Article 1 For the purpose of opening further to the outside world and developing the market circulation system, the said Measures are formulated in accordance with the laws and administrative regulations including the Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, Law of the People's Republic of China on Chinese-foreign Contractual Enterprises, the Law of the People's Republic of China on Enterprises Operated Exclusively with Foreign Capital and the Company Law.

Article 2 Foreign companies, enterprises and other economic organizations or individuals (hereinafter referred as foreign investors) that establish the foreign invested commercial enterprises in the territory of China and are engaged in the business operations shall abide by the Measures.

Article 3 The foreign invested commercial enterprises here refer to foreign invested enterprises engaged in the following business operations: (I) Commission agency: sales agents, brokers, auctioneers or other wholesalers selling other's goods and providing relevant auxiliary services based on the contract for gaining commission fee; (II) Wholesale: selling the goods of the retailers and industrial, commercial and institutional users or other wholesalers and providing relevant auxiliary services; (III) Retail: selling goods and providing auxiliary services for consumption by individuals and groups at fixed location or through television, telephone, mail order, the Internet and vending machine; (IV) Franchise: authorizing others to use one's own trademark, trade name and business model by signing a contract for the purpose of receiving compensations or royalties.
Foreign companies, enterprises and other economic entities or individuals shall undertake business operations outlined in aforementioned (I), (II), (III) and (IV) through the foreign invested enterprises established in the territory of China.

Article 4 Foreign invested commercial enterprises shall abide by the laws, administrative regulations and relevant rules of the People’
s Republic of China.  Their legitimate business operations and legal rights and interests shall be protected by the Chinese laws.

Article 5 State commercial administrative authorities shall supervise and regulate foreign investment in the commercial fields and the business operations of foreign invested commercial enterprises pursuant to applicable laws.

Article 6 The foreign investors of foreign invested commercial enterprises shall enjoy a good credit standing and not engage in any act contravening the Chinese laws, administrative regulations and relevant rules. Foreign investors with strong economic strength, profound business experience and management and marketing expertise as well as extensive international sales network are encouraged to set up foreign invested commercial enterprises.

Article 7 Foreign invested enterprises shall meet the following conditions: (I) The registered capital shall meet the minimum level set forth in the Company Law. (II) The registered capital and total amount of investment shall meet relevant regulations governing foreign-invested enterprises. (III) As a general rule, the operating term of foreign invested commercial enterprises shall not exceed 30 years and the operating term for foreign invested commercial enterprises established in central and west China shall not exceed 40 year.

Article 8 Foreign invested commercial enterprises that establish stores shall meet the following conditions:(I) Foreign invested commercial enterprises concurrently applying for establishment of the commercial enterprises and stores shall meet relevant regulations on urban development and urban commercial development.(II) Already existent foreign invested commercial enterprises applying to establish stores shall meet the following conditions in addition to the requirement set forth in Item (I). 1. Participate on time in and pass the joint annual review on foreign invested enterprises;2. The registered capital of the enterprise has been paid up.

Article 9 After approval, foreign invested commercial enterprises may conduct the following business: (I) Foreign invested commercial enterprises engaged in the retail business: 1. Commodity retailing;2. Import of commodities for self-marketing; 3. Purchase of domestically made products for export; 4. Other supporting business(II) Foreign invested commercial enterprises engaged in the wholesale business: 1. Commodity wholesaling; 2. Commission agency (excluding auction);3. Commodity import and export; 4. Other supporting business.
             Foreign invested commercial enterprises may authorize others to open stores by means of franchise. After approval, foreign invested commercial enterprises may engage in one or more line(s) of distribution business, and the types of the commodities sold shall be specified in the business scope in the contract and Articles of Association.

