Administration Measures on Foreign Invested International Freight Forwarding Enterprises

The Administration Measures on Foreign-Invested International Freight Forwarding Enterprises, amended and approved at the 15th meeting of the Ministry of Commerce on October 19, 2005, is now promulgated and shall enter into force as of December 11, 2005.

December 1, 2005

Article 1. This set of measures is formulated in line with related laws and regulations on foreign-invested enterprises and the Administration Regulations on Foreign-Invested International Freight Forwarding Enterprises of the People s Republic of China to promote a healthy development of China ?s international freight forwarding service, and standardize establishment and operation behavior of foreign-invested international freight forwarding enterprises.

Article 2. The foreign-invested international freight forwarding enterprises mentioned in this set of measures refers to foreign-invested enterprises founded in the form of Sino-foreign joint venture and cooperation, and wholly foreign owned, accepting entrusted business of import and export goods from consignees and consignors, and conducting international freight forwarding and related business in the name of clients or their own for the consignors and being paid (hereinafter referred as foreign-invested international freight forwarding enterprises ).

Article 3. The Ministry of Commerce is responsible for examination, approval and administration of international freight forwarding enterprises involving foreign investment for undertaking international express delivery service; and departments of commerce of various provinces, autonomous regions, municipalities, cities specially designated in central government plans and the Xinjiang Production and Construction Corps are responsible for examination, approval and administration of foreign-invested international freight forwarding enterprises engaging in other business.

Alteration and other matters relating to foreign-invested international freight forwarding enterprises founded before the measures became effective are the responsibility of the provincial-level departments of commerce in their registration places.

Article 4. Foreign-invested international freight forwarding enterprises shall abide by laws, administrative regulations and related rules of the People s Republic of China, and their regular operational activities and legal right are under the protection of China s laws.

Articles 5. Foreign investors are allowed to set up foreign-invested international freight forwarding enterprises in China in the form of joint venture and cooperation. Starting from December 11, 2005, wholly foreign-owned foreign-invested international freight forwarding enterprises are permitted to be set up in China.

Foreign investors are allowed to acquire foreign-invested international freight forwarding enterprises in the form of equity purchase, but the proportion of equity share and the qualification of foreign investors shall comply with the requirements of this set of measures, and those involving state-owned assets shall be handled in accordance with related laws and regulations.

Article 6. The minimum registered capital for establishment of foreign-invested international freight forwarding enterprises is US$1million.

Starting from December 11, 2005, national treatment will be carried out in respect to the minimum registered capital.

Article 7. Upon approval, foreign-invested international freight forwarding enterprises are allowed to conduct some or all the business services detailed below:

(1) Cargo booking space (ship renting, aircraft charter and lump-sum charter), consignment for shipment, storage and packaging;

(2) Loading and unloading supervision, LCL (less-than-container load) and deconsolidation service, partial shipment, transshipment and related short-distance transport service.

(3) Agency service on custom declaration, and procedures for examination, inspection and insurance.

(4) Making relevant documents, paying shipment fee, settlement and petty expenses;

(5) Shipment agency service for articles of international exhibitions and private-owned articles and transit cargo;

(6) International multi-method joint transport and container transport (including LCL);

(7) International express delivery (excluding the delivery service for private letters, and documents of party, government and military departments above county level);

(8) Consulting services and other international cargo shipment agency services.

Article 8. After obtaining approval from the administration department of commerce, enterprises engaging in international express delivery service of letter and similar mail (excluding the delivery service of private letters, and documents of party, government and military departments above county level) shall go through procedures for postal consignment by postal administration departments.

Article 9. Establishment of foreign-invested international freight forwarding enterprises shall submit documents listed in Article 10 to provincial-level departments of commerce in accordance with the procedures required in related state laws and regulations.

Provincial-level departments of commerce shall make the decision to approve or refuse within 30 days starting from the day of receiving all he required documents, and issue the Approval Certificate on Foreign-invested Enterprises to those approved, or provide written explanation to those not approved. According to Article 3 of this law and other laws and regulations covering foreign investment exceeding the examination and approval right of Provincial-level departments of commerce, the provincial-level departments shall report to the Ministry of Commerce within 15 day starting from the day of receiving all the documents, after conducting primary examination of the documents.

The Ministry of Commerce shall make the decision to approve or refuse the application within 60 days starting from the day of receiving all the application documents; and issue the Approval Certificate on Foreign-invested Enterprises to the approved, or provide written explanation to those not approved.

Article 10. Documents needed for establishment of foreign-invested international freight forwarding enterprises include:

(1) Application;

(2) Project feasibility study report;

(3) Contract, regulations and rules for establishment of foreign-invested international freight forwarding enterprises. Wholly foreign-owned foreign-invested international freight forwarding enterprises only need to submit the regulations and rules;

(4) List of board of directors and certificate of appointment for board of directors from various sides.

