Laws of the Shanghai Province

1. Authority of Examination and Approval
1) According to the State regulations, the Shanghai Municipal People' s Government has the authority to examine and approve a foreign-invested project with the total investment of US$ 30 million as the upper limit. Projects with the total investment of US$ 30 million and over and projects with the total investment exceeding US$ 30 million after an increase of capital shall be submitted to relevant ministries and commissions in the central government for examination and approval. But Shanghai can examine and approve the projects which are in line with the encouraged industries in the Industrial Catalogue for Guiding Foreign Investment and which don' t need comprehensive balance by the State, but it must submit to relevant ministries and commissions in the central government for the record. In case that the State has special regulations on examination and approval of certain foreign invested projects, they must be examined and approved according to these regulations.
2) The district and county government has the authority to examine and approve an encouraged foreign invested project with the total investment of less than $30 million and a permitted foreign invested project with the total investment of less than $10 million. The Pudong New Area People' s Government has the authority to examine and approve a project with the total investment of less than US$ 30 million. As for the encouraged and permitted projects set up in the city-level and State-level development zones, the district and county people' s government has the authority to examine and approve a project with the total investment value of less than $30 million. The examination and approval involving the management links in the building industry are delegated to the lower levels synchronously. On the principle of unity of power and responsibility, whoever approves and administrates the project is responsible for it.
3) The Waigaoqiao Free Trade Zone Administrative Committee, the Zhangjiang High-tech Park Office, the Shanghai Diamond Exchange Office, Shanghai Chemical Zone Administrative Committee and administrative committees of the export processing zones approved by the State all have the administrative functions of the government and they can examine and approve an encouraged or permitted project with a total investment of less than US$30 million within their jurisdiction through authorization.
4) As for the Caohejing Development Zone, the Minhang Development Zone and the large group corporations directly led by the municipal government such as electrical, light industry, textiles, instruments and electrical appliances, broadcasting and television, building materials, architectural engineering, medicine, Huayi, Nonggongshang and Shanghai Automobile corporations, which have no administrative functions of the government but have experiences in administration of foreign-invested enterprises, Shanghai Foreign Investment Commission entrusts them with the duties of making a preliminary examination of the startup and alteration of foreign-invested enterprises within their jurisdiction, transmit the paper to the commission, draft a written reply on its behalf and keep the archives.

2. Simplifying Examination and Approval and Verification Procedures

1) The examination and approval of the startup of foreign-invested projects can be divided into three phases, that is, examination and approval of project proposal, feasibility study report and corporate contract and articles of association. Except under three circumstances (projects that require the examination and approval by relevant departments of the State Council, projects containing capital construction or projects for which the State has separate regulations), the three phases can be merged into one, thus shortening the examination and approval period.
2) As for the revision of general clauses in the contract and articles of association, such as alteration of enterprise name, alteration of enterprise registered address, change of house number, adjustment of the proportion of export products, adjustment of number of members of the board of directors and alteration of time limits for providing funds, the written reply shall be given in the form, which can be downloaded and printed from the government website. This will facilitate enterprises.
3) As for the foreign-invested projects examined and approved by districts and counties, Shanghai Foreign Investment Commission will no longer give ordinal numbers after verifying item by item when issuing certificates, and now district and county authority will directly issue certificates and the commission will exercise supervision and inspection afterwards. The commission should strengthen training and guidance in relevant professional work.

3. Shortening Examination and Approval Time and Simplifying Examination and Approval Items and Gradually Introducing the Notification and Promise System
To serve foreign-invested enterprises, governments at all levels must improve the transparency of examination and approval, administration and registration and provide efficient and good service. "The Regulations of Shanghai Municipality on Examination and Approval of Foreign-invested Enterprises" adopted by the Municipal People' s Congress of Shanghai in 1996 stipulates that the time of examination and approval of project proposal of foreign-invested enterprises is 20 days and the time of examination and approval of feasibility study report, contract and articles of association is 30 days. In practices, the examination and approval departments have greatly shortened the time of documents circulating through relevant government departments. Except the projects requiring the coordination and submission to the central government, the time of examination and approval for each project is within 10 working days. As for the revision of general clauses in the contract and articles of association, the written reply shall be given in the form of a table. The time of handling is shortened to 3 working days as of the date of acceptance. As for some routine services such as verification of imported equipment for private use (including duty-free, dutiable, secondhand and technical transformation equipment) and permits for imported raw materials for private use (such as steel products, chemical fibres and plastics), we should put ourselves in the position of enterprises and uphold the system of providing efficient services on the spot and once only to reduce enterprises' time of journey to and fro. As for other related services, whatever can be handled once only will be done on the spot and once only. In accordance with the guidance and opinions of relevant departments of the central government, this city will gradually introduce the system of notification and promise in examination and approval of foreign-invested projects. We will encourage introduction of positive and effective methods of innovation to further simplify the items of examination and approval of foreign-invested projects and shorten the time of examination and approval. Most of districts and counties have set up organs in charge of soliciting investment and examination and approval, which provide "one-gate" services for foreign-invested projects, to facilitate the communication between functional departments of the government. This kind of good experience and practices should be summed up and promoted in time. We will establish the system of administrators specially assigned for foreign-invested projects. And in order to improve the professional skills of examination and approval personnel in foreign investment departments at all levels, we will give them professional training. They can take up their position only when they get work certificates through examination.