Article 10 The establishment of the foreign invested commercial enterprises and their opening of stores are subject to the following procedures: (I) The project proposal and feasibility study report of the foreign invested commercial enterprise and establishment of the enterprise are subject to one-time application and verification. (II) Unless otherwise specified in (III) (IV) of this Article, investors intending to establish foreign invested commercial enterprises and already existent foreign invested commercial enterprises applying for setting up stores shall submit the application documents outlined in Article 12 and 13 to the competent provincial commerce authority of where the foreign invested commercial enterprises are registered. After a preliminary review of the submitted documents, the authority shall submit the application documents to the Ministry of Commerce within one month after receipt of all application documents. The Ministry of Commerce shall make the decision as whether to approve the application within three months after receipt of all application documents and issue the certificate approving the establishment of the foreign invested enterprises to the applicant, or explain the reasons if the decision is to reject the application.The Ministry of Commerce may authorize a competent provincial commerce authority to approve the above-mentioned application in accordance with the Measures. (III) In the case of a foreign invested commercial enterprise engaged in the retail business applies for opening stores within the geographical jurisdiction of the commerce authority and meets the following conditions and its line of business does not include the products sold through television, telephone, mail order, the Internet and vending machine as well as commodities listed in Article 17 and 18 of the Measures, the competent provincial commerce authority shall examine and approve the application within its power, followed by a notification to the Ministry of Commerce.1. One single store does not operate on over 3000 square meters, and the number of the stores dose not exceed three, and the total number of like stores established in China by foreign investors through the foreign invested commercial enterprise does not exceed 30;2. One single store does not operate on over 3000 square meters, and the number of the stores dose not exceed 30, and the total number of like stores established in China by foreign investors through the foreign invested commercial enterprise does not exceed 300. (IV) Where the owner of the trademark and trade name of the Chinese-foreign joint invested and contractual commercial enterprises is a domestically invested enterprise and Chinese natural person, and the Chinese investors hold the stocks of the foreign invested commercial enterprise which does not sell the commodities listed in Article 17 and 18 of the Measures, the application for establishing such foreign invested commercial enterprises and stores may be examined and approved by the provincial commercial administrative authorities having jurisdiction in the district of the enterprise within its authority. If the stores are established across the provinces, the application shall also be approved by the local commercial administrative authorities at the provincial level where the enterprise proposed will be located.

          Without the authorization of the Ministry of the Commerce, the provincial commercial authority shall not delegate the power of approval stipulated in (III) and (IV) of this Article.

Article 11 The investors shall go through the registration procedures at the administrative authority for industry and commerce with the certificate for approval of the foreign invested enterprises within one month after receipt of the certificate of approval.

Article 12 The following documents shall be submitted in applying for the establishment of the foreign invested commercial enterprises (I)  Application form (II) Feasibility study report jointly signed by all investors(III) Contract, articles of association (foreign-capital commercial enterprises only submit the articles of association) and appendices(IV) Bank certificate of creditworthiness and registration certificate (copies) of the investors, legal representative certificate (copy); the ID certificate shall be presented if the foreign investor is an individual(V) Auditing report of each investor for the most recent year from an accounting firm(VI) Appraisal report on the state-owned assets to be invested in the Chinese-foreign equity joint commercial enterprises and contractual cooperative commercial enterprises by the Chinese investors(VII) Catalogue of Import and export commodities for the foreign invested commercial enterprises being applied for(VIII) Listing of directors on the board of the proposed foreign invested commercial enterprise and the power of attorney for the directors from the investors(IX) Pre-verification notification of the enterprise name issued by the administrative authority for industry and commerce(X) Certificate of the land for the proposed store (copy) and (or) house lease agreement (copy), except for stores with a business area below 3,000 square meters(XI) Document explaining the compliance with the requirements of urban development and urban commercial development issued by a competent local commerce authority of where the proposed store is to be located.If any document is signed by a non legal representative, the power of attorney from the legal representative shall be issued.

Article 13 In the case of an already existent foreign invested commercial enterprise applying to open a store, the following submissions shall be made:(I) Application form(II) If the contract and articles of association are modified, the modified versions shall be submitted;(III) Feasibility study report pertaining to opening of the store;(IV) Resolutions by the board of directors on opening of the store;(V) Auditing report of the enterprise for the most recent year;(VI) Capital verification report of the enterprise (copy)(VII) the registration certificate (copy) of each investor and legal representative certificate (copy);(VIII) Land-use right certificate for the proposed store (copy) and (or) house lease agreement (copy), except for stores with a business area below 3,000 square meters;(IX) Document explaining the compliance with the requirements of urban development and urban commercial development issued by the commercial administrative authorities of the local government where the proposed store will be located.If any document is signed by a non legal representative, the power of attorney from the legal representative shall be issued.

Article 14 The legal documents including the trademark, trade name license contract, technology transfer contract, management contract and service contract signed by foreign invested commercial enterprises shall be submitted accompanying the contract.(as for the foreign-capital commercial enterprises, the said documents shall be submitted accompanying the Articles of Association)
Article 15 The premise used for the store by the foreign invested commercial enterprise shall be acquired through methods such as public bidding, auction and listing in accordance with the relevant state laws and administrative regulations on land management.

Article 16 Foreign invested commercial enterprises that sell the commodities subject to specific state regulations and import and export commodities under the quota and license management shall go through the formalities according to relevant state regulations.

