Shanghai Fengpu Industrial Park
Export Processing Zone

6. Investment Services

6.2.1 Foreign Investment Examination and Approval

(1) The present status of Shanghai’s foreign investment administrative examination and approval service. According to the state regulations, foreign investment projects are still subject to the examination and approval system at present, but the examination and approval procedures should be simplified and the time for the examination and approval shortened for convenience of investors, and the emphasis of the government function has changed from prior examination and approval to administration and service afterwards. Shanghai Municipality has converted the examination and approval process of foreign investment projects into a process of service, coordination and balancing for investors, and minimized uncertain investment risks of foreign investors by trying to solve in the examination and approval process all kinds of problems which may probably exist in the preparatory phase of projects.

(2) Administrative examination and approval authorities and their power. At present, The foreign investment administrative examination and approval authorities of Shanghai Municipality, under the relevant laws, regulations and policies, are responsible for the examination and approval of any foreign-invested project falling within the encouraged and permitted categories and with the total amount of investment below 100 min. US Dollars, and of any foreign-invested project falling within the limited categories and with the total amount of investment below 50 min US Dollars. The power to examine and approve any project falling within the encouraged categories and with the total amount of investment below 30 min US Dollars, and of any project falling within the permitted categories and with the total amount of investment below 10 min US Dollars, has been passed down to districts and counties. Authorized units concerned have been empowered to examine and approve any investment project in state development zones and municipal development zones, falling within the encouraged categories and permitted categories and with the total amount of investment below 30 min. US Dollars.

For any newly-established foreign-invested project, or foreign-invested project falling within the encouraged categories and permitted categories, increasing its investment by a total amount of over 100 min US Dollars at a time, and any project falling within the limited categories and with the total amount of investment over 50 min US Dollars, a “Project Application” should be submitted to the State Development and Reform Commission for examination and approval; the “Contract and Articles of Association” should be submitted to the Ministry of Commerce after its approval, and a certificate of approval will be issued by the Ministry of Commerce after its approval.

Besides, foreign investments in related lines of business of the service trade should conform to the existing regulations of the state on the special issue, and are still subject to the examination and approval by the state if prior examination and approval by the ministries and commissions concerned are required.

(3) Simplification of Administrative Examination and Approval procedures and Reform in Systems.

Except for the projects, which need be submitted to the department concerned of the State Council for examination and approval, involving capital construction or should conform to other regulations of the state, the three examination and approval phases of project proposal, feasibility study report and company’s contract and articles of association related to the establishment of foreign-invested projects can be combined into one examination and approval step. Replies in fixed forms have been introduced to give amendments to the general conditions of the contract and articles of association of foreign-invested enterprises, and the forms can be down-loaded and printed from the government Web-site. The power of direct issuance of certificates of approval has been passed down to districts (counties) for foreign-invested projects within their power of examination and approval and the Municipal Foreign Investment Commission exercises supervision and inspection afterwards.

Shortening time for administrative examination and approval. Except for the projects which require coordination and are to be submitted to the State Council, the examination and approval of a project takes less than 20 work-days. Replies in fixed forms are introduced to give amendments to the general conditions of the contract and articles of association, and the time for processing is shortened to 3 work-days after acceptance. Certain routine service items can be processed right away with no need for the applicant to come again.

6.2.2 Administration of Foreign-invested Commercial Enterprises

The Ministry of Commerce promulgated “Measures for Administration in the Business Area of Foreign Investment” (referred to as “Measures for Administration” hereinafter) on April 16, which came into force and was implemented on June 1, 2004. Pursuant to the provisions of “Measures for Administration”, all foreign-invested commercial enterprises engaged in whole-sale business and foreign-invested retail enterprises with shops of relatively large areas or relatively large number of shops are subject to examination and approval by the Ministry of Commerce, while foreign-invested retail enterprises with shops of relatively small areas or relatively small number of shops are subject to examination and approval by Shanghai Municipality. In 2005, totally 421 foreign-invested commercial enterprises in Shanghai were approved, of which, 329 enterprises were examined and approved by the Ministry of Commerce, and 92 enterprises were examined and approved by the Shanghai Municipal Foreign Investment Commission.

The Ministry of Commerce issued “Circular of the Ministry of Commerce on Entrusting Local Authorities with Examination and Verification of Foreign-invested Commercial Enterprise” on December 9, 2005 (referred to as “Circular” hereinafter). Pursuant to the relevant provisions of “Circular”, the Ministry of Commerce passed down most of its power of examination and approval of foreign-invested commercial enterprises to local authorities from March 1, 2006. Any foreign-invested commercial enterprise, whose business mode involves sale by means of TV, phone, mail order, internet, automatic selling machines, etc., whose products distributed involve product oils, pharmaceuticals, motor vehicles , agricultural pesticides, agricultural films, chemical fertilizers, crude oil, books, newspapers, magazines, grains, vegetable oils, sugar, cotton and steels, noble metals, iron ore, fuel oils, natural rubber and other important industrial raw materials, and whose shopping areas exceed 5000 sq.m. still require approval by the Ministry of Commerce. Shanghai Municipality has examined and approved the establishment of more than 250 foreign-invested commercial enterprises since March 2006.

