|
The government officials from Guangdong Province responded to
enquiries about CEPA – Q&A Session
(Summary of the "CEPA Seminar on Service Sector" held on 8th July, 2004
at Hong Kong Wan Chai Convention and Exhibition Centre)
Note: All information in this document is for reference only. In case of ambiguity, relevant laws, regulations, administrative rules, and requirements from the state or government departments shall prevail.
|
Group 1
|
Distribution services
|
|
|
 |
1. On 1st June the Mainland officially implemented the Measures on the Administration of Foreign-invested Commercial Enterprises (hereby referred to as the “Measures for Commercial Enterprises"). Are there any conflicts between these measures and CEPA? How do these new measures facilitate the establishment of foreign trade companies?
The “Measures for Commercial Enterprises “ lower the thresholds further for entering the Mainland distribution market. The Measures clearly state that requirements on registered capital for foreign enterprises must be in accordance with the relevant regulations in Company Law, in which the respective requirements for wholesale services is RMB 500,000 and for retail services is RMB 300,000. However, Hong Kong and Macao investors must note that the required registered capital is the minimum requirement for enterprises to access the Mainland market. It does not necessarily mean that enterprises that meet the mentioned capital requirements will be approved to operate in China. During the examination and approval process, the competent authorities will base their examination on whether the registered capital of an enterprise is in line with its businesses from the feasibility report submitted. If the minimum registered capital does not correspond to the services provided by the enterprise, it will not be granted the operation license.
2. If an enterprise is engaged in the distribution of certain special products, is it required to operate in any special form?
The “Measures for Commercial Enterprises” only regulate the distribution of general products. It is clearly stated in the “Measures for Commercial Enterprises“ that specific products such as tobacco, salt, and motor vehicles” are regulated by other specific laws and regulations. In addition, Mainland authorities have stipulated that products with quota restrictions cannot be distributed in the form of wholesaling or retailing under “Measures for Commercial Enterprises”.
3. Can enterprises engaged in the distribution of motor vehicle parts develop their services in the Mainland according to the stipulations in the “Measures for Commercial Enterprises” ?
The “Measures for Commercial Enterprises” only stipulate that the distribution of motor vehicles is a restricted item. However, the sales of motor vehicle parts can still be conducted upon application in accordance with the market access requirements set out in the “Measures for the Administration“.
4. Is it possible that an enterprise establishes a jewelry authentication centre in the Mainland according to the “Measures for Commercial Enterprises”?
Since jewelry authentication is not categorized under commercial distribution service, enterprises engaged in this sector cannot enter the Mainland market under the provisions of the “Measures for Commercial Enterprises”.
5. What are the registration procedures for the establishment of an enterprise engaged in gold accessory wholesaling?
At present, the Mainland has already relaxed the relevant regulations on imports, exports, and distribution of gold and silver. Also, processing of gold, silver and relevant products made from gold or silver do not require any authorization at the moment. However, Customs registration is required for the imports and exports of all those products. In addition, according to the “Circular for Relevant Issues in Relation to the Retailing of Gold and Gold Products”, any company engaging in the retailing of gold products must obtain the “Certificate of Authorization for Trade in Gold Products” from the People's Bank of China before it can proceed with other business registrations.
6. Can a company that has established wholesale or retail enterprises also sets up factories in the Mainland for production?
A Wholesale / retail enterprise can establish factories in the Mainland in two different ways: (1) To set up a wholesale / retail enterprise and re-invest its profits on setting up factories through “re-investment”. This way of investment is permitted and concessions will also be given to the re-invested profits. However, the total amount of re-investment may not exceed 50% of the total assets of the enterprise; (2) investors can set up two different enterprises simultaneously. In this case, one company will be engaged in wholesaling / retailing, while another is established as an independent factory for production.
7. Can distribution enterprises be simultaneously established in Guangzhou and Shanghai?
If two distribution companies are established in both Guangzhou and Shanghai as independent juridical persons (with independent accounting systems), they are required to register separately in the two places. If the two companies exist as parent company and subsidiary (will not be audited independently), then separate registration of the companies is not required. However, the accounts of the subsidiary must be consolidated with those of the parent company. Also, income tax of the subsidiary will be declared and paid by the parent company.
