Investment Guide
China

Shijiazhuang Investment Guide of China  

The People's Government of Shijiazhuang, Hebei Province  

    Located in North China Plains and in the middle of Hebei Province, with Beijing and Tianjin in the north, Taihang Mountains in the west, and facing Bohai Sea in the east, Shijiazhuang City is the center of politics, economy, culture, science & technology, finance and information.

   During the past 50 years since the founding of the People’s of China, especially since the implementation of the policy of reform and opening to the outside world, Shijiazhuang City, a young and energetic city, has been input into with vigor. Being one of the cities that implemented the polices of reform and opening to the outside world, Shijiazhuang City has ranked the 15^th among 219 national major cities in general economic power, according to the national statistics and investigations made in 1996. The gross domestic product has reached RMB 108.5 billion in 2001.

   Shijiazhuang City, with outstanding people and glorious place, abundant resources, has extensive fields for cooperation and bright prospect for development. Today, in a world of global integration, Shijiazhuang City consistently insists on putting the strategy of promoting development through opening to the outside world and taking the advantage of surrounding Beijing, Tianjin and Bohai Sea as an important strategy for constructing Shijiazhuang into a center for medicines and pharmaceuticals, and an important commercial port in North Chin, in order to provide various opportunities for investors. We sincerely welcome friends from both at home and abroad to invest in Shijiazhuang City by providing high-quality services, most favorable environment and most preferential policies. Let us step into the beautiful tomorrow, hand in hand.  

Contents:

  Geographical Location

  Climatic Features

  Natural Resource

  Urban Area and Population

  Social and Economic Development

  Industry

  Agriculture

  Commerce

  Science, Technology and Culture, and Medical Care

 Foreign Exchange and Trade

  Tourism

  Traffic and Urban Infrastructure

  Construction of Development Zone

The Registration and the Power of Approval for Project Directly Using Overseas Investment

The Documents and Information to Be Submitted in Approval of and Putting on Record the Project

The Procedures for Setting up Overseas-funded Enterprise

Value-added Tax and Operation Tax

Enterprise Income Tax

Local Income Tax and Local Tax

Customs Duties and Import-related Tax

                A List of Overseas Investment Administration and Service     Organization

               The Center for Handling Overseas-funded Projects in Shijiazhuang City

   Outline of Shijiazhuang City

   Geographical Location

   Sitting in the central south of vast North China Plain, Shijiazhuang City is located in Hebei Province, at the longitudinal of 114°29′E, the latitude of 38°04′N. With the Capital – Beijing and Port City – Tianjin in the North, and Baohai Sea and North China Oilfields in the east, and the towering Taihang Mountains and the coal bases in China – Shanxi Province in the west, Shijiazhuang City was called “the Nation Capital’s Suburbs” in the old times. Shijiazhuang City enjoys convenient transportation conditions, called as “a gate from south to north and the throat from Hebei to Shanxi”.

   Climatic Features

   Enveloped in the temperature continental monsoon climate, it’s clearly distinguished between seasons, with yearly average temperature of 14.2℃, the coldest month of the year (January) at – 2.9℃, compared with the warmest (July) at 26.5℃. The average precipitation is 570mm, sunshine hours more than 2200 and frost-free period more than 240 days.

   Natural Resource

   With abundant agriculture, forest, husbandry and mine resources, Shijiazhuang City has a cultivated land of 0.59 million hectares. It is the main production bases for grains and cotton in Hebei Province, with a great variety of agricultural crops, a large planting area, and a large amount of dried and fresh fruits. The mountainous area in the western section of Shijiazhuang City is rich in limestone, marble, granite, dolomite, mica, quartz and iron ore, totaling seven kinds of minerals, with a large amount of reserves, high-grade, centralized-distribution, and complete system. This area is suitable for establishing a large base for building materials.

   Urban Area and Population

   Shijiazhuang City covers a total area of 15848 km², and has a population of 8.96 million. The urban area covers an area of 456km², and has a population of 1.95 million. Shijiazhuang City currently governs 6 districts, 12 counties and 5 county-level cities. The six districts are Chang’an District, Qiaodong District, Qiaoxi District, Xinghua District, Yuhua District, and Jingxing Mining District. The 12 counties include Shenze County, Wuji County, Zhaoxian County, Lingshou County, Gaoyi County, Yuanshi County, Zanhuang County, Pingshan County, Jingxing County, Luancheng County, Zhengding County, Xingtang County; and 5 county-level cities Luquan City, Xiji City, Gaocheng City, Jinzhou City, and Xinle City.

