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REGULATIONS ON ADMINISTRATION OF TECHNOLOGY-INTRODUCTION CONTRACTS

    Article 1  These Regulations are formulated with a view to further
expanding foreign economic and technological cooperation, upgrading the
scientific and technological level of the country and promoting the national
economic growth.

    Article 2  Introduction of technology referred to in these Regulations
means acquisition of technology by any corporation, enterprise, organization or
individual within the territory of the People's Republic of China (hereinafter
referred to as the recipient) from any corporation, enterprise, organization,
or individual outside the territory of the People's Republic of China
(hereinafter referred to as the supplier), by means of trade or economic and
technical cooperation, such as:

    1. assignment or licensing of patent or other industrial property rights;

    2. proprietary technology provided in the forms of drawings, technical
data, technical specifications, etc, such as technological processes, formulae,
product designs, quality control and management skills;

    3. technical services.

    Article 3  The technology to be introduced must be advanced and appropriate
and shall at least conform to one of the following requirements:

    1. capable of developing and producing new products;

    2. capable of improving quality and performance of products, reducing
production cost and lowering consumption of energy or raw materials;

    3. favourable to maximum utilization of local resources;

    4. capable of expanding product export and increasing earnings of foreign
exchange;

    5. favourable to environmental protection;

    6. favourable to production safety;

    7. favourable to improvement of management;

    8. contributing to advancement of scientific and technical level.

    Article 4  The recipient and the supplier shall conclude in written form a
technology-introduction contract (hereinafter referred to as the contract). An
application for examination and approval of the contract shall be submitted by
the recipient, whithin days from the date of conclusion, to the Ministry of
Foreign Economic Relations and Trade of the People's Republic of China or to
any other agency authorized by the Ministry (hereinafter referred to as the
examining and approving authorities). The examining and approving authorities
shall decide to approve or disapprove the contract within 60 days from the date
of receipt. An approved contract shall come into effect as of the date of
approval. Contracts on which the examining and approving authorities does not
make a decision within the specified period of time shall be regarded as
approved and shall come into effect automatically.

    Article 5  The conclusion of technology-introduction contracts must comply
with the relevant provisions of the Law of the People's Republic of China on
Economic Contracts Involving Foreign Interest and other laws.

    The contracting parties must specify in the contract the following items:

    1. contents, scope and essential description of the technology to be
introduced, and a list of patents and trademarks if they are involved;

    2. technical targets to be attained and the time limit and measures for
attaining the targets; and

    3. remuneration, composition of remuneration and modes of payment.

    Article 6  The supplier shall ensure that it is the lawful owner of the
technology to be provided and that the technology provided is complete,
accurate, effective and capable of attaining the technical targets specified in
the contract.

    Article 7  The recipient shall undertake the obligation to preserve, in
accordance with the scope and duration agreed upon by both parties, the
non-open technical secrets contained in the technology provided by the supplier.

    Article 8  The duration of the contract shall conform to the time needed by
the recipient to assimilate the technology provided and, unless specially
approved by the examining and approving authorities, shall not exceed ten years.

    Article 9  The supplier shall not oblige the recipient to accept
requirements which are unreasonably restrictive. Unless specially approved by
the examining and approving authorities, a contract shall not include any of
the following restrictive provisions:

    1. requiring the recipient to accept additional conditions which are not
related to the technology to be introduced, such as requiring the recipient to
purchase unnecessary technology, technical service, raw materials, equipment or
products;

    2. restricting the freedom of choice of the recipient to obtain raw
materials, parts and components or equipment from other sources;

    3. restricting the development and improvement by the recipient of the
introduced technology;

    4. restricting the acquisition by the recipient of similar or competing
technology of the same kind from other sources;

    5. non-reciprocal terms for exchange of improved technology between the
contracting parties;

    6. restricting the quantity, variety or sales price of products to be
turned out by the recipient with the technology acquired;

    7. unreasonably restricting the sales channels or export markets of the
recipient;

    8. forbidding the continued use by the recipient of the acquired technology
after expiration of the contract; and/or

    9. requiring the recipient to pay for or to undertake obligations for
patents which are unused or no longer effective.

    Article 10  In applying for approval of a contract, the following documents
shall be submitted:

    1. a written application for approval of the contract;

    2. copies of the contract and its translation; and

    3. documents certifying the legal status of the contracting parties.

    Article 11  Any revision or renewal of a contract shall be in accordance
with the provisions stipulated in Article 4 and Article 10 of these Regulations.

    Article 12  The authority to interpret these Regulations and to formulate
the rules for implementing these Regulations resides in the Ministry of Foreign
Economic Relations and Trade.

    Article 13  These Regulations shall enter into force as of the date of
promulgation.?