8. Can a timepiece retailer set up branches in different locations in the Mainland?
If a branch with independent accounting system is to be established, the company must register again with relevant government departments in the place where the branch is located.
9. Which are the government departments responsible for authorizing the establishment of wholesale / retail enterprises?
If the enterprises concerned are wholly foreign-owned enterprises, the Ministry of Commerce is responsible for relevant examination and approval. If the enterprises involved are Sino-foreign joint ventures in which the Chinese partner holds majority shares, relevant provincial departments of Foreign Trade and Economic Cooperation will examine and approve the applications.
10. What is the impact of the revision of the “Foreign Trade Law” on the distribution services?
According to Article 8 of the new "Foreign Trade Law", the term "foreign trade operator" refers to a juridical person or an organization engaging in foreign trade activities in compliance with the provisions of the Law”. With regards to the enterprises and individually-owned stores already established, they are not subject to any further evaluation and approval; however they must register with relevant departments governing foreign trade as required by the Law. Imports and exports of the products for the company’s wholesaling or retailing are allowed after registration.
11. Is there any impact on the establishment of foreign trade enterprises after the “Measures for Commercial Enterprises” and the new “Foreign Trade Law” were introduced in the Mainland?
The “Measures for Commercial Enterprises” have relaxed the registered capital requirements for wholesale and retail enterprises, while enterprises can import / export products for wholesaling or retailing purpose upon registration after the new "Foreign Trade Law" came into effect. However, since foreign trade enterprises engage in businesses related to importation and exportation of goods and customs clearance but not distribution of goods, the “Measures for Commercial Enterprises” in this sense are not applicable. In other words, companies that are to engage in distribution businesses still need to comply with the regulations of "CEPA" to establish foreign trade enterprises.
|
|
|
|
|
|
Telecommunications services |
|
|
|
1. What are the procedures for foreign companies applying for providing basic telecommunications services in the Mainland?
- To provide basic telecommunications services, inter-provincial operators must obtain the approval of the Ministry of Information Industry, and the “Letter of Validation” issued by the Ministry. Operators providing intra-provincial telecommunications services must apply to provincial Communications Administration Departments.
- After approved, the companies concerned should then apply for establishing foreign invested companies with the local Foreign Trade and Economic Departments.
- Local information industry administration departments will issue the “Permit for Telecommunications Operators”, after local Foreign Trade and Economic Trade Departments have consulted the opinions of The Ministry of Information Industry through the Ministry of Commerce.
- The companies concerned can now proceed with relevant registrations for company establishment with local Administration for Industry and Commerce.
2. What is the minimum registered capital required for telecommunications operators?
The minimum registered capital required for basic telecommunications operators is:
- Inter-provincial Operation - RMB 2,000,000,000
- Operation within a province – RMB 200,000,000
The minimum registered capital required for operators to engage in value-added telecommunications services is:
- Inter-provincial operation – RMB 10,000,000
- Operation within a province – RMB 1,000,000
3. According to "CEPA", is the “Online Broadcasting Service” sector open for Hong Kong and Macao investors? Which is the competent department handling applications?
Online Broadcasting Service is included in the value-added telecommunications services opened in "CEPA". However, when the contents of any online broadcasting involve news, and information of hygiene or medical services, service providers must obtain operation permits issued by the Ministry of Information Industry before the operation is launched. |
|
|
|
|
|
Management Consultancy |
|
|
|
1. Can Hong Kong and Macao enterprises operate in association with Mainland enterprises in providing management consultancy services?
According to Mainland laws, joint operation is not a legal form of enterprises. Service providers must establish Sino-foreign equity or contractual joint ventures to operate in the Mainland.