   Social and Economic Development

   The economy and other undertakings have been developing rapidly in Shijiazhuang City, and its comprehensive power is markedly improved over 50 years since the founding of the People’s Republic of China, especially since the implementation of the policy of reform and opening to the outside world. Shijiazhuang City ranked 15^th in 219 top Chinese cities in general economic power in 1996, becoming one of the cities with the strongest economic power. The gross domestic product reached RMB 108.545 billion yuan in 2001.

   Here are attached with three charts (Gross Domestic Product Growth in Shijiazhuang City, Total Retail Sales of Consumer Goods in Shijiazhuang City, Yearly Average Income of Employees in Shijiazhuang City)

   Industry

   A more reasonable and comprehensive industrial system has been established in Shijiazhuang City, with textiles, pharmaceuticals, electronic, chemical and building material industry as the backbone industry. Shijiazhuang City is now one of the important bases for textiles industry and also one of the largest pharmaceutical bases in China. Its profits and tax exceeded RMB 10 billion yuan in 2001 according to the statistics. Shijiazhuang City has become one of the cities whose profits and tax exceeded RMB 10 billion yuan among all cities in China, including 4 cites directly under the jurisdiction of the Central Government of China. It is also the sixth city whose profits and tax exceeded RMB 10 billion yuan among the capital cities in China. Shijiazhuang City is home to a great number of enterprises that enjoy high reputation both at home and abroad. North China Pharmaceutical Corporation is a largest antibiotic manufacturer in Asia; Shijiazhuang City Pharmaceutical Group is one of the largest producers of vitamin and semi-synthetic medicines in China; Huashu Pharmaceutical Plant ranks the first in the production capacity of terramycin; Changshan Textiles Group ranks in the front among the enterprises of same trades in terms of economic results; and Sanlu Group Company’s production capacity and sales ranks the first in the same trade in China; Shijiazhuang City Pump Group is the largest producer of slag and slurry pump, sewage pump and submerged pump in the China, and such brands as “Huabei”, “Sanlu”, “Shenwei” enjoy great popularity in China.

   Agriculture

   Shijiazhuang City is an important production base of grains, cotton and commercial grains in China, enjoying the reputation of “Barn in North China”. The main crops include wheat, corn, cotton, beans, peanut, etc. Pear of Xiji and Snow pear of Zhaozhou, are well received both at home and abroad. Other dry and fresh fruits, such as honey peach, big jujube, walnut, and apple and so on, have a great output and with high quality. The forestry land and water areas of 34 hectares are particularly suitable for the development of animal husbandry and aquatic breeding industries. Ten production bases has formed for grains, oils, meat, vegetables, and eggs, milk and fruits through active and great effort in agricultural industrialization.

   Commerce

   Relying on its unique geographical locations and convenient traffic conditions, the commerce and trade in Shijiazhuang City has been developing fast. And being an important commercial port in North China, Shijiazhuang City has formed a network of commerce and trade with the urban commerce as backbone, and covering urban and rural areas, which can satisfy consuming requirements of various levels. Shijiazhuang City is home to Beiren Group Company, Dongfang Shopping Center, Baolongcang Group, Xinyanchun Group, Zhengji Group, which enjoys a high degree of popularity in commerce both in Hebei Province and China. The commercial market has been well developed, and a considerable goods and commodities circulation system have formed in Shijiazhuang City, with the markets of State-level as head, the regional markets as backbone, and the specialized markets of local characteristics as foundation. Xinghua Trade Center, Nansantiao Wholesale Market of Small Commodities and Qiaoxi Wholesale Market of Vegetables have become one of ten markets of industrial goods, and one of ten markets of agricultural and sideline products in China. In 2001, the total retail sales of consumer goods reached RMB 36.91 billion yuan, and the volume of transaction in commercial market amounted to RMB 80.75 billion yuan. Shijiazhuang City has become an important shopping center, goods and commodities gathering and trading center, regional materials distribution center, commodities and goods exhibition center, commercial information center in North China.

