Laws of the People's Republic of China

Circular of the Ministry of Commerce on Clarifying Relevant Issues Concerning the Inspection of Direct Selling Service Network

Shang Zi Han [2007] No. 35

In accordance with Article 6 of the Measures for Administration of the Establishment of Direct Selling Service Network (Decree of the Ministry of Commerce No. 20, 2006), administrative commercial departments of all provinces, autonomous regions, municipalities directly under the Central Government shall, jointly with administrative commercial departments at or above the district/county level where the service network is located, conduct examination on the service network that has been set up in accordance with the Regulations on Direct Selling Administration, and shall report the result of the examination to the Ministry of Commerce for archival purpose in a one-off manner. For the purpose of unifying the examination requirements and the format of the examination report after examination, it is hereby notified as follows:

1.

The administrative commercial departments at or above the district/county level where the service network is located shall offer suggestions

The administrative commercial departments at or above the district/county level where the service work is located shall carry out examination on the service network in accordance with projects of service network approved by the Ministry of Commerce as well as the Regulations on Direct Selling Administration. In principle, the reduction of the number of service network and the trans-district or trans-county change of the address of service network both are cases where the establishment of service network failed to comply with the project. In line with Article 11 of the Regulations on Direct Selling Administration, the enterprise shall be required to report the revised project of service network in conformity with the original procedure, and examination in a one-off manner, upon approval, shall be carried out in accordance with the new project. However, the decrease of service network caused by the reduction of areas for direct selling made by the enterprise and the dismantling of service network that is inconsistent with the provisions of the Regulations on Direct Selling Administration shall not be included herein. The administrative commercial departments at or above the district/county level shall file a written report after examination to the administrative commercial departments at the provincial level, and the format shall be designed by the latter.

2.

The format of the letter of examination report by the administrative commercial departments at the provincial level

The administrative commercial departments at the provincial level, in accordance with the suggestions given by the administrative commercial departments at or above the district/county level of all provinces, autonomous regions, municipalities directly under the Central Government, shall submit the letter of examination report (see Appendix I for model format) to the Ministry of Commerce and clarify the name and number of districts in districted cities. The letter of examination report given by the administrative commercial departments at or above the district/county level shall be kept for record by the administrative commercial departments at the provincial level and need not be submitted to the Ministry of Commerce.

The letter of examination report may only bear the official seal of the foreign investment division or the domestic trade division under the administrative commercial departments at the provincial level, but shall bear such a statement as "This letter of examination report has been examined by officials in charge of commerce of all provinces (autonomous regions, municipalities directly under the Central Government)".

3.

The time limit for examination

The administrative commercial departments at the provincial level shall finish the examination within 30 working days as from the day the enterprise files the application and write out a letter of examination report and submit it to the Ministry of Commerce.

Ministry of Commerce

March 21, 2007 Appendix: Letter Concerning the Submission of Examination Report on XXX Enterprise Service Network

Ministry of Commerce:

1.

XXX enterprise has filed an application for service network examination to the present department/committee/bureau within six months as of the day of distribution of the document of approval.

2.

Upon examination by the administrative commercial departments at the county/city/district level, XXXenterprise has completed the establishment of service network in such places as XXX city or XXX county. It set up__ (number) service network in the present province (district/city) in total which are all in conformity with the service network project approved by the Ministry of Commerce. The number, location and function of the service network are in accordance with the requirements provided by Item 2 of Article 10 of the Regulations on Direct Selling Administration and that by Article 3 of the Measures for Administration of the Establishment of Direct Selling Service Network. To be specific, there are __districts such as XXX district and XXX district in XXX city.

(Where the district fails to finish the establishment of service network or that which does not comply with the service network project approved by the Ministry of Commerce, a clear statement shall be added: upon examination by the administrative commercial departments at the county/city/district level, XXX enterprise fails to complete the establishment of service network or fails to comply with the service network project)

3.

This letter of examination report has been examined by officials in charge of commerce of all provinces (autonomous regions, municipalities directly under the Central Government), and is hereby submitted for record.

Appendix:

Form of Examined Service Network of XXX Enterprise (Omitted)

Administrative Commercial Departments at the Provincial Level (Seal)

Date:________________