2. Can a Hong Kong or Macao management consultancy enterprise provide training services to Mainland enterprises?
If relevant services are stated clearly in the applications when Hong Kong or Macao investors apply for establishing foreign management consultancy enterprises, and the scopes of their business in the Mainland are not beyond the stated scopes, Hong Kong or Macao enterprises can provide internal training to Mainland enterprises. However, no certificate can be issued by the Hong Kong or Macao enterprises after the training is completed on the ground that such training is regarded as an internal service provided to the Mainland enterprises. |
|
|
|
|
|
Convention and Exhibition Services |
|
|
|
1. Can a convention and exhibition enterprise established in Guangdong Province operate in other areas of the Mainland?
According to Mainland laws, convention and exhibition enterprises established in the Mainland can hold conventions and exhibitions in any part of China. |
|
|
|
|
|
Tourism Services |
|
|
|
1. What are the requirements for establishing travel agencies and the qualifications for personnel engaged in the tourism industry in the Mainland?
There are no geographical constraints on Hong Kong and Macao enterprises to establish travel agencies in Guangdong. The required minimum registered capital is RMB4,000,000. The annual sales volume of wholly owned foreign travel agencies must be at least USD 500 million or above, while annual sales volume of Sino-foreign joint venture travel agencies must be USD 40 millions or above.
With regards to personnel engaged in the tourism industry, (1) tour guides must obtain relevant elementary, intermediary or advanced qualifications through examinations; (2) management of travel agencies must also obtain recognized qualifications through unified examinations organized by tourism departments in the Mainland.
2. How to apply for opening restaurants in the Mainland?
Applications should be submitted to local Foreign Trade and Economic Cooperation Departments. In this regard, information including proof of operation premises (e.g. lease contracts, etc.), feasibility study describing relevant business scopes, and the amount of total investment must be submitted.
3. What are the procedures for establishing food and beverage chain stores and franchised stores in the Mainland?
At present, the Mainland has no dedicated laws or regulations governing such chain stores and franchised stores. Chain stores can be established in the form of branches in different places, while franchised stores can only be set up through the establishment of independently audited branches by franchise owners.
4. What are the application procedures for operating hotels in the Mainland?
Foreign companies investing in up-market hotels should submit applications for company establishment to provincial Development and Reform Commissions or Economic and Trade Commissions. Local Foreign Trade and Economic Departments will then examine and approve the memorandum of the companies and their contracts. After approved, the companies can proceed with all registrations for company establishment with local Industry and Commerce Administration Departments and other departments.
|
|
|
|
|
|
Advertising Services |
|
|
|
| 1. Which department is responsible for the evaluation and approval for the establishment of advertising enterprises in the Mainland? How much is the required minimum registered capital?
The State Administration for Industry and Commerce is responsible for the examination and approval of wholly foreign-invested advertising enterprises in the Mainland, while the Ministry of Commerce is responsible for the examination and approval of relevant contracts. Also, provincial Industry and Commerce Administration Departments are charged of approving Sino-foreign joint ventures.
The Mainland does not impose specific requirements on the registered capital for advertising enterprises. Therefore, their registration should be made according to the stipulated regulations in the Company Law (according to Article 23 in the Company Law, the registered capital for enterprises providing general services should not be less than RMB100,000. The registered capital for foreign-invested advertising enterprises should not be less than USD300, 000). However, the enterprises should note that these registered capital requirements are only the thresholds for accessing the market. It is also required in the Law that the business scale of an enterprise must correspond with its registered capital. |
|
|
|
|
|
Real estate and construction services |
|
|
|
1. Please explain the requirements for real estate enterprise and the qualifications for the personnel engaging in the industry? How can they obtain those qualifications?
Enterprises providing real estate services must meet the requirements set out in following laws and regulations, including:
(1) |
Property Management Enterprises
|
(2) |
Real Estate Valuation Enterprises
|
(3) |
Real estate Brokerage Agencies
These enterprises must obtain the relevant qualifications from provincial or municipal construction departments in order to provide relevant services.
In addition, personnel engaged in the industry must obtain corresponding qualifications before they can provide relevant services:
- Real estate appraisers － The Hong Kong Institute of Surveyors (HKIS) has signed the Agreement of Mutual Recognition of Professional Qualifications with the China Institute of Real Estate Appraisers (CIREA). Recognized Hong Kong surveyors can obtain the qualifications for a real estate appraiser in the Mainland.