   Science & Technology, Education & Culture and Medical Care

   Science & technology, education & culture, and medical care in Shijiazhuang City have made considerable progress. Since 1991, the whole city has actively implemented the main strategy of promoting development through science and technology, and gained the national reward of the advanced city in putting the strategy into effect for three times in succession. By depending on it’s solid industrial economy advantage and initiative talents advantage, Shijiazhuang City developed overall, multi-level and plural scientific and technological cooperation and foreign economic and investment cooperation with projects of the present enterprises renovation, high-new technology, infrastructure, agriculture general development and resource development as main points. The city now is trying its best to realize the escalation of structure for the key industries such as pharmaceuticals, textiles, electronics, machinery and construction materials, speeding the industrialization of agriculture and high-new technology, and making an economic setup with distinctive features. The 54th and 13th Institutes of Ministry of the Information Industry, and Shijiazhuang Agricultural Modernization Research Institute of the Chinese Academy of Science represents the domestically advanced level in the fields of semi-conductor, telecommunications, monitoring & control, and agricultural modernization. In Shijiazhuang City, there are 5360 schools and colleges of all sorts, in which there are 15 common institutions of higher learning, 49 technical secondary schools, 4072 primary schools, 495 junior middle schools, 139 common high schools, 73 professional schools and 517 private schools. Medical organizations, totaling 730, are evenly distributed in Shijiazhuang City. There are about 100 hospitals, which have advanced equipment and enjoy excellent medical conditions. A number of modern cultural and sports facilities, such as libraries, the Cultural Square, the People’s Square, the People’s Arts Center, Yutong International Sports Center and Zhongshan Road Gymnasium, constitute beautiful landscapes in Shijiazhuang City.

Foreign Exchange and Trade

   Shijiazhuang City has established more and more extensive exchange and trade relations with over 100 countries and regions, illustrated bye the sister city relationship with 10 cities in 8 countries, such as Canada, Italy, Japan, U.K, South Korea, Mexico and Sweden. By the end of 2001, the amount of the enterprises which have the importing & exporting rights has reached 251, with 7 categories comprising more than 480 items of exporting goods in the fields of textiles, garments, medical industry, pharmaceuticals, machinery, electronics and light industry within the markets in 135 countries of all over the world. In 2001, the City’s imports & exports totaled USD 942.18 million, increasing 13.2% compared with the same period of last year, among which the exports amounted to USD 704.42 million with increase of 26%. The absolute exporting value listed to the top of the whole province.

   Tourism

  There are numerous scenic spots and historical sites in Shijiazhuang City, among which the key scenic spots total 18. Xibaipo, Cangyan Mountain, Tiangui Mountain, Fenglong Mountain, Zhaozhou Bridge (known as “The No.1 Bridge in the world) and the world largest natural echoing wall in Zhangshiyan Mountain are all well known in the world. The ancient town Zhengding, a historical and cultural town in China, usually called “ Four Pagodas and Eight Temples”, is famous for Longxing Temple with a history of 1400 years, and a bronze statue of Buddha and a color statue of Kuanyin, which shine as a gem of ancient casting and carving arts in China. Each year, it receives over 10 thousand overseas tourists who come to Shijiazhuang City for friendly visit, trade negotiation or sightseeing.

   Traffic and Urban Infrastructure

   Jing-Shi, Shi-Tai, Shi-Huang and Shi-An Express Highways and the National Roads No.107, 207,307, and 308 as well as 21 provincial roads and 42 county-level roads form convenient traffic network in Shijiazhuang City, with a total mileage of 6379km.

   As the site of The Railway Branch Bureau, Shijiazhuang is a key railway hub of the whole country. Jing-Shi, Shi-Tai, Shi-De and Shuo-Huang railways meet here, among which the Jing-Shi Railway is a great artery for connecting home and abroad, the Shi-Tai Railway is a main passage for transporting coal from Shanxi Province. Being one of the national top grade railway stations and one of the three marshalling stations in China, Shijiazhuang Railway Station is mainly in charge of the tasks for passenger transportation and goods distribution, trains dispatch and organization on the above mentioned three railways, with daily transporting 52 thousand passengers in 108 passenger trains and 11434 cargoes of 231 trains for goods.

