China's top legislature last week read for the second time the draft anti-monopoly law which requires foreign purchases of Chinese companies to be scrutinized to ensure there is no negative effect on the national security.
The draft of China's first anti-monopoly law was submitted to the 28th session of the Standing Committee of the National People's Congress for a second reading.
"Foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operations in other forms should be examined according to relevant laws and regulations if the cases are related to national security," the draft reads.
According to official statistics, the number of foreign M&A cases only accounted for five percent of all forms of foreign direct investment in China annually before 2004. However, the proportion rapidly increased to 11 percent in 2004 and nearly 20 percent in 2005.
Foreign companies have even begun to acquire major state-owned enterprises or companies with famous brands in recent years, arousing concerns about China's economic security.
Zhang Yansheng, director of the International Economic Research Institute under the National Development and Reform Commission, said it is crucial to require foreign purchases of domestic companies to go through stringent state security checks as well as a thorough anti-monopoly monitoring.
Thursday, July 5, 2007
Wednesday, July 4, 2007
China inaugurates free-trade harbor area in Dalian
China inaugurated a harbor area with preferential tax rates on Thursday in the northeastern city of Dalian, a major step towards forming a free trade zone between China, Japan and the Republic of Korea (ROK).
The Dayaowan Bonded Harbor Area, located at the Dagushan Peninsula in the northeastern part of Dalian, enjoys preferential taxation and foreign exchange policies, said Zhang Shikun, director of the Dalian Bonded Area Administrative Committee.
"It will remove tariffs for foreign cargo and offer tax rebates for domestic cargo. It will also exempt businesses from value added taxes and consumption taxes if they trade with each other," Zhang said.
Analysts predict the efficiency of logistics will be raised by 20 percent after the port is put into operation.
The first phase of the area covers 3.06 square kilometers and includes warehouses, cold storage facilities, a container terminal and processing and logistics services.
About 200 million yuan (25 million U.S dollars) has been spent on the construction of the area since August 31 last year, when the State Council approved its establishment.
The second phase is expected to be finished by the end of next year, expanding the area to 6.88 square km.
The Dalian port is the seventh largest in China and handled 200million tons of cargo and 30 million containers (TEUs) last year.
The Dayaowan Bonded Harbor Area is the second of its kind in China, following the operation of the Shanghai-based Yangshan Bonded Harbor Area in December 2005. The State Council has also approved a third such area, the Dongjiang Bonded Harbor Area whichis under construction in north China's Tianjin Municipality.
Analysts say the Dayaowan area is expected to increase China's share in the northeast Asian shipping industry, and is also considered a major step towards forming a free trade zone between China, Japan and ROK, which political leaders and business circles of the three countries have repeatedly called for.
Dalian has advantages for a free trade zone in terms of its location and its close economic and cultural links with neighboring countries, said Wang Jun, associate professor on logistics studies with the Dalian Maritime University.
Dalian is one of the most successful Chinese cities in attracting Japanese and ROK businesses -- half of the city's overseas-funded businesses come from Japan and the ROK, more than 5,000 in number, and 40 percent of the city's foreign trade comes from the two countries, local government statistics show.
"The internationalization of Dalian has been largely due to Japan and the ROK, and Dalian has every advantage for building a free trade zone in northeast Asia," said Xia Deren, mayor of Dalian.
"We expect to develop the area of about 50 square km surrounding the Dagushan Peninsula into a free trade zone on the basis of the Dayaowan Bonded Harbor Area," he said.
"But, of course, it has to depend on the country's overall economic layout," he added.
The Dayaowan Bonded Harbor Area, located at the Dagushan Peninsula in the northeastern part of Dalian, enjoys preferential taxation and foreign exchange policies, said Zhang Shikun, director of the Dalian Bonded Area Administrative Committee.
"It will remove tariffs for foreign cargo and offer tax rebates for domestic cargo. It will also exempt businesses from value added taxes and consumption taxes if they trade with each other," Zhang said.
Analysts predict the efficiency of logistics will be raised by 20 percent after the port is put into operation.
The first phase of the area covers 3.06 square kilometers and includes warehouses, cold storage facilities, a container terminal and processing and logistics services.
About 200 million yuan (25 million U.S dollars) has been spent on the construction of the area since August 31 last year, when the State Council approved its establishment.
The second phase is expected to be finished by the end of next year, expanding the area to 6.88 square km.
The Dalian port is the seventh largest in China and handled 200million tons of cargo and 30 million containers (TEUs) last year.
The Dayaowan Bonded Harbor Area is the second of its kind in China, following the operation of the Shanghai-based Yangshan Bonded Harbor Area in December 2005. The State Council has also approved a third such area, the Dongjiang Bonded Harbor Area whichis under construction in north China's Tianjin Municipality.
Analysts say the Dayaowan area is expected to increase China's share in the northeast Asian shipping industry, and is also considered a major step towards forming a free trade zone between China, Japan and ROK, which political leaders and business circles of the three countries have repeatedly called for.
Dalian has advantages for a free trade zone in terms of its location and its close economic and cultural links with neighboring countries, said Wang Jun, associate professor on logistics studies with the Dalian Maritime University.
Dalian is one of the most successful Chinese cities in attracting Japanese and ROK businesses -- half of the city's overseas-funded businesses come from Japan and the ROK, more than 5,000 in number, and 40 percent of the city's foreign trade comes from the two countries, local government statistics show.
"The internationalization of Dalian has been largely due to Japan and the ROK, and Dalian has every advantage for building a free trade zone in northeast Asia," said Xia Deren, mayor of Dalian.
"We expect to develop the area of about 50 square km surrounding the Dagushan Peninsula into a free trade zone on the basis of the Dayaowan Bonded Harbor Area," he said.
"But, of course, it has to depend on the country's overall economic layout," he added.
Tuesday, July 3, 2007
The Ministry of Commerce Issued “Administrative Measures for Archival Filing of Commercial Franchise” and “Administrative Measures for the Information
On February 6, 2007, the State Council issued Order No. 458 to proclaim Administrative Provisions on Commercial Franchise. In order to implement the Provisions, the Ministry of Commerce passed on April 30, 2007 the Administrative Measures for Archival Filing of Commercial Franchise and the Administrative Measures for the Information Disclosure of Commercial Franchise, which came into force on May 1, 2007.
1. Archive management
1) Filing authority
The Ministry of Commerce and administrative department of commerce at provincial level are filing authority of commercial franchise. Those who are engaged in commercial franchise within a province, autonomous region or municipal city directly governed by the State Council shall put their business on file with the administrative department of commerce at provincial level where the franchiser is located. Those who are engaged in commercial franchise inter-province, inter-region or inter municipal city shall put their business on file with the Ministry of Commerce. The filing of commercial franchise all over the country is connected by internet. Franchisors, complied with Administrative Provisions, shall file on the website of the government.
2) Filing materials
Franchisor shall submit the following materials to the filing authority:
(1) Basic information of the commercial franchise, distribution of shops of all franchisee in China, marketing proposal of franchisor;
(2) Copy of business license or certificate of other entities;
(3) Copy of certificate of trademark right, patent right or other operative resources relevant to franchise;
(4) Certifying document issued by administrative department of commerce at city level conformed with Article 7(2) of the Provisions; Business certificate of the direct sales stores if the store is within the territory of China.
(5) Catalogue of the franchise hand book.
(6) Other necessary documents
3) Filing Procedure
The franchisor shall, within 15 days after the franchisor first comes into contract with the franchisee within the territory of the PRC, file its contract with the filing authority.The filing authority shall, within 10 days from the date of receiving the required documents and materials from the franchisor, put the contract on file and have it published on the website of the Ministry of Commerce. Should the submitted documents or materials be inadequate, the filing authority may ask for supplementary submission from the franchisor within 7days. The filing authority shall within 10 days after supplementary submission put the contract on file.The general public may find out the name of the enterprise, the registered trademark, the enterprise’s logo, patent, know-how and other operative resources used in the commercial franchise services and also other commercial franchise information on the website of the Ministry of Commerce.
2. Management of the Information Disclosure
1) Time of the Disclosure
The franchisor shall at least 30 days before coming into the commercial franchise contract, disclose to the franchisee the information related to franchise in written form and provide contract of commercial franchise.
2) Content to be Disclosed
The information to be disclosed by the franchisor shall include the following:
(1) The basic information of the franchisor and its service, e.g. the name, address, contact means, legal representative, general manager, the amount of registered capital, business scope of the franchisor and the present number, address and phone number of direct operative shops of the franchisor.
(2) The basic information of the operative resources. The franchisor shall in written form explain to the franchisee the available registered trademarks, the enterprise’s logo, patent, know-how, operation pattern and other operative resources.
(3) The basic information of the franchise fees, including: the type, sum, standard and payment means of the fees charged by the franchisor and on third party’s behalf; collection of guarantee, condition, time and method for return of the guarantee etc.
(4) The price and conditions for supply of the products, services or equipments to the franchisee, e.g. whether or not the franchisee must purchase from the franchisor or its related company the products, services or equipments and the relevant price and conditions.
(5) The continue provision of service by the franchisor, e.g. the detailed content, means of provision and implementing plans, including the place, means and duration of the business training.
(6) The means and content of direction to and supervision over the business operated by the franchisee.
(7) Related information of the franchisee with the territory of the PRC, e.g. the actual or anticipated average sales amount, cost, gross and net profit of the franchisee.
(8) Recent 2 years’ financial accounting and auditing report abstracts produced by accounting or auditing agencies.
3) Other Items
Before disclosing information to the franchisee, the franchisor has the right to request the franchisee to sign a confidentiality contract. After the disclosure, the franchisee shall produce to the franchisor a signed copy of receipt as to the known information in duplicate, one for the franchisee and the other for the franchisor.Should the franchisor conceal any information that should be disclosed or disclose any wrong information, the franchisee may dissolve the commercial franchise contract.
1. Archive management
1) Filing authority
The Ministry of Commerce and administrative department of commerce at provincial level are filing authority of commercial franchise. Those who are engaged in commercial franchise within a province, autonomous region or municipal city directly governed by the State Council shall put their business on file with the administrative department of commerce at provincial level where the franchiser is located. Those who are engaged in commercial franchise inter-province, inter-region or inter municipal city shall put their business on file with the Ministry of Commerce. The filing of commercial franchise all over the country is connected by internet. Franchisors, complied with Administrative Provisions, shall file on the website of the government.
2) Filing materials
Franchisor shall submit the following materials to the filing authority:
(1) Basic information of the commercial franchise, distribution of shops of all franchisee in China, marketing proposal of franchisor;
(2) Copy of business license or certificate of other entities;
(3) Copy of certificate of trademark right, patent right or other operative resources relevant to franchise;
(4) Certifying document issued by administrative department of commerce at city level conformed with Article 7(2) of the Provisions; Business certificate of the direct sales stores if the store is within the territory of China.
(5) Catalogue of the franchise hand book.
(6) Other necessary documents
3) Filing Procedure
The franchisor shall, within 15 days after the franchisor first comes into contract with the franchisee within the territory of the PRC, file its contract with the filing authority.The filing authority shall, within 10 days from the date of receiving the required documents and materials from the franchisor, put the contract on file and have it published on the website of the Ministry of Commerce. Should the submitted documents or materials be inadequate, the filing authority may ask for supplementary submission from the franchisor within 7days. The filing authority shall within 10 days after supplementary submission put the contract on file.The general public may find out the name of the enterprise, the registered trademark, the enterprise’s logo, patent, know-how and other operative resources used in the commercial franchise services and also other commercial franchise information on the website of the Ministry of Commerce.
2. Management of the Information Disclosure
1) Time of the Disclosure
The franchisor shall at least 30 days before coming into the commercial franchise contract, disclose to the franchisee the information related to franchise in written form and provide contract of commercial franchise.
2) Content to be Disclosed
The information to be disclosed by the franchisor shall include the following:
(1) The basic information of the franchisor and its service, e.g. the name, address, contact means, legal representative, general manager, the amount of registered capital, business scope of the franchisor and the present number, address and phone number of direct operative shops of the franchisor.
(2) The basic information of the operative resources. The franchisor shall in written form explain to the franchisee the available registered trademarks, the enterprise’s logo, patent, know-how, operation pattern and other operative resources.
(3) The basic information of the franchise fees, including: the type, sum, standard and payment means of the fees charged by the franchisor and on third party’s behalf; collection of guarantee, condition, time and method for return of the guarantee etc.
(4) The price and conditions for supply of the products, services or equipments to the franchisee, e.g. whether or not the franchisee must purchase from the franchisor or its related company the products, services or equipments and the relevant price and conditions.
(5) The continue provision of service by the franchisor, e.g. the detailed content, means of provision and implementing plans, including the place, means and duration of the business training.
(6) The means and content of direction to and supervision over the business operated by the franchisee.
(7) Related information of the franchisee with the territory of the PRC, e.g. the actual or anticipated average sales amount, cost, gross and net profit of the franchisee.
(8) Recent 2 years’ financial accounting and auditing report abstracts produced by accounting or auditing agencies.
3) Other Items
Before disclosing information to the franchisee, the franchisor has the right to request the franchisee to sign a confidentiality contract. After the disclosure, the franchisee shall produce to the franchisor a signed copy of receipt as to the known information in duplicate, one for the franchisee and the other for the franchisor.Should the franchisor conceal any information that should be disclosed or disclose any wrong information, the franchisee may dissolve the commercial franchise contract.
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