Establishment of Franchising Enterprises and Procedures for Opening Stores
August 26, 2009
The establishment procedures are the same as those for foreign-invested wholesale enterprises. Under existing policies, FIEs engaging in commercial franchising are treated in the same way as domestic enterprises with regard to establishment requirements, rights and obligations, information disclosure, advertising and publicity etc, but are different in terms of establishment procedures. Approval procedures carried out by the examination and approval authorities are merely a matter of formality.
FIEs that are qualified to engage in franchising should apply to their original examination and approval authorities for permission to add “engaging in commercial activities in the form of franchising” to their business scope and submit the necessary documents, including information disclosure document, sample of franchising contract and operation manual of franchising. The examination and approval authorities will make a decision in writing on whether or not to approve the application within 30 days after receiving the complete set of application materials. Upon obtaining approval and completing the necessary formalities in respect of change of registration details with the industry and commerce administration, the FIEs may start their franchising business.
The following documents must be submitted when applying for permission to add “engaging in commercial activities in the form of franchising” to a company’s business scope:
- Application letter and resolution of the board of directors.
- Corporate business licence and Certificate of Approval of Foreign-Invested Enterprises (photocopy).
- Agreements on the modification of contracts and articles of association (for foreign enterprises, only the modified articles of association are required).
- Relevant documents showing compliance with Article 7 of the Measures.
- Basic information reflecting the provisions of Article 17 of the Measures.
- Sample of franchising contract.
- Operation manual of franchising.
FIEs are not allowed to engage in any business under the prohibited category as specified in the Catalogue for the Guidance of Foreign Investment Industries in the form of franchising.
Where patent licensing is involved in franchising, patent licensing contracts should be signed in accordance with the related provisions of the Patent Law of the PRC and its implementation rules, and record filing formalities should be completed in accordance with the provisions of the Measures for the Administration of Record Filing of Licensing Contracts for the Implementation of Patents. Before conducting franchising activities, the franchiser should handle matters relating to the trademark licensing contract in line with the provisions of the Trademark Law of the PRC and its implementation rules.
Tags: foreign investment, Trade, businessRelated Posts:
Establishment of Retail Enterprises and Procedures for Opening Stores
August 26, 2009
The approval procedures for foreign-invested commercial retail enterprises are the same as those for wholesale enterprises.
Stores opened by foreign-invested commercial enterprises engaging in retail in the provincial-level administrative region where they are located are approved by the local provincial-level commerce department and the applications are forwarded to MOFCOM for the record. For the opening of stores in another province, the opinions of the commerce department of that province have to be sought. The provincial-level commerce department in charge will send a letter to its counterpart in the place where the store is to be located seeking its opinion. During this process, the enterprise should cooperate by supplying the necessary documents.
Provincial-level commerce departments may grant approval to the establishment of the following stores, with the applications forwarded to MOFCOM for the record:
-
Stores with a business area of less than 3,000 sqm each and not exceeding three in number; the foreign investor may not open a total of more than 30 similar stores through its foreign-invested commercial enterprise in China;
-
Stores with a business area of less than 300 sqm each and not exceeding 30 in number; the foreign investor may not open a total of more than 300 similar stores through its foreign-invested commercial enterprise in China;
-
Stores whose scope of business does not include television, telephone, mail order, Internet and the sale of automatic vending machines;
-
Stores not engaging in tobacco retailing, and not selling chemical fertilisers
Related Posts:
Establishment of Wholesale Enterprises (Distribution in China)
August 26, 2009
Application Procedures
1. Examination and Approval of Project Proposals, Contracts and Articles of Association
The Chinese party (in the case of a wholly foreign-owned enterprise, the foreign investor or its appointed Chinese agency which is qualified to provide foreign investment consultation services) must submit to the local foreign economic and trade authorities the feasibility study report, contract, articles of association and other documents required. Trademark and trade name licensing contracts, technology transfer contracts, management contracts, service contracts and other legal documents signed by foreign-invested commercial enterprises should be submitted at the same time as annexes to the contract (in the case of wholly foreign-owned commercial enterprises, as annexes to the articles of association).