   Shijiazhuang Airport was put into service in 1995,which is large enough for the large and medium-sized passenger liner to land and take off. Now more than 20 domestic and international airlines are open, with about 50 passenger flights coming in and going out each week.

   The city’s well-developed post and telecommunications system is one of the country’s four major distribution centers, and also a key hub of the telecommunication networks south of Beijing.

   By the end of May in 2002, the number of the local program controlled telephones have reached 2.1045 million, the exchanging general amount of terminals for long distance call has reached 62 thousand, and the amount of terminals for figure telecommunication has reached 15998. An urban and rural organic whole local telephone network has already been formed, the program controlled exchanging and the optical fiber transferring modernization have been realized. The broad band transferring web from the City to counties and the high-speed ring web inside the city have been established. The broad band figure network based on the city optical wire net, the broad band urban IP net, ATM net and broad band user local net has been up to a certain scale so as to a communicated capacity of thousand billion to road sides, hundred billion to buildings and ten billion to desks has been achieved.

   An urban road network has formed, which includes 3 horizontal roads, 6 vertical roads, 2 ring roads and 12 roads extending to the nearby areas. The urban road is well developed, consisting of 50 main roads, 258 bridges (including 29 overpass bridges). 82 pubic bus lines and 1585 buses are being in service. 150 large buildings of newly and beautifully shaped and with different styles and more than 80 large residential quarters with beautiful environment have been completed one after another. The greening coverage reaches 33.5% in the urban area. Shijiazhuang City has ranked among the first ten key cities with the cleanest environment for 5 times in succession. Shijiazhuang City has rich power resources, which can assure a sufficient supply to the industrial and agriculture production and the resident’s daily use in the city. The daily supplying capacity of water reaches 1.81 million tons. More than 99.03% of the urban residents (according to the population) use coal gas as fuel in Shijiazhuang City, and the annual coal gas supplying amount is 121.08 million cubic meters.

   Construction of Development Zone

   Shijiazhuang Hi-tech Industry Development Zone was established in March of 1991, which is one of the first groups of national development zones. After ten years of construction and development, the High-tech Industry Development Zone has possessed a certain industrial scale and economic strength. In 2001, the Zone accomplished general income of technology, industry and trade RMB 14.5 billion yuan, GDP 4.43 billion, tax RMB 1.1 billion, financial income RMB 356 million, with the increase of 34.3%, 29%, 37.8% and 115.6% respectively compared with the same period of last year. At present, its industrial output value accounts for 13.2% of the total in Shijiazhuang urban area, while in the initial period, the proportion was 1.4%. It’s general income of technology, industry and trade accounts for 89% of the total of the whole city’s high-tech enterprises, and its high-tech output value accounts for 78.9% of the total in the zone. Now there are 1357 technological enterprises of all kinds, among which there are 110 foreign-funded enterprises, and 326 enterprises have been identified as high technological ones by the Ministry of Science & Technology.

   In the past ten years, the investment environment was being perfected gradually. Up till now, RMB 1 billion yuan have been invested in construction of the infrastructure of the zone within 11.8 square kilometers of initiative construction area, a complete auxiliary facilities are available for all kinds of large and medium-sized enterprises to locate and operate here. Now a relative independent management system has been basically formed so that all the procedures needed to be approved for setting up enterprises can be finished within the zone. Shijiazhuang High-tech Industry Development Zone is becoming a hot point of Hebei Province and Shijiazhuang City for absorbing foreign investment, as well as the most active new economic increasing point for the combination between technology and economy, and a base for the transformation of technological achievements and the industrialization of high-new-tech.

   Following the construction of a large number of projects, now the main and characteristic industries of the zone have been taken shape, such as information telecommunication, chemical and pharmaceutical industries, Chinese medicine, and new materials.  In recent years, totally 1170 projects have been absorbed and built, among which more than 520 items belong to high-new-tech ones. The total construction investment of the zone has been up to RMB 17.314 billion yuan. Some world famous companies such as Fujitsu of Japan, Hughes of the US, Hoest of Germany, BBA of Britain, Sarplasp Group S.P.A of Italy, Gold Lion of Malaysia and so on have invested in the Zone.