4. Publicizing the Basis and Procedures of Examination and Approval and Promoting Online Work Step by Step
As the examination, approval and administration of foreign-invested projects are foreign-related work, the transparency of government departments doing their work seems particularly important and conspicuous. Now on the website of Shanghai Foreign Investment Commission, all the matters and contents relating to examination and approval and verification are open and updated, including item names, basis and procedures of handling affairs, list of documents, office hours and supervisory departments. The forms to be filled by applicant units can be downloaded from the website.

With the upgrading and improvement of the website, dynamic display or inquiry of the process and results of examination and approval of each project will be available and electronic documents will be exchanged via the Internet, besides openness and constant renewal of the information relating to examination and approval.

II. Better Service to Established Foreign-invested Enterprises

In Shanghai there are more than 20,000 foreign-invested enterprises, accounting for over 50% of the city' s total output value, more than 60% of the city' s foreign exchange earnings through export and over one third of the city' s profits and tax turned over to the State. They have 1.18 million employees and are the main force for Shanghai economic development. The increased investment of the existing foreign-invested enterprises accounts for one third of the city' s absorption of foreign investment. So further improving the soft environment of investment and better serving foreign-invested enterprises are important contents of propelling Shanghai economic development and also important aspects of furthering absorption of foreign investment. The measures for better service to the existing foreign-invested enterprises are:

1. To establish a mechanism of communication with foreign-invested enterprises and to create an atmosphere of being friendly to them and taking them seriously
Government leaders at various levels will regularly communicate with leaders of foreign-invested enterprises in a flexible form. They will determine the theme of communications in line with the foreign-related economic situation in the city or in the district (county) and operation types of enterprises and heed their opinions. Afterwards, the general office of the municipal government will urge relevant departments to resolve the issues put forward by foreign investors and reply to them on every issue. We will build a database by analyzing information of important regions and enterprises and maintain hotline links with them so as to know in time their new external development.

2. To establish a system of releasing policy information to improve policy transparency
We will improve policy transparency so as to enable the foreign-invested enterprises to know in time the new developments of policy change and we will publicize policies, laws and regulations relating to absorption of foreign investment, taxation, customs, commodity inspection and administration of industry and commerce.
1) To establish a news spokesman system;
2) To release in time information via government websites including comprehensive and specialized websites and give full play to the key role of Shanghai Foreign Economic Relations and Trade Commission and Shanghai Foreign Investment Commission website www.smert.gov.cn and Shanghai Foreign-invested Enterprises Association website www.saefi.org.cn to put information in time on the Internet;
3) To send free of charge the semimonthly Foreign Investment Information (in Chinese and English), the quarterly Shanghai Foreign Investment and the quarterly Selected Laws and Regulations published by Shanghai Foreign-invested Enterprises Association to foreign-invested enterprises as members of the association;
4) To hold on non-regularly basis public lectures on policy and invite relevant specialized departments of the government to explain relevant policies, laws and regulations to foreign-invested enterprises as members of the association;
5) To establish a system of hearing before formulating new local laws and regulations involving foreign-invested enterprises.

3. To further strengthen the building of a citywide complaints handling network for foreign-invested enterprises
On the principle of two-level government, two-level administration and unity of power and responsibility, a citywide complaint handling network has basically taken shape with 24 complaint handling points in the municipality, districts (county) and administrative committees of development zones and complaints liaison persons in 14 specialized departments such as finance, taxation, industry and commerce, labor, customs and foreign exchange. Governments at all levels must attach importance to complaints and raise the rate of winding up cases. They must seriously comb out difficult cases unresolved over the years, work out objectives and wind up cases within the specified time.