- Real estate agents － According to the "Provisional Regulations on the Professional Qualifications of Real Estate Agents” and the “Regulations on Professional Qualification Examinations for Real Estate Agents”, Hong Kong and Macao residents are required to pass the Real Estate Agents Qualification Examinations and obtain the professional qualifications before providing relevant services.
|
2. Can the sales revenue and the employees of Hong Kong property management enterprises in Hong Kong be taken into account when they are applying for establishing enterprises in the Mainland?
In the property management sector, the performance of Hong Kong enterprises and their employees cannot be taken into account as the qualifications required for establishing enterprises in the Mainland.
3. What are the regulations on the proportion of foreign architect designers employed by foreign-invested architectural design enterprises?
According to Article 15 of the Ministry of Construction Decree No. 114 "Administrative Regulations on Foreign-Invested Construction and Engineering Design Enterprises", it is stipulated that, when a wholly foreign-owned construction and engineering design enterprise set up by a Macao service supplier in the Mainland applies for construction and engineering design enterprise qualifications, the number of Macao residents qualified as certified architects or certified engineers in China and the number of Macao residents having the relevant design experience should not be less than 1/4 of the total certified professionals and total key technical personnel required under the qualification grading criteria; for application for construction and engineering design enterprise qualifications by an equity or contractual joint venture construction and engineering design enterprise set up by a Macao service supplier in the Mainland, the number of Macao residents qualified as certified architects or certified engineers in China and the number of Macao residents having the relevant design experience should not be less than 1/8 of the total certified professionals and total key technical personnel required under the qualification grading criteria.
4. Can Hong Kong enterprises establish construction and engineering supervision service enterprises in the Mainland?
At present, the Mainland has no specific laws regulating construction and engineering supervision enterprises but only regulations governing construction engineering cost consulting services. In other words, the construction engineering supervision service sector has not yet been opened to Hong Kong and Macao enterprises. Therefore, Hong Kong and Macao enterprises cannot set up such enterprises in the Mainland at the moment (“Administrative Measures for Engineering Cost Consulting Enterprises”). |
|
|
|
Group 2 |
Medical and Dental Services |
|
|
|
1. What criteria or requirements must be fulfilled when Hong Kong or Macao service suppliers establish medical institutions in the Mainland?
Hong Kong and Macao investors are only allowed to establish medical institutions in the form of equity joint ventures or contractual joint ventures with Mainland enterprises. Also, the following requirements must be met:
| (1) |
They must be independent juridical persons. |
| (2) |
The Minimum investment should not be less than RMB20,000,000. |
| (3) |
The equity ratio of the Chinese investors in Sino-foreign equity or contractual joint venture medical institutions should not be less than 30%, while that of the foreign investors should not be less than 70%. |
| (4) |
The duration of the equity or contractual joint ventures must not exceed 20 years. |
2. How can Hong Kong and Macao doctors practicing in Mainland medical institutions? Is there any time constraint for their practice in the Mainland?
Hong Kong and Macao Doctors who are legally eligible to practice medicine and are employed or have been invited to practice by Mainland medical institutions can apply for registration with the Ministry of Health. After they have submitted the required documents and have obtained the “Temporary Licenses for Foreign Physicians to Practice Medicine in the People’s Republic of China”, they are then allowed to practice in Mainland medical institutions. (Please refer to the “Provisional Measures on the Temporary Practice of Medicine by Foreign Physicians in the People’s Republic of China.)
Hong Kong and Macao doctors are allowed to practice medicine short-term for a period of 3 years. They may apply to extend their licenses for another 3 years after the licenses are due, resulting in a total practicing period of 6 years.
3. Does CEPA allow Hong Kong and Macao doctors to set up their own clinics or Chinese chiropractic clinics in the Mainland?