   Liangcun Development Zone started construction in 1993, covering an area of 4 square kilometers. It is an industrial zone mainly for pharmaceuticals, chemicals and food, where the auxiliary facilities are complete. At present, RMB 860 million yuan has been invested in the construction of the infrastructure, and the daily water supplying capacity reaches 130 thousand tons. A substation of 110KV and a thermal power plant of 72000KW can assure power and heat consumption by the enterprises in the zone. The laying of a special railway line and the construction of inland port shall facilitate the export of the enterprises’ products.

   At present, in order to realize a new stride, Shijiazhuang High-tech Industry Development Zone is further promoting “reform and opening-up” policy, comprehensively practicing “the Second Pioneering Cause” development strategy, and carefully improve the investment environment.

Foreign-Funded Enterprises In Shijiazhuang City

   In the wake of the Reform and Opening-up Policy, foreign investment in Shijiazhuang City is growing continuously. By the end of 2001, a total of 1898 foreign-funded projects have been approved, with a total investment of USD 6.09 billion, a registered capital of USD 3.57 billion, and contractual foreign capital of USD 2.44 billion. From 53 countries and regions, an actual foreign capital of USD 2.68 billion (USD 1.82 billion invested directly by the overseas investors) has made 603 enterprises operational. In 2001, the sales income reached RMB 10.726 billion yuan, with profits of RMB 1.298 billion yuan, and tax of RMB 0.885 billion yuan. The foreign currency earning through direct export reach USD 315 million, making up 46.9% of the total exports in Shijiazhuang City.

   The excellent investment environment has attracted many renowned international companies to invest in Shijiazhuang City, such as Mitsubishi, Nichiwayi, Itochu, Nichiman, NEC of Japan, GE and Monsantu of U.S.A., Hoest GMBH of Germany, the National Power Corp. and BBC of Britain, New World Group and Glorious Sun Group of Hongkong, Chai Tai Group of Thailand, etc. The foreign-funded enterprises have become an important part in the national economy in Shijiazhuang City.

   Key Points in Attracting and Directing Overseas Investment in Shijiazhuang City

   The projects for overseas investment are divided into three categories: the project in which the overseas investors are encouraged to invest, the project in which the overseas investors are restricted to invest and the project in which the overseas investors are forbidden to invest, according to “Directing List of Industries for Overseas Investment” revised by the National Planning Commission, the National Economical and Trade Commission and the Ministry of Foreign Economy and Trade, and approved by the State Council to be issued on April 1, 2001. The overseas investors are allowed to invest in the industries that are not listed in “Directing List of Industries for Foreign Investment”.

   During some time in the future, the key fields in which overseas investment are attracted are as follows:

   1. Overseas investors are encouraged to transform the traditional agriculture, to develop modern agriculture and promote the industrialization of agriculture.

   2. Overseas investors are encouraged to invest in such infrastructure and basic industries as traffic, energy and raw materials.

   3. Overseas investors are encouraged to invest in such hi-tech industries as electronic information, bioengineering, new materials, and aviation and space. The overseas investors are encouraged to establish the development center in this respect.

   4. Overseas investors are encouraged to transform such traditional industries as machinery, light and textiles industries by adopting new advanced technology, giving rise to the upgrading of aforesaid industries.

   5. Overseas investors are encouraged to invest in the projects that make comprehensive use of resources and regenerated resources, and in the environmental protection projects and municipal projects.

   6. Overseas investors are encouraged to invest in the allowable projects whose products are all exported.

   The Procedures of Registration, Approval and Set-up for Establishing Overseas-funded Enterprises in Shijiazhuang City

   The Registration and the Power of Approval for Projects Directly Using Overseas Investment

   The Foreign Investment Administrative Bureau of Shijiazhuang City is a functional department under the Municipal Government to handle the utilization of overseas investment throughout the city. It is responsible for the work related to overseas capital absorption and for selecting projects that seek overseas investment. It is also responsible, within its power of approval, for putting on record the proposals of overseas-funded project of direct investments, and the feasibility study reports, and for the approval of contracts of foreign-funded enterprises and their regulations. It is authorized to grant certificates of permission to overseas-funded enterprises. It shall provide later stage management and coordination service for these enterprises.

