|
China's Attracting Foreign Investment Policy
(Effective Date：1998.01.01--Ineffective Date)
I. Frame of foreign investment Laws
Laws and regulations for foreign investment enterprises mean the total of legal norms formulated by China to readjust the economic relations of foreign investment in the Process of establishment, alteration, termination and management control.
Laws and regulations for foreign investment enterprises mainly in dude The three basic laws: Chinese-foreign Joint Ventures Law The Chinese-foreign Co-operative Enterprise Law The Foreign-funded Enterprise Law and their implementing regulations. For foreign investment limited liability companies, adapting to The Company Law; but if there are any other regulations in the above-mentioned three, adapts to them. The contracts of Chinese and foreign investors in establishing foreign investment enterprises are foreign economic contracts, bound by The Company Law of our Country.
Besides, aiming at the establishment, management, termination and dearing of foreign investment enterprises, our country have correspondingly formulated a series of laws, regulations, rules and measures, formed a whole set of more complete system of laws and regulations, and effectively protected the legal rights of domestic and foreign investors. In order to heighten the investment security sense of foreign investors and protect the legal rights of enterprises, Chinese government, with relevant countries, has signed a treaty to encourage and mutually protect investment and a treaty to avoid double taxation,
II. Basic forms of foreign direct investment
Our country attract foreign investment, direct investment generally in ways of and other ways. Mostly adopted direct investment ways are China-foreign joint ventures China-foreign co-operative enterprises, wholly foreign-owned enterprises and cooperative development Other investment includes compensation trade, processing and assembling, etc.
(I) China-foreign joint ventures.
China-foreign joint ventures may also be called equity joint ventures. It is established by foreign companies, enterprises and other economic organizations or individuals and Chinese counterparts to invest to invest together in China (Rights and duties of each Bide are stipulated in the contracts signed by different sides. China-foreign ).
Its characteristics are as follows :all joint side invest together, manage together, share risks according to the investment proportion and share losses and benefits, Investment of every side should be converted to investment proportion and the proportion of foreign investment can't shill ranks a considerable proportion in attracting foreign investment.
(II) China-foreign co-operative enterprises
It can also be called contractual joint ventures.
In establishing this kind of enterprises, usually foreigners provide all or most of funds, Chinese enterprises or individuals provide land, factory buildings, available device and facilities, some of which also provide some fund.
(III) Wholly foreign-owned enterprises
It means enterprises established in china by foreign companies, enterprises, other economic organist or individuals, according to china's Laws, in which all the funds are invested by foreign investors.
According to the stipulation of the foreign Investment Enterprise Law, establishing this kind of enterprises should favor the development of our national economy, and at least meets with one of the following: adopting advanced international technology and device, most or au products exported. The form of it is commonly Limited Liability Company.
(IV) Cooperative development.
It is the short form of offshore and Land co-operative oil prosecution and development. It is now a way of economic co-operation widely adopted in international natural resource field. Its characteristics are high risk, high investment and high benefits. The process is usually divided in to three stages: prosecution-development and manufacture. It only rank s a small rate compared with the former three kinds.
(V) New investment means
When we gradually broaden investment fields and further open domestic markets, we also positively explore and broaden new means to utilize foreign funds.
1.BOT: The BT Items in the field of projects for basic facilities have been tried. For example, the BOT Item in Guangxi Laibin Electric Power Plant has been approved.
2. Investment Company: In April 1995, the Foreign Trade and Economic Administration published Temporary Provisions On Foreign Investment Running Investment Companies, so as to encourage Large overseas companies to develop their serial investment plans. Up to now, more than 160 investment companies have been set up, whose investment activities have been constantly broadened.
3.Foreign Investment stock Company: Stock companies may be set up in ways of initiation or collection. The present foreign investment limited liability companies may apply for alteration in to joint stock companies limited.
4. Incorporative purchase: Trans-international inoperative purchase has come to one of the main ways of direct international investment. At present, our country is researching and formulating relevant policies.
III. Management Procedures for foreign investment enterprises
(I) Establishment Procedure:
According to the current national laws and regulations, in establishing foreign investment enterprises, a term wise government approval and registration system is being carried out, In applying for establishment of China-faeigu joint ventures and co-operative enterprises, four steps are generally needed:
1. Submit item propositions for establishing enterprises; after the approval from relevant Departments C Project admin is triton or technical transformation administration, investors may embark on work with item feasibility study as center;
2. Submit reports on item feasibility study. After approval, investors may negotiate and sign Laws and documents such as contracts and statutes of establishing enterprises;
3. Submit contracts and statutes of establishing enterprises; after approval from foreign trade administrations, the Approving authorities may issue approval license to foreign investment enterprises.
4. Investors may go through formalities in industrial and commercial administrations with the approval license issued by approving authorities.
The procedure of establishing foreign funded enterprises is easy. After initial item application is approved in a written form by the governmental approving authorities, relevant documents such as formal application and company statutes may be submitted. After approval, investors may go through formalities of registration with approval license.
(II) Time limit for operation and enterprise termination:
1.Time limit for operation: The time limit of foreign investment enterprises, usually 10-30years, 20years at longest, may be stipulated by investors through negotiation under national regulations in terms of specific conditions of different industries and items. If particularly approved by the State Council, time limit needs no stipulation. For foreign investment enterprises with appointed time limit for operation, when the expiration comes, their termination comes, If investors want to prolong the time of operation, they may apply to approving authorities for approval at least 180 days before the former time limit. During the Period of enterprise operation, enterprises have self-operation power, and the government can't implement nationalization and collection about foreign investment enterprises, under special conditions, any collection in line with the need of social public interests should be done in accord with law procedures, and some relevant Compensation should be given to the enterprises.
2. Termination:
If any terminal conditions appear in foreign investment enterprises, the enterprises should submit termination application to approving authorities, with the approval date as that of enterprise termination.
(III) Limits of approval powers
Our country implements Level-to-Level administration for foreign investment, the provinces, municipalities directly under the Central Government autonomous regions and singly-planned cities have powers to approve the investment value not more than US & 30 million. The items of restricted-class and above the limited level should be approved by the Foreign Trade and Economic Cooperation Administration.
|
