Laws of the People's Republic of China

    Article 1  These Procedures are formulated in accordance with "The
Foreign Trade Law of the People's Republic of China", "The Law of the
People's Republic of China on Chinese-Foreign Equity Joint Ventures" as well
as other relevant laws and regulations with a view to further expanding the
scope of opening up to the outside world and promoting the growth of China's
foreign trade.

    Article 2  These Procedures shall be applicable to Chinese-foreign joint
venture foreign trade companies(hereinafter referred to as "joint venture
foreign trade companies") set up within the territory of China(experimental
areas) by foreign companies and enterprises(hereinafter referred to as
"foreign companies") and Chinese companies and enterprises(hereinafter
referred to as "Chinese companies") for the sole purpose of engaging in
import-export trade.

    Article 3  The joint venture foreign trade company shall be a limited
liability company. The percentage of the registered capital of Chinese
company in a joint venture foreign trade company shall not be less than 51%;
the percentage of a foreign company shall be more than 25%. The legal
representative shall be appointed by the Chinese company.

    Article 4  The following conditions shall be satisfied in the
establishment of a joint venture foreign company:

    (1) A foreign company shall have the following qualifications:

    a. A turnover of over US$ 5 billion in the year preceding the
application;

    b. An average annual trade volume of over US$ 30 million with China
during the three years preceding the application;

    c. A representative office has been set up within the territory of China
for more than three years prior to the application, or an investment of over
US$ 30 million within the territory of China.

    (2) A Chinese company shall have the following qualifications:

    a. Has authorization in foreign trade operations;

    b. An average annual import-export volume of over US$ 200 million during
the three years preceding the application, out of which the export amount
shall not be less than US$ 100 million;

    c. Has set up more than three branches, subsidiaries and joint ventures
outside the territory of China, with an average annual turnover of more than
US$ 10 million in the three years prior to the application.

    (3) A joint venture foreign trade company shall have the following
qualifications:

    a. Its registered capital shall not be less than RMB 100 million yuan;

    b. Has its own name and organization;

    c. Has necessary place, professional staff and other material conditions
suitable for foreign trade operations.

    Article 5  In applying for the establishment of a joint venture foreign
trade company, the Chinese company shall submit the following documents to
the department in charge of foreign trade and economic cooperation of the
state through the local department of foreign trade and economic cooperation
for examination:

    (1) Project proposal and the feasibility study, contract and constitution
signed by the Chinese and foreign parties;

    (2) Certificates of registration(copies) of the Chinese and foreign
parties, credibility certificates and legal representative certificates;

    (3) Certificate of approval of the foreign company's invested enterprise
in China(copy), or approval paper for the establishment of representative
office in China(copy), business license(copy) and credibility report issued
by a Chinese registered accountant firm(copy);

    (4) Certificates of registration of the Chinese company's branch,
subsidiary and joint venture outside the territory of China(copy);

    (5) Tables of assets and liabilities of the Chinese and foreign parties
in the past three years and the certificates of confirmation issued by the
auditing department;

    (6) Business scope of the proposed joint venture foreign trade company;

    (7) Other documents as required by the department in charge of foreign
trade and economic cooperation of the state.

    A certificate of approval for the joint venture foreign trade company
shall be issued by the department in charge of foreign trade and economic
cooperation of the state upon examination by the department in charge of
foreign trade and economic cooperation of the state and approval by the State
Council.

    Article 6  Upon approval by the state of the application for the
establishment of the joint venture foreign trade company, the Chinese company
shall, within one month starting from the date of approval, go through the
procedures of registration with the certificate of approval at the department
of industry and commerce administration, and complete financial registration
at the department of finance in charge within one month starting from
registration.

    Article 7  Funding by the foreign company for the registered capital of
the joint venture foreign trade company can be in convertible currency, and
funding by the Chinese company can be in RMB, in kind and invisible assets or
other property rights.

    Parties in the joint venture foreign trade company shall, within one
month starting from the date of issuance of the business license, complete
full payment of their respective confirmed amount of funds.

    Article 8  The joint venture foreign trade company shall engage in self-
operations or agency business operations of import and export of goods and
technologies with the approved business scope. It shall not engage in other
business operations without approval.

    Article 9  Import or export of commodities under quota and license
control by the state for import and export can be effected upon approval
after application to the department in charge concerned of the state in
accordance with relevant provisions of the state. The joint venture foreign
trade company shall, in accordance with the provisions of the department in
charge for tender and bidding of the commodities for import and export, take
part in bidding with regard to commodities for import and export under quota
tender by the state.

    Article 10  The joint venture foreign trade company shall handle foreign
exchange settlement, selling and payment in accordance with the relevant
provisions by the state for state-owned foreign trade companies. The joint
venture foreign trade company shall maintain foreign exchange balance.
Specific control measures shall be formulated by the People's Bank of China
in consultation with the department in charge of foreign trade and economic
cooperation of the state.

    Article 11  The joint venture foreign trade company shall effect payment
of taxes in accordance with relevant taxation laws and regulations of the
state. The state shall effect refund of taxes on its export products in
accordance with the provisions for the refund of taxes on export by state-
owned foreign trade companies.

    Article 12  The joint venture foreign trade company shall, at regular
intervals, submit reports and tables of finance, accounting and statistics to
local departments in charge in accordance with the laws and regulations of
China concerning finance, accounting and statistics.

    Article 13  The joint venture foreign trade company shall apply to join
the chamber of commerce for import and export or the association enterprises
with foreign investment, and obey the coordination of either the chamber or
the association.

    Article 14  The joint venture foreign trade company shall abide by the
laws and regulations of China and put itself under the jurisdiction of the
laws and regulations of China. Its legitimate rights shall be protected by
the laws and regulations of China.

    Violation of laws and regulations of China on the part of the joint
venture foreign trade company shall be handled in accordance with relevant
laws and regulations. Violation of these Procedures by the joint venture
foreign trade company shall be handled by the department in charge of foreign
trade and economic cooperation.

    Article 15  Reference shall be made to these Procedures with regard to
the establishment of joint venture foreign trade companies by companies,
enterprises of Hongkong, Macao and Taiwan regions and inland companies and
enterprises.

    Article 16  The areas of experiment and number of companies for
experiment shall be determined by the State Council. For the present,
experiment shall be conducted only in the Pudong New Development Zone of
Shanghai and Shenzhen Special Economic Zone.

    Article 17  These Procedures shall enter into force as of the date of
promulgation. The department in charge of foreign trade and economic
cooperation of the state shall be responsible for the interpretation of these
Procedures.