   When overseas investors (including investors from Hongkong and Macao) invest in Shijiazhuang City to set up the projects that comply with the following conditions, the projects shall be approved and put on record by the Foreign Investment Administrative Bureau of Shijiazhuang City (the project with the total direct investment exceeding USD 30 million (including USD 30 million) and other projects that should be submitted according to the State regulations shall be submitted to the State for approval according to the related regulations worked out by the State and Hebi Province).

   A. The project with total investment of under USD 30 million

   B. The project that is compliance with temporary regulations made by the State to direct overseas investment and with the requirements of “Directing List of Industries for Overseas Investment”

   C. The project that is not related to tax exemption on imported tax

   D. The imported product being not related to quotas and license

   The Documents and Information to Be Submitted in Approval of and putting on record the projects:

   1. Sino-foreign joint ventures and equity joint ventures

   Putting on record the project proposal and the feasibility study report

   A. The forms for record putting, after being by filled by the project client, and signed by the authorities of local government (or the Government and the jurisdictional of) shall be submitted to the Foreign Investment Administrative Bureau of Shijiazhuang City for putting on record.

   B. Documents to be submitted

   The tables for putting on records the project proposals and the feasibility study report (as for the project with a total investment of under USD 30 million (including USD 30 million), its proposals (in place of the feasibility study report) shall be put on record at a time).

   C. Main attachments:

     a. Letter of intent on cooperation;

     b. The Chinese party’s business license (stamped);

     c. The overseas partner’s business license (or certificate for personal identity);

     d. The overseas partner’s certificate of credit;

     e. Notice of confirmed name;

     f. Comments on site arrangement;

     g. Comments by the environmental protection department;

     h. Comments by the municipal planning department;

     i. Assessment Report on Chinese party’s assets;

     j Comments by the authorities of same industry (special industry);

     k. Approval certificate for import license;

     l. The feasibility study report;

     m. Other materials needed to be submitted

   Approval of contract and regulations

   A. The contract and regulations, after being signed by the authorities, shall be submitted to the Foreign Investment Administrative Bureau of Shijiazhuang City for approval.

   B. Documents to be submitted:

     a. Application report;

     b. Contract;

     c. Regulations

   C. Main attachments:

     a. List of members of the Board of Directors;

     b. The certificate of appointment made by Chinese party;

     c. The certificate of appointment for overseas partner;

     e. Notice of confirmed name of overseas-funded enterprises;

     f. The table for putting on record the project proposal (in place of the feasibility study report) and all attachments (with the exception of project put on record directly by the Foreign Investment Administrative Bureau of Shijiazhuang City)

     g. List of imported goods;

     h. Agreements on technical transfer;

     i. Agreement signed by authorized person;

   2. Approval of overseas-funded enterprise

   A. Investor or its trustor submits to the Foreign Investment Administrative Bureau of Shijiazhuang City the application for setting up overseas-funded enterprise and the regulations of same enterprises.

   B. Main attachments

     a. List of legal representative (or the Board of Directors);

     b. Legal certificate provided by the overseas partner;

     c. Certificate of credit;

     d. Written comments made by the foreign Investment administrative bureau of the city where the ventures is to be set up;

     e. Notice of confirmed name of overseas-funded enterprises;

     f. The feasibility study report;

     g. Comments by the environmental protection department;

     h. Comments on site arrangement;

     i. Comments by the municipal planning department;

     j. Certificate of appointment for legal representative (notarized);

     k. List of imported goods;

     l. Other documents to be submitted

   The Procedures for Setting up Overseas-funded Enterprise 

1. Seeking Overseas Partner

   Letter of intent on cooperation signed by both Chinese and overseas party

2. Registration of Enterprise Name

   Enterprise name is to be registered with the industrial and commercial administration

3. Submitting the Project Proposal

   Applying to the Foreign Investment Administration Bureau for putting on record the Project Proposal

4. The Chinese Party Invests in the form of State-owned Assets

   To submit the documents certified and issued by the authorities of state assets

5. Submitting the Feasibility Study Report

   Applying to the Foreign Investment Administration Bureau for putting on record the Feasibility Study Report

6. In Case of Capital Construction and Transformation

   Entrusting with design of project

7. Approval of Contract and Regulations

   To be approved by the related authorities according to its approval limits of authority