2. Registration at the industry and commerce administration
Foreign-invested wholesale enterprise granted approval to set up should complete its registration formalities at the industry and commerce administration within one month after obtaining the approval certificate issued by the provincial-level foreign economic and trade authorities.
3. Tax registration
After its incorporation, the enterprise should have an official seal made at the local public security bureau, apply for enterprise code from the technical supervision bureau, and complete tax registration formalities at the tax registration department.
Documents Required
Documents Required for Examination and Approval of Feasibility Study Reports, Contracts and Articles of Association
-
Feasibility study reports, contracts, articles of association (for foreign commercial enterprises, only articles of association required) signed by the investing parties, together with annexes to these documents.
-
Bank credit proofs of the investing parties, registration certificates (photocopy) and legal representatives’ certificates (photocopy). Personal identification papers are required if the foreign investors are individuals.
-
The latest annual audit reports of all investing parties.
-
Evaluation report on the state-owned assets to be invested by the Chinese party in a Sino-foreign equity or contractual joint venture commercial enterprise.
-
Import/export commodity catalogues of the proposed foreign-invested commercial enterprise.
-
Application and approval papers of the feasibility study.
-
Names of members of the board of directors of the proposed foreign-invested commercial enterprise and their letters of appointment.
-
Notification on pre-approval of enterprise name issued by the industry and commerce administration.
-
Land-use right certificates (photocopy) and/or tenancy agreements (photocopy), except for stores with a business area of less than 3,000 sqm.
-
Document proving compliance with the requirements of urban development and urban commercial development issued by the commerce department where the proposed stores are to be located.
-
Letter of attorney signed by the legal representatives for documents not signed by the legal representatives.
-
Other relevant documents.
Application for Changes
Existing foreign-invested commercial enterprises should submit applications to the original examination and approval authorities for permission to engage in wholesaling or retailing business, open branches or change partners in accordance with regulations governing foreign-invested enterprises. The following documents must be submitted when making application:
-
Application form.
-
The modified contract and articles of association if modifications are involved.
-
Feasibility study report on the opening of stores.
-
Resolution of the board of directors on the opening of stores.
-
The latest annual audit report of the enterprise.
-
Capital verification report (photocopy).
-
Registration certificates of the investing parties (photocopy) and certificates of the legal representatives (photocopy).
-
Land-use rights certificates (photocopy) and/or tenancy agreements (photocopy) for the proposed stores, except for stores with a business area of less than 3,000 sqm.
-
Document proving compliance with the requirements of urban development and urban commercial development issued by the government where the proposed stores are to be located.
-
Letter of attorney signed by the legal representatives for documents not signed by the legal representatives.
Related Posts:
China’s Installed Wind Power Capacity Surges 101% in H1
August 26, 2009
China’s on-grid wind power capacity surged 101% year on year to 11.81 million kilowatts in the first half of this year, the official Xinhua News Agency reported.
The surge in installed wind power capacity reflects the country’s effort to increase its reliance on renewable energy, said Shu Yinbiao, vice general manager of the State Grid Corp. He added that the State Grid is actively carrying out other programs to promote the development of new energy. The works include the construction of a research center for wind and solar power generation.
Shu suggested the government map out a long-term wind power development plan, launch new national technical standards for new energy and enhance the accurate prediction of power generation.
China’s wind power sector has developed fast in recent years due to the government’s supportive measures. The country’s installed wind power capacity amounted to 12 million kilowatts as of the end of 2008, ranking fourth in the world following the U.S., France and Spain.
Source: Xinhua.net
Related Posts:
Law of the People’s Republic of China Against Unfair Competition
August 25, 2009
Contents
Chapter I General Provisions
Chapter II Acts of Unfair Competition
Chapter III Supervision and Inspection
Chapter IV Legal Responsibility
Chapter V Suplementary Provisions
Article 1
This Law is formulated with a view to safeguarding the healthy development of socialist market economy, encouraging and protecting fair competition, repressing unfair competition acts, and protecting the lawful rights and interests of business operators and consumers.