Medical institutions are restricted items for foreign investment. Private clinics can only be established in the form of Sino-foreign equity or contractual joint ventures. Individuals are not allowed to set up wholly-owned clinics or Chinese herbalists’ clinics. |
|
|
|
|
|
Accounting services |
|
|
|
1. Can Hong Kong companies establish accounting companies in the Mainland and recruit staff in the Mainland to provide accounting or financial services to local companies? Also, can payment for such services be transferred to Hong Kong?
The way in which the mentioned companies operate is problematic. At present, Mainland regulations only permit the establishment of Sino-foreign accounting firms in the Mainland in the form of contractual joint ventures or partnership. Hong Kong companies are not allowed to establish wholly-owned accounting companies in the Mainland. In addition, Hong Kong companies should pay attention to the issues in relation to the professional qualifications of Mainland accounting staff, as well as the contractual relations and responsibilities among Hong Kong companies, Mainland employees and the companies consuming the services. With regards to payment, since such services are provided in the Mainland, payment should not be transferred to Hong Kong companies. |
|
|
|
|
|
Logistics services |
|
|
|
1. For companies intending to provide various services, are they required to apply for licenses for each of the services they provide?
If a company provides many kinds of services, it should state clearly in the memorandum of the company and in relevant contracts. Also, it must submit applications to different authorities, depending on the kinds of services it is to provide, before engaging in such businesses. For example, for a company providing road transport services, it must first submit its project proposal to the Ministry of Transportation and Communications for approval.
2. If a Hong Kong company establishes a logistics company in a province or city in the Mainland, can the Hong Kong company provide services in the whole province? If it plans to provide services in other provinces or cities, what are the relevant procedures?
A company that has been approved by Mainland authorities to set up an establishment can provide the approved services in the place where the company has registered. If the company plans to establish a branch in other provinces or cities other than the place in which it registered, further applications must be submitted to the competent departments of the destination. Consultations will then be held between the competent departments of the original location where the company has registered and of the destination where the company will set up a new establishment. The company is allowed to launch businesses in the new destination after approved by the relevant competent departments, with notification to the relevant ministries of the Central Government. |
|
|
|
|
|
Storage and Warehousing services |
|
|
|
1. What is the minimum capital required for establishing storage and warehouse companies in Guangdong?
The minimum capital required for establishing a warehouse company is RMB500,000. The investment is only subject to examination and approval of the Department of Foreign Trade and Economic Cooperation of Guangdong Province.
2. What should be done if the “Storage and Warehousing Rental Agreement” cannot be provided when a company submits application to the departments of Foreign Trade and Economic Cooperation?
The "Storage Rental and Warehousing Agreement” must be provided when a company applies for establishing a warehousing company. The applicant can submit other relevant documents first, and provide the Agreement later within the period set by the departments of Foreign Trade and Economic Cooperation . |
|
|
|
|
Freight forwarding agency services |
|
|
|
1. Can Hong Kong companies establish branches in different regions in the Mainland after obtaining the “Hong Kong Service Supplier Certificates”?
Hong Kong companies that possess “Hong Kong Service Supplier Certificates” can establish branches in different regions in the Mainland, such as Shanghai, Beijing or Guangzhou. However, before the companies are allowed to establish branches, they must have operated for at least one year in a particular region in the Mainland and be approved by competent local departments of Foreign Trade and Economic Cooperation. Also, the business scopes of the branches should not fall beyond those of the parent company. However, setting up branch offices in different regions is not subject to the mentioned requirements.
2. What is the minimum capital requirement for establishing an international freight forwarding agency?
The minimum registered capital required to operate an international sea freight forwarding agency is RMB5,000,000. For an international air freight forwarding agency, the minimum capital is RMB 3,000,000, and RMB 2,000,000 for an international land freight forwarding agency. If an enterprise is engaged in two or more of these businesses, the highest of those minimum capital requirements will prevail.
3. How is the business tax of freight forwarding agencies in the Mainland calculated?
A 5% business tax will be levied on the operating incomes of freight forwarding agencies. For tax purpose, the operating incomes should be the net incomes after deduction of all relevant expenses paid to carriers. |
|
|
|
|
|
Cancel Printing
Printable Version