8. Application of Enterprise Code

   Apply to the technical supervision organization for enterprise code

9. Registration with the Industrial and Commercial Department

   To be registered with the industrial and commercial department at 30 days after the receipt of letter of approval

10. Approval of Preliminary Design

   To be approved by the planning and construction department

11. To be listed into the Annual Plan of Construction

12. Going through Procedures for Land Requisition

   To be handled by the land administration

13. Capital to Be Verified by the Registered Accountant

   To be handled in the accountant’s office

14. Registration of Foreign Exchange

   To Go through “Registration of foreign exchange for the overseas-funded Enterprise” in the foreign exchange administration within 30 days after issuance of business license

15. Customs and Commodities Inspection

   To be put on record in the Customs and the Commodities Inspection Department after the establishment of the enterprise

16. Registration of Tax

   To be handled in the tax department at 30 days after having obtained the business license

17. Opening an Account with a Bank

   To open an account with a bank for RMB and foreign exchange

18. Registration with the Financial Department

   To go through procedures of financial registration in the financial department within 30 days after registration

19. Going through the Procedures of Insurance

   To be handled in the insurance organization  

   Preferential Polices

   Value-added tax and operation tax

   Unless otherwise stipulated, the practice of tax exemption, low tax or tax drawback shall be followed for the goods and commodities produced by the overseas-funded enterprises when they are exported by the enterprise itself or by the foreign trade organization. The value-added tax related with production links shall be exempted on the goods and commodities produced and exported by the production enterprise itself. The included returnable purchase tax on the raw materials, parts, fuels and power consumed to produce exported-oriented-goods and commodities shall offset the payable tax on goods and commodities sold on the domestic market. When the amount of purchase tax exceeds that of the payable tax within a month, the surplus shall be returned to the overseas-funded production enterprise.

   a. As for export goods produced, the foreign-funded enterprise will be refunded for the export tax paid at the taxation authority accompanied by the relevant documents.

   b. If the foreign-funded enterprise purchased the home - made equipment (made in China) within the total investment, and this equipment is in List of the Tax-free Products, the Company will be refunded for all the value-added tax paid for the same equipment at the taxation authority.

   c. As for the foreign-funded research and development center, the Center shall be exempted from the operation tax on transfer of technology, in light of the practice on the other domestic scientific research institutions.

   d. If a foreign enterprise transfers technology to a company in China, and the technology is advanced or transferred on favorable terms, the foreign enterprise shall be exempted from the operation tax after being approved by the taxation authority of the State Council. The foreign enterprise shall be exempted from the operation tax on the income from technology transfer.

   Enterprise Income Tax

   a. The productive foreign-funded enterprise, with their tenure over 10 years, will be exempted from the enterprise income tax in the first two years, while half of this tax will be exempted in the following three years.

   b. Under the approval of the State Council taxation authority and at their own application, those foreign-funded enterprises engaged in agricultural, forestry and husbandry industry, or investing in the economically-undeveloped areas and with a tenure of over 10 years, will, at the expiration of the tax-free and tax exemption period, still enjoys 15% to 30% discount on the enterprise income tax in the following 10 years.

   c. Export-oriented enterprises sponsored by the overseas investors, at the expiration of the tax-free and tax-exemption period, are entitled to pay only half of the enterprise income tax regulated in the tax Act, on the condition that the output value of their exports reach 70% of the total of the enterprise. As to those rates below 10% after this 50 % exemption, they will be regarded as the rate of 10%.

   d. The technologically-advanced enterprises sponsored by the overseas investors, which remains technologically-advanced at the expiration of their tax-free and tax exemption period, are entitled to pay only half of the enterprise income tax for an extra period of three years, according to the Tax Act.

   e. Under the approval of the taxation authority and at their own applications, foreign investors who reinvest the profit derived from the enterprises as an additional capital in the same enterprise or in another foreign-funded enterprise as an floating capital with a tenure no less than 5 years, will be refunded 40% of their income tax paid for the capital reinvested. As for those foreign investors, who directly reinvest in China, using their profit share derived form the enterprises to sponsor or to expand the export-oriented and technologically-advanced enterprises with a tenure no less than 5 year, will be 100% refunded the enterprise income tax paid for the capital reinvested.

   f. The profits that foreign investor obtained from the foreign-funded enterprise will be exempt from the income tax.

   g. The productive and managerial enterprises, institutes and entities sponsored by the foreign enterprises in China, are authorized to make up the loss occurred in the previous fiscal year with the income of the following fiscal year. The loss-make-up procedure will go on continuously for a period of no more than 5 years.

   h. Under the approval of the State Tax Bureau, the foreign-funded productive enterprise built in Shijiazhuang and undertaking the items mentioned below, will enjoy a 15% tax rate for enterprise income tax.