Article 2
A business operator shall, in his market transactions, follow the principles of voluntariness, equality, fairness, honesty and credibility and observe the generally recognized business ethics.
Unfair competition as mentioned in this Law refers to a business operators acts violating the provisions of this Law, infringing upon the lawful rights and interests of another business operator and disturbing the socio-economic order.
A business operator as mentioned in this Law refers to a legal person or any other economic organization or individual engaged in commodities marketing or profit-making services commodities referred to hereinafter includes such services).
Article 3
People’s governments at various levels shall take measures to repress unfair competition acts and create favourable environment and conditions for fair competition.
Administrative departments for industry and commerce of the people’s governments at or above the county level shall exercise supervision over and inspection of unfair competition acts; where laws or administrative rules and regulations provide that other departments shall exercise the supervision and inspection, those provisions shall apply.
Article 4
The State shall encourage, support and protect all organizations and individuals in the exercise of social supervision over unfair competition acts.
No State functionary may support or cover up unfair competition acts.
Chapter II Acts of Unfair Competition
Article 5
A business operator shall not harm his competitors in market transactions by resorting to any of the following unfair means:
(1) counterfeiting a registered trademark of another person;
(2) using for a commodity without authorization a unique name, package, or decoration of anothers famous commodity, or using a name, package or decoration similar to that of anothers famous commodity, thereby confusing the commodity with that famous commodity and leading the purchasers to mistake the former for the latter;
(3) using without authorization the name of another enterprise or person, thereby leading people to mistake their commodities for those of the said enterprise or person; or
(4) forging or counterfeiting authentication marks, famous-and-excellent-product marks or other product quality marks on their commodities, forging the origin of their products or making false and misleading indications as to the quality of their commodities.
Article 6
A public utility enterprise or any other business operator occupying monopoly status according to law shall not restrict people to purchasing commodities from the business operators designated by him, thereby precluding other business operators from fair competition.
Article 7
Governments and their subordinate departments shall not abuse administrative powers to restrict people to purchasing commodities from the business operators designated by them and impose limitations on the rightful operation activities of other business operators.
Governments and their subordinate departments shall not abuse administrative powers to restrict commodities originated in other places from entering the local markets or the local commodities from flowing into markets of other places.
Article 8
A business operator shall not resort to bribery, by offering money or goods or by any other means, in selling or purchasing commodities. A business operator who offers off-the-book rebate in secret to the other party, a unit or an individual, shall be deemed and punished as offering bribes; and any unit or individual that accepts off-the-book rebate in secret shall be deemed and punished as taking bribes.
A business operator may, in selling or purchasing commodities, expressly allow a discount to the other party and pay a commission to the middleman. The business operator who gives discount to the other party and pays commission to the middleman must truthfully enter them in the account. The business operator who accepts the discount or the commission must also truthfully enter it in the account.
Article 9
A business operator may not, by advertisement or any other means, make false or misleading publicity of their commodities as to their quality, ingredients, functions, usage, producers, duration of validity or origin.
An advertisement agent may not act as agent for, or design, produce or release, a false advertisement while he clearly knows or ought to know its falsehood.
Article 10
A business operator shall not use any of the following means to infringe upon business secrets:
(1) obtaining an obligees business secrets by stealing, luring, intimidation or any other unfair means;
(2) disclosing, using or allowing another person to use the business secrets obtained from the obligee by the means mentiond in the preceding paragraph; or
(3) in violation of the agreement or against the obligees demand for keeping business secrets, disclosing, using or allowing another person to use the business secrets he possesses.
Obtaining, using or disclosing anothers business secrets by a third party who clearly knows or ought to know that the case falls under the unlawful acts listed in the preceding paragraph shall be deemed as infringement upon business secrets.
Business secrets as mentioned in this Article refers to any technology information or business operation information which is unknown to the public, can bring about economic benefits to the obligee, has practical utility and about which the obligee has adopted secret-keeping measures.
Article 11
A business operator shall not, for the purpose of pushing out their competitors, sell their commodities at prices lower than costs.
