to be presented on application. Then the money can be cashed at the deposit bank on presentation of a verification letter issued by the administration:

1. For foreign debt repayment, the foreign debt registration card, contract and authorization from the creditor need to be submitted.

2. Foreign currency for implementation of guarantee contract, guarantee registration card issued by the Administration for Foreign Exchage Control, and authorization of the foreign organization need to be submitted.

3. Payment for capital investment in foreign countries, approval documents issued by the government body responsible and investment contract need to be submitted.

4. Approved foreign exchange investment by Chinese side in foreign-invested enterprises, approval documents issued by government body responsible and investment contract need to be submitted.

5. The payment of capital in foreign exchange of foreign-funded enterprises, the decision of the board of directors and approval document issued by government bodies responsible.

6. The addition to existing investment or reinvestment of profits earned by the foreign side or allocation of capital in foreign exchange within China, approval letter of the Administration for Foreign Exchange Control needs to be presented.