By Zhong Yi, Liu Fei

1. What business forms for foreign investors to develop activities in China
(1) Forms of enterprise
ⅰ Chinese-Foreign Equity Joint Ventures,
ⅱ Chinese-Foreign Contractual Joint Ventures
ⅲ Foreign Capital Enterprises.

(2) In addition to establishing enterprises, there are following business forms for foreign investors to develop activities in China
ⅰ Foreign countries (regions) enterprises can be engaged in business activities of specific areas in China without establishing enterprises, but only with business registration. For detail of those specific areas, please refer to Article 3 of 《The Registration and Management Methods of Foreign Countries (Regions) Enterprises Engaged in Production and Business Activities in China》.
ⅱ Foreign countries (regions) enterprises can also set up Resident Respective office in China engaged in non-direct business activities, such as business contact.

2. What particular provisions should be referred to for establishing a foreign-invested enterprise?
Based on provisions above, what are the differences among the three forms of foreign-invest enterprises?

(1)To set up a foreign-invested enterprise, 《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 Joint Ventures》，《Law of the People’s Republic of China on Foreign Capital Enterprises》，《Guidance of Foreign Investment Industries》and other relevant foreign-invested special provisions, should be referred to.

(2) Based on provisions above, there are following differences among the three forms of foreign-invest enterprises.
ⅰBoth Chinese-Foreign Equity Joint Ventures and Chinese-Foreign Contractual Joint Ventures are set up jointly by foreign enterprises, other economic organizations or individuals and Chinese enterprises or other economic organizations. Foreign capital enterprises should be solely established only by foreign enterprises and other economic organizations.
ⅱ Shareholders of Chinese-Foreign Equity Joint Ventures should be liable for the enterprise to the extent of their respective contributions and share the profits based on the proportion of their respective contributions. Shareholders of Sino-foreign cooperative enterprises can set up a cooperation contract in which the allocation ratio of profits, the sharing ways of risks and losses and other conditions for cooperation are prescribed.

3. What processes are included in the basic procedure to set up an enterprise?
(1) Apply to Shanghai Administration of Industry and Commerce for the Approval of Enterprise Name to confirm your company’s name.

(2) Apply to Shanghai Foreign Investment Commission for Foreign-Invested Enterprises Approval.

(3)Apply to Shanghai Administration of Industry and Commerce for Establishment Registration within 30 days after obtaining the Foreign-Invested Enterprises Approval Certificate.

(4)Obtain a Business License from Shanghai Administration of Industry and Commerce. The date of issuance of the business license is the date of establishment of your company.

4. What is “Pre-Approval Document” required in registration?
According to Laws, Administrative Regulation and other relevant provision, the establishment of some special company should be reported and the approval should be obtained before registration. Those approval files are called “Pre-Approval Document”. For example, to establish a food business company,《Food Sanitation Permit》issued by Shanghai Food and Drug Administration should be obtained before the application to Shanghai Administration of Industry and Commerce for registration.

Zhong Yi & Liu Fei, China Law Case - Legal Resources