Any of the following shall not be deemed as an unfair competition act:
(1) selling perishables or live commodities;
(2) disposing of commodities near expiration of their validity duration or those kept too long in stock;
(3) seasonal sales; or
(4) selling commodities at a reduced price for the purpose of clearing off debts, change of business or suspension of operation.
Article 12
A business operator may not, against the will of purchasers, conduct tie-in sale of commodities or attach any other unreasonable conditions to the sale of their commodities.
Article 13
A business operator shall not engage in any of the following lottery-attached sale activities:
(1) lottery-attached sale conducted by such deceptive means as falsely declaring to have prize or intentionally making a designated insider win the prize;
(2) lottery-attached sale employed as a means to sell goods of low quality at a high price; or
(3) lottery-attached sale in form of lottery-drawing with the highest prize exceeding 5 000 yuan.
Article 14
A business operator shall not fabricate or spread false information to injure his competitors commercial credit or the reputation of his competitors commodities.
Article 15
Bidders shall not act in collusion with each other so as to force up or down the bidding prices.
Bidders and tender-inviters shall not collude with each other so as to push out their competitors from fair competition.
Chapter III Supervision and Inspection
Article 16
Supervision and inspection departments at or above the county level may carry out supervision over and inspection of unfair competition acts.
Article 17
Supervision and inspection departments shall, in supervising and inspecting unfair competition acts, have the right to exercise the following functions and powers:
(1) to interrogate the business operators under inspection, interested persons, or witnesses in accordance with the prescribed procedures, and require them to provide testimonial materials or other materials relating to the unfair competition acts;
(2) to inquire about and duplicate the agreements, account books, invoices, documents, records, business letters and telegrammes or other materials relating to the unfair competition acts; and
(3) to inspect the property involved in the unfair competition acts under Article 5 of this Law; and, when necessary, to order the business operators under inspection to explain the source and quantity of the commodities, suspend the sale and await the inspection thereof, and the property involved shall not be transferred, concealed or destroyed.
Article 18
Functionaries of supervision and inspection departments shall, when supervising and inspecting unfair competition acts, produce their inspection certificates.
Article 19
Business operators under inspection, interested persons and witnesses shall truthfully provide relevant materials or particulars when the supervision and inspection departments supervise and inspect unfair competition acts.
Chapter IV Legal Responsibility
Article 20
A business operator who violates the provisions of this Law and thus causes damage to the infringed business operators, shall bear the liability of compensation for the damage. If the losses of the infringed business operator are difficult to estimate, the damages shall be the profits derived from the infringement by the infringer during the period of infringement. And the infringer shall also bear the reasonable expense paid by the infringed business operator for investigating the infringers unfair competition acts violating his lawful rights and interests.
A business operator whose lawful rights and interests are infringed upon by unfair competition acts may bring a suit in a peoples court.
Article 21
A business operator who counterfeits anothers registered trademark, uses without authorization the name of another enterprise or person, forges or counterfeits authentication marks, famous-and-excellent-product marks or other product quality marks, forges origin of the products or makes false and misleading indications regarding the product quality shall be punished in accordance with the provisions of the Trademark Law of the People’s Republic of China and the Law of the People’s Republic of China on Product Quality.
In case a business operator uses for a commodity without authorization the name, package or decoration of a famous commodity or the name, package or decoration similar to that of a famous commodity and thereby confuses the commodity with another’s famous commodity and leads the purchasers to mistake the former for the latter, the supervision and inspection department shall order the business operator to stop the illegal act and confiscate the illegal earnings and may, in light of the circumstances, impose a fine of not less than one time but not more than three times the illegal earnings; if the circumstances are serious, his business licence may be revoked; and if the commodities sold are fake and inferior, and the case constitutes a crime, he shall be investigated for criminal responsibility according to law.
Article 22
A business operator, who resorts to bribery by offering money or goods or by any other means in selling or purchasing commodities and if the case constitutes a crime, shall be investigated for criminal responsibity according to law; if the case does not constitute a crime, the supervision and inspection department may impose a fine of not less than 10 000 yuan but not more than 200 000 yuan in light of the circumstances and confiscate the illegal earnings, if any.
