Article 15 Commercial FIES shall acquire the land to be used for the business operations of their stores through public tender, auction or publicly listed sale, in accordance with the relevant laws and regulations on land management.
Article 16 Commercial FIES trading in merchandises that are subject to special regulations, or in import or export merchandises that are subject to state imposed quotas or permits must abide by the relevant state regulations in that regard.
Article 17 Where the business scope of the Commercial FIE encompasses the following merchandises, the following regulations must be followed in addition to these Measures:
Where the business scope of a Commercial FIE encompasses books, newspapers, and periodicals, the <Administrative Measures for Foreign Investment in Books, Newspapers, Periodicals Distribution Enterprises> must be followed.
Where a Commercial FIE operates in gas stations that engage in the retail distribution of finished oil products, the Commercial FIE must ensure that it has a stable source of supply of finished oil products, that it respects local regulations on the construction of gas stations, that the facilities and equipment involved respect national standards and regulations, and that the relevant fire and environmental protection requirements have also been met. The detailed implementation measures in this regard will be separately set out by MOFCOM.
Where a Commercial FIE’s business scope encompasses pharmaceutical products, the national laws and regulations on the sale of pharmaceutical products must be respected. The detailed implementation measures in this regard will be separately set out by MOFCOM.
Where a Commercial FIE’s business scope encompasses motor vehicles, the Commercial FIE shall respect the approved business scope. The detailed implementation measures in this regard will be separately set out by MOFCOM.
Except where this Article or Article 18 of these Measures provides otherwise, Commercial FIES engaging in the trade of agricultural byproducts, agricultural production materials or data will not be subject to any geographic restrictions, or any restrictions with respect to the proportion of shareholding or the amount of investment.
Wholesale Commercial FIES may not engage in the trade of pharmaceuticals, pesticides and mulching films before December 11, 2004, and may not engage in the trade of fertilizers, finished oil products or crude oil before February 11, 2006.
Retail Commercial FIES may not engage in the trade of pharmaceuticals, pesticides, mulching film, or finished oil products before December 11, 2004, and may not engage in the trade of fertilizers before December 11, 2006.
Wholesale Commercial FIES may not engage in the trade of salt or tobacco, and retail Commercial FIES may not engage in the trade of tobacco.
Article 18 A foreign investor that has opened a total of more than 30 stores in the PRC will not be allowed to hold more than 49% equity interests in a joint venture Commercial FIE if the goods it sells include books, newspapers, magazines, motor vehicles (this restriction will be lifted as of December 11, 2006), pharmaceuticals, pesticides, mulching films, fertilizers, finished oil products, grain, vegetable oil, sugar for human consumption, and cotton, etc which are of various brands and from different suppliers.
Article 19 Commercial FIES that authorize others to open franchise stores must abide by these Measures and other national regulations on franchising activities.
Article 20 Commercial FIES engaging in auction activities must abide by the <Auction Law>, the <Cultural Relic Law> and other relevant laws, and subject to the approval of MOFCOM. The detailed implementation measures in this regard will be set out by MOFCOM.
Article 21 The establishment of Commercial WFOES will be permitted as of December 11, 2004.
Article 22 Before December 11, 2004, retail Commercial FIES and its stores must be established in provincial capitals, capitals of autonomous regions, municipalities directly under the Central Government, municipalities separately listed on the State Plan or special economic zones. As of December 11, 2004, there will no longer be any geographic restrictions on the establishment of retail Commercial FIES and its stores.
Wholesale Commercial FIES will no longer be subject to any geographic restrictions as of the date these Measures come into force.
FIES that purport to invest in the domestic commercial sector should abide by the <Provisional Regulations on Domestic Investment by Foreign Invested Enterprises> in addition to abiding by these Measures.
FIES other than Commercial FIES that purport to engage in the business activities described in Article 3 shall abide by these Measures, and adjust their business scope accordingly.
Article 25 The establishment of Commercial FIES in the mainland of China by investors from Hong Kong, Macao and Taiwan shall be dealt with in accordance with these Measures, modified as follows:
- As of January 1, 2004, commercial service providers from Hong Kong and Macao may establish Commercial WFOES in the mainland of China;
- Hong Kong and Macao commercial service providers may establish retail Commercial FIES in regional and county level municipalities in the province of Guangdong, and in regional level municipalities in the rest of mainland China.
- As of January 1, 2004, Hong Kong and Macao commercial service providers may apply to establish Commercial FIES in the mainland of China to engage in retail distribution of motor vehicles in accordance with these Measures and the related regulations subject to the following requirements: The average annual sales volume of the applicant Hong Kong or Macao commercial service provider must be at least USD100 million for the three years immediately preceding the application, with total assets of at least USD10 million in the year immediately preceding the application, and the registered capital of the proposed motor vehicle retail distribution FIE must be at least RMB10 million or RMB6 million in central and western regions of the mainland of China.
- Hong Kong and Macao permanent residents who are Chinese citizens may set up personal businesses to engage in commercial retail activities (except those activities where special business permits are required) in accordance with the laws, regulations, and rules of mainland China, with a business area not exceeding 300 square meters.
- For the purpose of these measures, Hong Kong and Macao service providers shall meet the definition of, and the requirements for, Hong Kong and Macao service providers as set out in the <Closer Economic Partnership Agreement between the Mainland and Hong Kong> or in the <Closer Economic Partnership Agreement between the Mainland and Macao>, as the case may be.
Article 26 Commercial FIES are encouraged to participate in the relevant trade associations to strengthen self-governance.
Article 27 MOFCOM is the competent authority for the interpretation of these Measures.
Article 28 These Measures enter into force on June 1, 2004.
Article 29 These Measures hereby replaces the <Pilot Procedures for Foreign Investment in Commercial Enterprises> promulgated by the former State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation as of the date these Measures enter into force.