This content is from: Local Insights

China

The Ministry of Foreign Trade and Economic Cooperation (Moftec) has issued a notice which permits the establishment of joint venture logistics enterprises in certain pilot cities and provinces in China. The Notice on Issues Related to the Launch of Pilot Projects for the Establishment of Foreign-Invested Logistics Enterprises was issued on June 20 2002 and came into force 30 days later. It applies in Beijing, Tianjin, Shanghai, Chongqing, Zhejiang, Jiangsu, Guangdong and the Shenzhen Special Economic Zone.

According to the Notice, foreign-invested logistics enterprises must be foreign-invested enterprises established by overseas investors in the form of either Chinese-foreign equity joint ventures or Chinese-foreign cooperative joint ventures, and are expected to integrate with stages such as transport, storage, loading, unloading, processing, packaging, distribution, information processing and import and export so as to form a comparatively complete supply chain with one-stop logistics services to users.

The registered capital of a foreign-invested logistics enterprise must be at least $5 million and the foreign investment share ratio in a foreign-invested logistics enterprise that engages in logistics services for international distribution cannot exceed 50%. The Chinese partner or the largest overseas shareholder will need to have experience in international trade and international cargo or agent services. In addition, the Chinese partner or the largest overseas shareholder will need experience in transport and logistics.

As to the approval process, the local trade offices are to give their preliminary opinions to Moftec for approval at least 10 working days after receiving applications for setting up logistics joint ventures. Moftec will then make a decision, in writing, within 30 working days.

The duration of a foreign-invested logistics enterprise will in normal cases not exceed 20 years. However, this can be extended subject to approval from the original approving authority. A foreign-invested logistics enterprise can also apply to establish branch companies in other places within China in accordance with the relevant regulations in force, provided that the scope of business of the branch company does not exceed that of the parent company.

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