What about the projects which go beyond the power of the Shanghai Municipal Government?
Production projects with a total investment of over USD 30 million and other projects requiring approval from the competent department of the State Council will be submitted to the authoritative department of the State Council for approval after being examined by the FISC together with related offices.

Is there any difference between jointly-funded enterprises and jointly-cooperated enterprises?

a. sino-foreign invested enterprises are corporations limited jointly funded and run by either foreign companies or enterprises or other economic organizations or individuals with Chinese counterparts, approved by the Chinese government and set up inside china in accordance with Chinese laws and regulations. They belong to stock ownership enterprises, jointly invested and run by Chinese and foreign partners, who share risks, profits and losses. According to the Regulations about Sino-foreign Investment Enterprises, these joint ventures, set up inside china will become Chinese legal person and will be ruled as well as protected by Chinese laws.

b. Sino-foreign cooperative enterprises are economic organizations, in which foreign enterprises or organizations or individuals cooperate with their Chinese counterparts both entrusted with rights and duties according to the contract of cooperation, approved by the Chinese government and set up inside china. The contract shall include investment of any party of the cooperation, condition of cooperation, allotment of profits and product, share of risk, profit and loss, the way of management, and property allocation at the termination of the cooperation term. In organization, a Sino-foreign cooperative enterprise can be established with the qualifications of an independent Chinese legal person, or some cooperative projects can be worked out by each party of the cooperation. If they conform themselves to the condition of being a legal person, they can obtain the qualifications of a legal person. the enterprises or projects that are ratified shall be ruled and protected by China's laws. The Chinese partner of the cooperation can offer land , natural resources, labor force and service or buildings, equipment and other facilities that can still be used, while the foreign partner can offer capital or technology , or major equipment or materials.

The main difference between jointly-funded enterprises and jointly-cooperated enterprises lies in the fact that shares are not calculated merely by capital and that profit is divided not according to the proportion of shares but according to the investment-distribution ratio based on the contract.

Can foreign investors recommend their relatives as employees for foreign-invested enterprises?

Yes, they can. They can recommend from one to three relatives inside China as their employees according to their investment quota.

What sort of preferential policies can an export-oriented enterprise and an advanced?hi-tech enterprise enjoy?

a. Apart from the state provisions that they pay for insurance, welfare and accommodation allowance of the Chinese staff, export-oriented enterprises and advanced hi-tech enterprises are exempt from other subsidies the state give to employees.

b. Export-oriented enterprises and advanced hi-tech enterprises are given priority in the supply of water, electric power, transport and telecommunication required in business and charged at the same prices as with State enterprises.

c.Export-oriented enterprises and advanced hi-tech enterprises which need in production and circulation short-term funds or other necessary loans shall be given priority once examined by the Bank of China.

d. To exported -oriented enterprises, they can still be exempt from local income tax after the period of local income tax exemption expires when the value of export goods exceeds over 70% of the year's production value.

e. Advanced hi-tech enterprises can still pay their enterprise income tax at a reduced rate of 50% for another 3 years after the periods of enterprise income tax exemption and reduction expire.

f.Those export-oriented enterprises & advanced hi-tech enterprises in special economic zones and in economic development zones and those already paying their enterprise income tax at a reduced rate of 15% can have a 10% reduction if they fit in with the situation mentioned previously.

g. The charge of land use for export-oriented enterprises and advanced hi-tech enterprises is three yuan per square meter per year at its highest( set in 1992) except the land in the city proper of big cities.

It should be explained that the two types of enterprises mentioned above is not perpetual. According to MOFTEC, an acknowledged export-oriented enterprise will be examined by government authorities every year. If it is disqualifies, its preferential treatment of that year will be either canceled or made up. With regard to an advanced hi-tech enterprises, it will be examined irregularly, if it has been disqualified for several times, its verification certificate will be revoked.

What sort of funds shall a foreign-invested enterprise extract from its profit after enterprise income tax is paid?

The proportion of extraction of the reserved funds, staff's reward and welfare funds as well as enterprise' development funds shall be decided by the Border of Directors. It's not necessary for a wholly foreign owned enterprise to extract enterprise' development funds. As far as reserve fund is concerned, the foreign invested enterprises shall extract from its after-tax profit no less than 10% percent for its reserve funds. When the reserve funds extracted is added up to 50% of its registered capital, the enterprise doesn't have to extract more. The proportions for the staff's reward and welfare fund shall be determined by the Board of Directors, too.

The reserve funds is used to cover loss; the enterprise' development funds is normally used to expand operation and increase investment with approval from the original examine and approval department, while the staff's reward and welfare funds is used as irregular reward to employees and other collective welfare such as allowance to employees' house purchasing, construction and repairing.

How is the cancellation procedures handled when the Representative Office terminates or winds up operation before termination?

When it is time for termination or winding up operation before termination, the Representative Office shall report to the original examing and approval department for reference through original sponsor at least 30 days before termination with the Cancellation Application Letter signed by the Chairman of the Board or General Manager of the enterprise and afterwards go through the cancellation procedures at Administration Bureau for Industry and Commerce, Public Security Bureau and Custom Office after clearing its liabilities, tax and other relevant matters.