   ­­­­ Technology - intensive and intellectual-intensive projects;

   ­­­­ Foreign investment exceeding USD 30 million and, with a long pay-back period;

   ­­­­ Energy, traffic and port construction projects

    i. The foreign-funded productive enterprise, set up in Shijiazhuang, all enjoy a 24% tax rate for the enterprise income tax.

    j. The foreign-funded enterprise, set up in Shijiazhuang High-New-Tech Industry Development Zone and authenticated as a high-new-tech enterprise, will enjoy a 15% tax rate for the enterprise income tax.

   k. If a foreign enterprise transfers technology to a company in China, and the technology is advanced or transferred on favorable terms, the foreign enterprise shall be exempted from the income tax after being approved by the taxation authority of the State Council.

   l. If the technological development fee spent by the foreign-funded enterprise increases by more than 10% (including 10%) compared with that of same period of last year, the company shall enjoy another 50% discount on the payable income tax of the present year, calculated at the actual amount occurred of technological development fees, under the approval of the taxation authority.

   m. If the overseas-funded enterprise and foreign enterprises purchased a set of domestic equipment that is not included in the catalogue for tax-free equipment, they may offset, with 40% of the total investment on same equipment, the increment of enterprise income tax than the former year when the equipment were purchased.

   Local Income Tax and Local Tax

   Under the approval of the taxation authority and at their own applications, foreign-funded productive enterprise, with a tenure of over 10 years, will be exempted from the local income tax for the first five profits years and, half of the local income tax will be exempted for the following 5 years.

   Under the approval of the taxation authority and at their own applications, those non-productive foreign funded enterprises with a tenure of over ten years, will be exempted from the local income tax for the first two profits years, and half of the local income tax will be exempted for the following three years.

   After having been confirmed by the economic and trade department and approved by the taxation authorities, the foreign-funded enterprise shall be exempted from local tax if their export value exceeds 70% (70% included) of their total output value in a year. Upon application by the enterprise itself, and approval by the taxation authorities, the enterprise shall be exempted from local income tax in a year when it is confirmed to be technically advanced.

   Customs Duties and Import-related Tax

            a. As for the foreign-funded projects in which the technology is transferred and, belonging to the encouraged projects in the national “Directing List of Industries for Foreign Investment”, except the items listed in “Catalogue of Imported Commodities Not Exempt from Taxation for the Foreign-funded Project”, the equipment, purchased within the total investment for the Project, shall be exempt from the customs duties and import related tax.

   b. In the technical transformation of the foreign-funded enterprise, the foreign-funded research & development center, the technologically-advanced and export-oriented enterprises that have already established and belonging to the encouraged projects and restricted Grade-B projects, the equipment, which are not obtainable at the domestic market or the performance of same home-made equipment can not meet the requirements, and its auxiliary parts and spare parts as well as the related technology, imported within the approved business scope, shall be exempt from the customs duties and import related tax, according to the relevant regulations.

   c. The foreign-funded project, belonging to the encouraged projects and the restricted Grade-B projects, and that have been approved in accordance with the “Directing List of Industries for Foreign Investment” as of April 1, 2002, shall continue to enjoy the preferential policies on tax.

   d. The equipment, which are not obtainable at the domestic market or the performance of same home-made equipment can not meet the requirements, and its auxiliary parts and spare parts as well as the related technology, imported within the total investment by the foreign-funded research & development center for use by itself, shall be exempt from the customs duties and import related tax, according to the relevant regulations.

   e. The equipment imported for the project that uses the loan provided by the foreign government or the international financial organizations, and the equipment imported for processing trade shall be shall be exempt from the customs duties and import related tax, with the exception of the items listed in “Catalogue of Imported Commodities Not Exempt from Taxation for the Foreign-funded Project”.  

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