The Ministry of Commerce, the General Office of the General Administration of Customs issued “Circular on Related Matters Concerning the Trade Administration in Bonded Areas and Bonded Logistic Parks” on July 30, 2005, indicating clearly that the enterprises and individuals in bonded areas and bonded logistic parks may acquire rights to trade and rights to apply for distributing in accordance with relevant laws and regulations. The enterprise and individual acquiring the above-mentioned rights may conduct trade business with enterprises and individuals (including those that have not acquired the right of trade) outside the area (park) and within the territory.

The foreign-invested enterprise acquiring the right of distribution may conduct distribution activities within the country. This indicates that “Measures for Administration” applies to the enterprises in Waigaoqiao Bonded Area, further widening the operation space of the enterprises in the bonded area and providing more facilities for their management. All the foreign-invested enterprises of trade, distribution, logistics, production and other categories in the Bonded Area can apply for additional whole-sale and retail business in their business scope in accordance with the regulations of the Ministry of Commerce. In the past eight months, 220 enterprises under the trade category in Waigaoqiao Bonded Area of Shanghai have filed their applications, and among them, 115 enterprises have got approval.

6.2.3 Foreign Investment Registration

Shanghai municipal industrial and commercial departments have taken following measures for foreign investment registration:

• (1) Trying out registra system to improve efficiency in administrative examination and approval. The Ministry of Labor and Personnel Affairs and the State Administration of Industry and Commerce took the lead in starting the experiment of registrar system in Shanghai in November 2004. Certificates were issued on an average only 5 days after acceptance of applications for establishment of foreign-invested enterprises, greatly improving administrative efficiency.
• (2) Promoting on-line acceptance of registration applications of permanent representative offices of foreign (regional) enterprises, reducing the commercial cost of the enterprises. Since 2003, Shanghai Municipal Administration for Industry and Commerce introduced the mode of registration of permanent representative offices of foreign (regional) enterprises, i.e., “On-Line Application and Review and Issue within a Day”. This mode of registration shortens the time for registration from 10 days to only one day by reducing three trips from the enterprises to Shanghai Municipal Administration for Industry and Commerce for collecting forms, submitting applications and collecting certificates respectively to only one trip for application form inspection and certificate issuance.
• (3) Experimenting in Pudong New Area with the optimized foreign-invested enterprise examination and registration procedures. The mode of “Simultaneous Acceptance and Issuance” was introduced from April 18, 2006 for establishment registration and variation registration of foreign-invested enterprises, which conform to the industrial policy of the state on drawing foreign investment, fall within the power of examination and approval of the People’s Government of Pudong New Area and do not involve capital construction, environmental impact evaluation and prior examination and approval. Shanghai municipal industrial and commercial authorities are continuing to study further expansion of the scope of on-line application and gradually promoting the cyberization process of on-line enquiry, file-recording, application and other ways of registration of foreign-invested enterprises on the basis of “on-line acceptance” for permanent representative offices of foreign (regional) enterprises.

6.2.4 Visa Examination and Approval

According to statistics, the exit and entry administrative departments of the public security bureaus handled visa and residence permit applications of 131,299 people in 2004 and visa and residence permit applications of 145,879 people in 2005, up 11% y-o-y.

(1) Existing Service Measures. The exit and entry administrative departments are optimizing the service at the reception windows, and optimizing their written instructions. For receiving foreigners’ applications, there are 11 reception windows, consisting of windows for general reception, windows for consulting, windows for permanent residence application, a window for reception by the department director, windows for nationality examination and finalization, etc., and foreign applicants can receive more specialized service. 36 kinds of written instructions on application procedures, which foreign businessmen may require, are available in the reception hall.

Information in foreign languages may be obtained on the phone. Consulting services may be provided in English, Japanese, German, and other languages, enabling foreigners to consult on application procedures easily.

Promoting port visa service. Port visa services was established in the international airports to accept visa applications of foreigners since 1985. Foreigners’ port visa applications been handled on the government Web-site in December 2003. The governments above town and township level and enterprises and institutions of various categories may get their organizational codes registered on-line in the business columns of the portal Web-site of the Municipal Public Security Bureau to apply for port visas of the foreigners invited.