Laws of the People's Republic of China

General Office of Ministry of Commerce

Circular of the General Office of Ministry of Commerce on Printing and Distributing the Detailed Rules for the Implementation of Qualification Evaluation of Automobile Distributor and Brand Distributor

Shang Jian Zi [2006] No. 4

All the automobile industry association

In accordance with Measures for the Implementation of Management of Automobile Brand Sales for the purposes of evaluating qualifications of automobile distributor and brand distributor, regulating evaluation activities, the Detailed Rules for the Implementation of Qualification Evaluation of Automobile Distributor and Brand Distributor is hereby printed and distributed to you, and shall be implemented accordingly.

General Office of Ministry of Commerce

January 12, 2006

Detailed Rules for the Implementation of Qualification Evaluation of Automobile Distributor and Brand Distributor

Article 1

These detailed rules are formulated in accordance with Measures for the Implementation of Management of Automobile Brand Sales for the purposes of evaluating qualifications of automobile distributor and brand distributor, regulating evaluation activities, ensuring the evaluation going fairly, justly and orderly.

Article 2

These detailed rules apply to the evaluation of qualification of automobile distributor and brand distributor.

Article 3

The competent commercial authority of the State Council guides and authorizes automobile industry associations to build Expert Database for Automobile Brand Sales ("Export Database" in short below).

Article 4

Experts in Expert Database are consist of the experts of automobile production, sales and service, economy, law and management.

Article 5

The experts in Expert Database should meet following requirements:

1.

enjoy good health, usually younger than 65 years old;

2.

have senior professional titles or be a university graduate or higher;

3.

have fine professional quality and work ethic, no bad record;

4.

Understand national policies and related laws and regulations about automobile development, keep abreast of the status of domestic automobile production, sales and service, and development of corresponding industry in foreign countries; be equal to the qualification evaluation of automobile distributor or brand distributor;

5.

the experts of automobile production, sales and service have worked in automobile industry for more than 5 years.

Article 6

The authorized automobile industry associations engages the experts in Expert Database from the society in light of the need of the evaluation works.

Article 7

Evaluation procedures for recommending experts in Expert Database

1.

the experts in Expert Database are recommended by their units. The recommendation units should submit the recommended name list and corresponding materials to the authorized automobile industry associations according to the requirements of Expert Recommendation Form for evaluation of automobile brand sales (see Appendix);

2.

the authorized automobile industry associations should notify the recommendation unit of the examination result and issue Letter of Appointment to the experts who have passed the examination within 20 days at receipt of the recommendation materials.

Article 8

If any false content are found in expert recommendation materials, the authorized automobile industry associations will not accept and handle all the recommendation materials of the recommendation unit.

Article 9

The experts in Expert Database are employed for a term of 4 years. At the end of the term, after reviewing of the authorized automobile industry associations, the experts who meet the requirements may remain in Expert Database.

Article 10

If any expert transfers or retires from his unit, his original unit and himself should notify in time the authorized automobile industry associations in writing.

Article 11

The total number of the experts in Expert Database is usually 40 to 50 every year.

The authorized automobile industry association should report the name list of the experts in Expert Database to the competent commercial authority of the State Council for record.

Article 12

When relative experts withdraw from the Expert Database, the authorized automobile industry associations should augment experts in time according to relative regulations.

Article 13

The experts in Expert Database should abide by national laws and regulations, strictly observe work ethics, fairly engaged in qualification evaluation of automobile distributor or brand distributor, should not provide the application materials, evaluation content and other relative materials of the evaluated party to any other unit or individuals. During the qualification evaluation of automobile distributor or brand distributor, they should not get in touch secretly with corresponding automobile supplier, brand distributor and other interested parties.

Article 14

The experts in Expert Database should sign confidentiality agreement and take part in the evaluation works according to the requirements.

Article 15

The authorized automobile industry associations should notify relative experts in writing to withdraw from the Expert Database and inform their units in one of following circumstances:

1.

not equal to qualification evaluation of automobile distributor or brand distributor because of physical problem;

2.

have no complete civil disposing capacity;

3.

have been given criminal sanction;

4.

violate the content stipulated in confidentiality agreement;

5.

violate the provision of Article 13 of these measures and the case is serious.

Article 16

While accepting and handling the application of automobile distributors or brand distributors, the competent commercial authority of the State Council may authorizes automobile industry associations to organize expert committee to make evaluation on their qualifications if it doubts that.

Article 17

The authorized automobile industry associations should select experts from Expert Database and form the expert committee according to the authorization of the competent commercial authority of the State Council and the need of evaluation.

Article 18

Selecting the experts of automobile industry expert committee should be compliance with the following principles:

1.

principle of combination of random selecting and professional structure. The expert committee should make random selecting from the Expert Database according to the need of evaluation and give expression to the representativeness of different professions;

2.

avoidance principle. The experts who have direct interest relationship with the evaluated party should not take part in the evaluation. If any one has already been selected, the expert himself should make public and avoid initiatively;

3.

principle of change. The members of expert committee should be changed in proportion, generally speaking, one expert should not take part in the evaluation consecutively for more than twice.

Article 19

The number of expert committee should be 5 or 7.

Article 20

Major content of qualification evaluation of automobile distributor:

1.

The information of written authorization of automobile production enterprises, including legal validity of authorization materials, brand name of sold automobile by authorization, the name, trademark and sign of the shops used by authorization;

2.

the ability of automobile marketing, including explanation materials about the concrete content, organizational structure, professionals and their structure in market investigation and study, marketing and planning, advertisement and promotion, network construction and guidance, product service and technical training and consultation, fitting supply and logistics management, among them, the network layout, scale and process should be made clear in the content of network construction;

3.

whether or not the content of automobile brand sales in the business scale accord with the content authorized by automobile production enterprises;

Article 21

Major content of evaluating the qualifications of automobile brand distributor:

1.

The written authorization of automobile supplier, including legal validity of authorized materials, brand name, selling areas of automobile sold by authorization, name, trademark or sign of the shop used by authorization;

2.

whether or not the content of automobile brand sales in business scale is consistent with the content authorized by automobile supplier, and whether or not the name, sign and trademark of the shop to be used are consistent with the ones authorized by the automobile supplier;

3.

whether or not the business place, facilities and professional service staffs meet the requirements of the business range or scale.

Article 22

The automobile industry associations organize expert committee to hold evaluation meetings according to the evaluation trust. The expert evaluation meeting is held by expert joint checkup. It may be held in the forms of "check and approve separately, discuss together" or "check and approve together, discuss together".

Article 23

The members of expert committee should attend the meeting as experts and take part in the evaluation objectively and fairly.

Article 24

The check and approval comments adopted by the expert committee should be agreed and signed by more than half of the members in expert committee. The authorized automobile industry associations should provide a report according to the check and approval comments of the expert committee.

Article 25

If thinking the evaluated party has some problems to be investigated or the application materials are not completed, the expert committee may put off the evaluation comments with the agreement of more than half members attending the meeting.

The authorized automobile industry associations should report in time their opinion on putting off the evaluation comments and corresponding information to the competent commercial authority of the State Council.

Article 26

The automobile industry associations accepting evaluation trust should establish an expert committee, finish evaluation and provide evaluation report to the competent commercial authority of the State Council within 15 working days at receipt of the applicant¡¯s application materials of the automobile distributor and brand distributor provided by the competent commercial authority of the State Council.

Article 27

The qualification evaluation of automobile distributor or brand distributor should accept the supervision of the competent commercial authority of the State Council and the society.

Appendix: Expert Recommendation Form for Evaluation of Automobile Brand Sales (omitted)