Article 17 Foreign invested commercial enterprises selling the following commodities shall comply with the following regulations in addition to the Measures: Foreign invested commercial enterprises selling the books, newspapers and periodicals shall abide by the Methods on the Management of Foreign Invested Enterprises for the Distribution of Books, Newspapers and Periodicals.Foreign invested commercial enterprises that operate gas stations and are engaged in the retail of product oil shall have stable supply of product oil and comply with the local gas stations development planning, and their operating facilities shall meet existing state standards and the provisions of the metrological verification rules as well as the fire control and environmental protection requirements. The detailed implementing Measures shall be formulated by the Ministry of Commerce separately.Foreign invested commercial enterprises selling pharmaceuticals shall abide by relevant state regulations on the management of the sales of medicines, and the detailed implementing Measures shall be formulated by the Ministry of Commerce separately. Foreign invested commercial enterprises selling automobiles shall operate within its approved business scope, and the detailed implementing Measures shall be formulated by the Ministry of Commerce separately.Unless otherwise stipulated in Articles 17 and 18 of the Measures, commercial enterprises funded by foreign investors to sell agricultural and sideline products and capital goods in the agricultural sector are not subject to the restriction of the geographic location, shareholding proportion and investment amount.Foreign invested commercial enterprises engaged in the wholesale business shall not sell medicines, pesticides and agricultural films before December 11, 2004, and shall not sell chemical fertilizers, processed oil and crude oil before December 11, 2006. Foreign invested commercial enterprises engaged in the retail business shall not sell medicines, pesticides, agricultural films and processed oil before December 11, 2004 and shall not sell chemical fertilizers before December 11, 2006. Foreign invested commercial enterprises engaged in the wholesale business shall not sell salt and tobacco, and foreign invested commercial enterprises engaged in the retail business shall not sell tobacco.

Article 18 Where the total number of stores opened by the same foreign investor within the territory of China exceeds 30, and the commodities sold include books, newspapers, magazines, automobiles (the restriction will be lifted as of December 11, 2006), medicines, pesticides, agricultural films, chemical fertilizers, processed oil, grains, vegetable oils, sugar, and cotton which are of different brands and supply sources, the proportion of contribution by the foreign investor shall not exceed 49%.

Article 19  Foreign invested commercial enterprises authorizing others to open stores by means of franchise shall observe relevant state regulations on franchise in addition to the Measures.

Article 20  Foreign invested commercial enterprises engaged in the auction business shall comply with relevant laws including the Auction Law and Cultural Relics Law, and be approved by the Ministry of Commerce. The detailed implementing Measures shall be formulated by the Ministry of Commerce separately.

Article 21 Foreign-capital commercial enterprises can be established as of December 11, 2004.

Article 22 The locations of foreign invested commercial enterprises engaged in the retail business and of the stores they open are limited to provincial capitals, capitals of the autonomous regions, municipalities, cities under direct state planning and special economic zones before December 11, 2004. The geographical restriction is lifted as of December 11, 2004.Geographic restrictions on foreign invested commercial enterprises engaged in the wholesale business shall be lifted as of the implementation of the Measures.

Article 23 Foreign invested commercial enterprises in the commercial fields in the Chinese territory shall abide by the Interim Regulations on Investment by Foreign Invested Enterprises in the Chinese Territory, and follow the procedures provided for in the Measures.

Article 24 Foreign invested enterprises other than foreign invested commercial enterprises engaged in the operations outlined in Article 3 of the Measures shall abide by the regulations set forth in the Measure and make changes to their business scope accordingly.

Article 25 Investors from the Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan investing in other provinces, autonomous regions, and municipalities to establish the commercial enterprises shall abide by the Measures.(I) Commercial service providers from Hong Kong and Macao can establish foreign-capital commercial enterprises in the mainland as of January 1, 2004. (II) The geographical coverage of retail enterprises set up by commercial service providers from Hong Kong and Macao is expanded to include cities at regional level and cities at county level in Guangdong province. (III) Commercial service providers from Hong Kong and Macao can apply to establish commercial enterprises for automobile retailing in the mainland as of January 1, 2004 according to relevant provisions in the Measures. However, their average sales volume for the three years prior to the application shall not be lower than 100 million USD; and the value of the assets for the year prior to the application shall not be lower than 10 million USD; the minimum registered capital for automobile retail enterprises established in the mainland is 10 million RMB, and the minimum registered capital for automobile retail enterprises established in central and west China is 6 million RMB. (IV) Chinese citizens among the permanent residents of Hong Kong and Macao are allowed to set up small industrial or commercial retailing businesses pursuant to relevant laws, regulations and rules of the mainland (except for franchise operations), and their operating area shall not exceed 300 square meters.(V) Commercial service providers from Hong Kong and Macao shall meet the definition of a service provider in this Article and requirements of the relevant regulations provided in the Closer Economic Partnership Arrangement between Hong Kong and the Mainland and Closer Economic Partnership Arrangement between Macau and the Mainland.

Article 26 Foreign invested commercial enterprises are encouraged to join corresponding trade associations for better self-discipline.

Article 27 The Ministry of Commerce reserves to right to the interpretation of the Measures

Article 28 The Measures is implemented as of June 1, 2004.

Article 29 The former Experimental Measures on Foreign Invested Commercial Enterprises jointly promulgated by the former State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation shall be annulled as of the date of the implementation of the Measures.