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100 Questions Concerning Foreign Investment (Shanghai)  (2-18)

11.What are the differences between investing in Songjiang Export Processing Zone and in Waigaoqiao Free Trade Zone?
Export Processing Zone Free Trade Zone
Business Scope
1. Only the processing trade of self-produced goods is permitted.
2. Over 70% of the Products should be sold to other countries.
1. Enterprises can be engaged in international trade, domestic trade and manufacturing and processing.
2. All products can be sold out domestically.
Taxation
1. The entrance of spare parts and raw materials from enterprises outside the zone to the zone is regarded as export and VAT can be refunded.
2. Customs duty will be levied according to ready-made products sold domestically and manufactured by enterprises in the zone with spare parts and raw materials from abroad.
1. VAT on spare parts and raw materials entering the zone from enterprises outside will not be refunded.
2. Customs duty will be levied according to the standard of spare parts and raw materials from abroad on those ready-made products sold domestically and manufactured by enterprises in the zone with spare parts and raw materials from abroad.
Customs Inspection
1. Cancellation of verification is carried out every half year or whole year.
1. Cancellation of verification is carried out upon each contract.

B. Guidance and Examination & Approval of Foreign Invested Enterprises

12. What kind of organization is Shanghai Foreign Investment Commission (SFIC)? What is SFIC responsible for?
SFIC, a comprehensive and authoritative body, is established by the Shanghai Municipal Government to improve Shanghai's investment environment and streamline procedures of project examination and approval. Major functions of SFIC are: to implement relevant laws and regulations of the State and carry out the State's policy on industrial preferences; to examine and
approve foreign direct investment projects; to oversee foreign invested projects of the whole city on a macro basis; to introduce Shanghai's investment environment and policy; and to coordinate and solve problems encountered by foreign invested enterprises throughout their establishing and operating periods.

13. How many organizations are responsible for the examination and approval of foreign investment projects in Shanghai? What are the detailed regulations?
There are altogether 24 organizations dealing with the examination and approval of foreign investment projects in Shanghai. Shanghai Foreign Investment Commission examines and approves projects with an investment between USD 10 million & USD 30 million as well as projects which do not need the State's overall balance and with an investment over USD 30 million listed in Encouraged Industries. Foreign Economic and Trade Commissions of district-level and of county-level are responsible for examination and approval of foreign investment projects with an investment under USD 10 million. Local municipality can examine and approve projects located in municipal level industrial zones and with a total investment of less than USD 30 million listed in Encouraged Industries. Pudong Administrative Committee and Free Trade Zone administrative Committee are responsible for examination and approval of projects with and investment under USD 30 million.

14. How to handle the projects which go beyond the power of the Shanghai Municipal Government?
Manufacturing projects with a total investment of over USD 30 million, which are regarded as Encouraged projects but need the State's overall balance, will be submitted to the authoritative department of the State Council for approval after being examined by the SIC together with related offices.

15. What kind of organization is Shanghai Foreign Investment Development Board (SFIDB)?
Under the leadership of Shanghai Foreign Investment Commission, SDIDB is an investment promotion organization approved by Shanghai Municipal People's Government to develop foreign investment in Shanghai.
The major functions of SFIDB are:
Participating in formulating the industrial guidance and relevant policy for attraction foreign investment; publicity and information release with regard to foreign investment; organizing various foreign information release with regard to foreign investment; organizing various foreign
investment promotion activities; collecting, exhibiting and releasing investment projects information; guiding district and county level foreign investment promotion organizations; establishing and managing overseas investment promotion representative offices.

16. What services can Shanghai Foreign Investment Service Center (SFISC) offer?
Shanghai Foreign Investment Service Center (SFISC) was founded in October 1991 by the Government of Shanghai Municipality to improve investment environment and to promote the opening up of Shanghai and the development of Pudong New Area.
SFISC is a specialized and comprehensive service institution for overseas investors. Under the leadership of Shanghai Foreign Investment Commission, SFISC aims to provide whole-course, multi-level and efficient services for overseas investors.
◆Introducing the local investment environment; providing consulting services on investment laws, regulations and rules; advising on the evaluation of the potential projects.
◆ Acting as the legal agent to go through all the procedures for establishing foreign invested
enterprises, including preparing and submitting Project Proposal, Feasibility Study Report, Cooperation Contract, Articles of Associaton and other necessary legal documents.
◆Conducting preliminary market research for overseas enterprises prior to investment in Shanghai.
◆Planning and handling mergers & acquisition of enterprises for foreign investors.
◆Helping both Chinese and foreign investors to find suitable cooperation partnership.
◆Acting as the legal agent for foreign companies to set up resident representative offices in Shanghai.
◆Acting as the legal agent for overseas Chinese scholars to establish enterprises.
◆Organizing business investigation delegation abroad.

17. What do "one station management" and "a coordinated service" signify?
"One station management" means that, according to different investment & different registered addresses of each project, foreign businessmen who came to invest can just turn to SFIC, Pudong New Area Foreign Economic & Trade Commission, and Foreign businessmen who came
to invest can just turn to SFIC, Pudong New Area Foreign Economic & Trade Commission, and Foreign Economic and Trade Commissions in Districts or Countries. for approval of their applications. All the relevant government departments and offices responsible for examination and approval of investment projects are put together to facilitate the formalities for overseas investors.
" A coordinated service" intends to offer overseas businessmen a whole process of services, such as recommending proper partner, assisting in locating a site for a factory, preparing and submitting project proposal, handling the registration of the enterprise's name, drafting a
feasibility study report and contract, and assisting in the application for business license at the setting up period; assisting in designing & planning, in engineering construction and in handling related construction procedures like land planning, environmental protection, fire protection and public utilities etc. At the second stage; assisting in employing staff, providing relevant information, etc. At the last stage. Shanghai Foreign Investment Service Center can provide "coordinated service".
18. How were the laws on foreign invested enterprises modified?
This time modification mainly involves followings:
1. Deleted some contents of the problem in foreign exchange balance that should be solved by foreign invested enterprises themselves. Foreign exchange that foreign enterprises need to buy raw materials and spare parts, to pay wage, interests on capital and dividend on shares may be disbursed by means of buying foreign exchange through bank or be disbursed through foreign exchange account.
2. Deleted the regulations that foreign invested enterprises should buy raw materials and fuel in China first; as same as other domestic enterprises foreign invested enterprises can enjoy enlarged power of purchase.
3. As for exporting duty, the regulations encou4aging export replace that concerned of export duty. After deleting the regulations that foreign invested enterprises must export duty. After deleting the regulations that foreign invested enterprises must export all of or the great part of its products, foreign invested enterprises can enjoy own power of sales as same as other domestic enterprises.
4. Deleted the regulations that foreign invested enterprises should report their manufacturing and managing plans to the administration in charge in order to record these plans.
Modifications mentioned above were made owing to the requirements that foreign invested enterprises can enjoy autonomous rights under the condition of Socialist market Economy.