Article 23
In case a public utility enterprise or any other business operator occupying monopoly status according to law restricts people to purchasing commodities from a designated business operator in order to push out other business operators from fair competition, the supervision and inspection departments at the provincial level or of cities divided into districts shall order the ceasing of the illegal acts and may impose a fine of not less than 50 000 yuan but not more than 200 000 yuan in light of the circumstances. If such designated business operator takes advantage of his monopoly status to sell goods of low quality at high prices or indiscriminately collects fees, the inspection and supervision department shall confiscate the illegal earnings and may impose a fine of not less than one time but not more than three times the illegal earnings in light of the circumstances.
Article 24
In case a business operator makes false and misleading publicity of his commodities by advertisement or any other means, the supervision and inspection department shall order the said business operator to stop his illegal acts and eliminate the bad effects, and may impose a fine of not less than 10 000 yuan but not more than 200 000 yuan in light of the circumstances.
In case an advertistement agent acts as agent for, or designs, produces or releases, a false advertisement though the agent clearly knows or ought to know the falsehood, the supervision and inspection department shall order the ceasing of the illegal acts, confiscate the illegal earnings, and impose a fine according to law.
Article 25
In case a business operator violates the provisions of Article 10 of this Law and infringes upon trade secrets, the supervision and inspection department shall order the ceasing of the illegal acts and may impose a fine of not less than 10 000 yuan but not more than 200 000 yuan in light of the circumstances.
Article 26
In case a business operator engages in lottery-attached sale in violation of the provisions of Article 13 of this Law, the supervision and inspection department shall order the ceasing of the illegal acts and may impose a fine of not less than 10 000 yuan but not more than 100 000 yuan in light of the circumstances.
Article 27
Where bidders act in collusion with each other to force up or down the bidding price, or a bidder colludes with a tender-inviter for the purpose of pushing out their competitors, the successful bid shall be invalid, and the supervision and inspection department may impose a fine of not less than 10 000 yuan but not more than 200 000 yuan in light of the circumstances.
Article 28
In case a business operator acts in violation of the order of stopping the sale or forbidding the transfer, concealment or destruction of the property involved in the unfair competition acts, the supervision and inspection department may impose a fine of not less than one time but not more than three times the price of the property sold, transferred, concealed or destroyed.
Article 29
In case a party is not satisfied with the punishment decision made by the supervision and inspection department, it may apply for reconsideration to the competent department at the next higher level within 15 days from receipt of the decision; and if the party is still not satisfied with the reconsideration decision, it may bring a suit in a people’s court within 15 days from receipt of the decision; and the party may also directly file a suit in a people’s court.
Article 30
Where a government or its subordinate departments, in violation of the provisions of
Article 7 of this Law, restrict people to purchasing commodities from a designated business operator or impose limits on other business operator’s rightful operation activities or the normal circulation of commodities between different areas, the supervision and inspection department at higher levels shall order them to make corrections; and if the circumstances are serious, the persons held directly responsible shall be given administrative sanctions by the relevant department at the same or higher levels; if the designated business operator takes advantage of his status to sell goods of low quality at high prices or indiscriminately collects fees, the supervision and inspection department shall confiscate the illegal earnings and may impose a fine of not less than one time but not more than three times the illegal earnings in light of the circumstances.
Article 31
Where a State functionary engaged in supervision over and inspection of unfair competition acts abuses his power or neglects his duty, and if the case constitutes a crime, he shall be investigated for criminal responsibility according to law; if the case does not constitute a crime, he shall be given an administrative sanction.
Article 32
Where a State functionary engaged in supervision over and inspection of unfair competition acts practices favouritism or irregularities and intentionally harbours a business operator whom he clearly knows to be guilty of a crime committed by violating the provisions of this Law and attempts to shield him from prosecution, he shall be investigated for criminal responsibility according to law.
Chapter V Supplementary Provisions
Article 33
This Law shall enter into force as of December 1, 1993.
Related Posts:
