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Investment FAQs

( chinadaily.com.cn ) 2020-05-14

1. What specific stipulations do the district and county people's governments have for examining and approving foreign-invested projects?

Answer: A project with an investment of less than $10 million is subject to the examination and approval of the district and county people's governments. If a project to be built in the municipal industrial zones involves an investment of less than $30 million, it is subject to the examination and approval of the local people's government.

2. What are the procedures for examining and approving a foreign-invested project?

Answer: (1) The procedures for establishing a Sino-foreign joint-venture enterprise or a Sino-foreign cooperative enterprise are:

A. Preparation and submission of project proposal

The Chinese investor prepares a project proposal and submits it to the examining and approving authorities for approval (or entrusts a foreign-involved consulting institution to submit the proposal on its behalf).

B. Application for corporate name registration

After the project proposal is approved, the Chinese investor should apply to the institution in charge of industrial and commercial administration for the registration of the corporate name.

C. Preparation of feasibility study report, contract and articles of association

The investors should jointly prepare a feasibility study report and draft the contract and articles of association, which are to be submitted by the Chinese investor to the examining and approving authorities for examination and approval.

D. Application for approval document issuance

After the feasibility study report, contract and articles of association are approved, the Chinese investor should apply to the examining and approving authorities for issuing approval documents.

E. Application for business license issuance

After the approval documents are issued, the Chinese and foreign investors should handle business registration with the institution in charge of industrial and commercial administration.

(2) Procedures for establishing a wholly foreign-owned enterprise

A. If a foreign investor intends to establish a foreign-invested enterprise, it should entrust the matters of application and submission for approval to an institution in the city that is qualified to work as the consulting agent for foreign investors.

B. If a foreign investor intends to establish a wholly foreign-owned enterprise, it should handle the matters according to the investment procedures for Sino-foreign joint-venture enterprises and for Sino-foreign cooperative enterprises.

3. What are the conditions for applying for the establishment of a foreign-invested bank?

Answer:

(1) The investor must be a financial institution;

(2) The investor has had a representative office in China for more than three years;

(3) The investor managed more than $100 billion of assets at the end of the year before the investor applies to establish a foreign-invested bank.

4. What are the conditions for applying for the establishment of an investment company?

Answer: A foreign investor applying for the establishment of an investment company must meet the following conditions:

(1) A. The foreign investor must have excellent credit, the economic strength required for establishing the investment company, and assets totaling no less than $400 million in the year before the application. In addition, the investor must have established foreign-invested enterprises in China, have a paid-up registered capital of more than $10 million, and have more than three investment projects whose project proposals have been approved.

Or B. The foreign investor must have excellent credit, the economic strength required for establishing the investment company, established more than 10 foreign-invested enterprises engaged in production or infrastructure construction in China, and a paid-up registered capital of more than $30 million.

(2) If the investment company is to be established in the form of a joint venture, the Chinese investor must have excellent credit, the economic strength required for establishing the investment company and assets totaling no less than 100 million yuan ($16.3 million);

(3) The registered capital of the investment company must be no less than $30 million.

5. Which institution examines and approves the establishment of a foreign-invested financial institution?

Answer: The Shanghai Branch of the People's Bank of China conducts preliminary examination and then submits the application to the head office of the People's Bank of China for examination and approval.

6. What if the laws promulgated later contain new provisions after the contract on a Sino-foreign joint-venture enterprise is signed?

Answer: The investors may continue to perform the terms of the contract on the establishment of a Sino-foreign joint-venture enterprise, the contract on the establishment of a Sino-foreign cooperative enterprises, or the contract on the Sino-foreign joint exploration and exploitation of natural resources that have been approved by the State and will be executed within the territory of the People's Republic of China if the laws promulgated later contain new provisions.

7. What principles govern the sharing of a Sino-foreign cooperative enterprise?

Answer: The cooperating enterprises distribute profits or products and bear risks and losses according to the contract terms.

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