(5) Verification letter on enterprise name issued by the department of industry and commerce.

(6) Certificates and documents on registration and credit of investors resident countries and regions.

Article 11. Foreign-invested international freight forwarding enterprises, after being operational for one year and with all registered capital paid, can apply to set up branch companies in other places in China. Business scope of the branch companies shall be limited to the scope of their parent companies, and the civil liability of the branch companies shall be taken by the parent companies.

Foreign-invested international freight forwarding enterprises shall increase the registered capital by at least RMB500, 000 for the founding of one Branch Company engaging in international freight forwarding service. If the enterprise registered capital has exceeded the required minimum amount, the excess shall be taken as the additional part of the capital of the branch.

Article 12. Those applying to set up branch companies shall submit an application to departments of commerce at prefecture and provincial levels at the places where the parent company is located, and then obtain approval from departments of commerce at prefecture and provincial levels after receiving endorsement from departments of commerce at prefecture and provincial levels in places where the branches will be set up. According to Article 3 of this law and other laws and regulations covering foreign investment exceeding the examination and approval right of Provincial-level departments of commerce, provincial-level departments shall submit all the application materials after conducting primary examination and the letter of approval from the department of commerce at the place where the branch will be set up to the Ministry of Commerce

Article 13. Documents needed for establishment of branch companies of foreign-invested international freight forwarding enterprises include:

(1) Application;

(2) Decision of the board of directors;

(3) If there is additional capital made, the decision of the board of directors on making additional capital and agreements on revisions of joint venture contract and regulations and rules, and agreement on revision of regulations and rules for wholly foreign owned foreign-invested international freight forwarding enterprises.

(4) Appraisal report on enterprise assets

Article 14. Foreign-invested international freight forwarding enterprises are encouraged to participate in non-governmental organisations and trade associations such as China International Freight Forwarders Association and China Association of Enterprises with Foreign Investment to put themselves under the supervision and guidance of the trade association.

Article 15. Companies, enterprises, other economic organisations and individuals of Hong Kong, Macao and Taiwan shall follow this set of measures when investing in the establishment of international freight forwarding agency enterprises in the mainland of China.

Article 16. Foreign-invested international freight forwarding enterprises shall follow this set of measures when applying to add new international freight forwarding business.

Article 17. The work of putting on record foreign-invested international freight forwarding enterprises is under the unified management of the Ministry of Commerce, and there will be other documents concerning the matter issued by the Ministry of Commerce.

Article 18. The Ministry of Commerce shall be entitled to the interpretation right of this set of measures.

Article 19. This set of measures shall enter into force as of December 11, 2005, and the former Administration Measures on Foreign-Invested International Freight Forwarding Enterprises (No. 36 Decree (2002) of the Ministry of Foreign Trade and Economic Cooperation) and the supplementary rules of the Administration Measures on Foreign-Invested International Freight Forwarding Enterprises (No. 12 Decree (2003) of the Ministry of Commerce) will be abolished at the same time.

Appendix:

According to the Closer Economic Partnership Arrangement (CEPA) between the Mainland of China and Hong Kong and its supplementary agreement and the CEPA between the Mainland of China and Macao and its supplementary agreements approved by the State Council, the following are the supplementary regulations for investment from Hong Kong and Macao investing in international freight forwarding enterprises for promotion of establishing a closer economic and trade relationship with Hong Kong and Macao and encouraging service providers from Hong Kong and Macao to set up enterprises engaging in international freight forwarding services:

1. Service providers from Hong Kong and Macao are permitted to establish international freight forwarding enterprises in the mainland of China in the forms of joint venture, cooperation and wholly owned.

2. Qualified service providers from Hong Kong and Macao shall meet the following requirements when establishing international freight forwarding enterprises in the mainland of China:

(1) Those engaging in ocean international freight forwarding service shall have a minimum registered capital of RMB5 million;

(2) Those engaging in air international freight forwarding service shall have a minimum registered capital of RMB3 million;

(3) Those engaging in land international freight forwarding or international express delivery services shall have a minimum registered capital of RMB2 million.

Those engaging in the first two services shall have the minimum registered capital of the highest one.

3. Service providers from Hong Kong and Macao establishing international freight forwarding enterprises in the mainland of China with all registered capital paid may apply to set up branch companies in other places. They shall add at least RMB500, 000 when founding one branch company. If the enterprise s registered capital has exceeded the required minimum amount, the excess may be taken as the additional part of the capital of the branch.

4. Service providers from Hong Kong and Macao shall meet the definition of service providers of the Closer Economic Partnership Arrangement (CEPA) between the Mainland and Hong Kong and the CEPA between the Mainland and Macao and requirements of related regulations.

5. In cases where other regulations and rules concerning service providers from Hong Kong and Macao establishing international freight forwarding enterprises exist this set of measures shall still be implemented.