China Legal Update

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January 2009 (1)

 Contents

1. Foreign Investment Directory for the Middle

and Western Regions （ amendment in
2008 ）
New
2. Patent Law of PRC ( amendment in 2008)
3. Circular on the implementation of regulations
on the establishment of headquarters of
Multinational Companies in Shanghai (No.28,
2008, Hufufa)

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1. Annual License Reviews

2. Foreign investment in Shanghai has
exceeded US$10 billion in 2008
News
3. China issues new product catalog under
import/export licensing
4. Trade: Export tax rebate net widened

Investment Zone
Introduction Introduction of Chancheng District, Foshan City

January 2009 (2)

 New

1. Foreign Investment Directory The new version is available at the

for the Middle and Western below website:
Regions （ amendment in http://www.ndrc.gov.cn/zcfb/zcfbl/2008ling/
2008 ） Each municipality, province and
autonomous region has identified
Issuing Authority: National
its own investment preferences in
Development and Reform
the updated 28-page catalogue.
Commission (NDRC)
Date of Promulgation: 12/25/2008
Foreign investors are being
Effective Date: 01/01/2009.
encouraged to invest in agriculture,
environmental protection,
To attract foreign investment, local
infrastructure and industrial
governments in the western and
upgrades in the 21 provinces,
central areas have come up with
autonomous regions and
various preferential measures such
municipalities of western and
as tax breaks, low-interest loans
middle China.
and cheap rent on industrial-
purpose land.
Foreign investors can operate
healthcare services in Jilin, retail
The new Foreign Investment
petroleum in Hubei and develop
Directory for the Middle and
Tibetan medicines in Tibet starting
Western Regions, as adopted by
in 2009.
NDRC on 25, December, 2008, will
take effect on 1 January 2009.

January 2009 (3)

 New

2. Patent Law of PRC

( amendment in 2008) lProtection of Genetic Information

Issuing Authority: National The inventor shall reveal the source

People’s Congress of the People’s of Genetic Information if the

Republic of China invention is relying on Genetic

Date of Promulgation: Information; otherwise the

27/12/2008. application may be rejected by

Effective Date: 01/10/2009. Intellectual Property Bureau.

The Patent Law of PRC, which has lCompulsory License can be

been adopted by the 6th Session of granted to produce and export

the Standing Committee of the 11th patent medicines for the purpose of

National People's Congress of the Public Health

People's Republic of China on

December 27, 2008, will take effect lIncrease in Penalties for Patent

as from October 1, 2008. Infringement

Main Changes in the amendment

lThe abolition of a designated

patent agent by State Council of
PRC for the Patent application for
foreign individuals or foreign
companies.

January 2009 (4)


3. Circular on the implementation
of regulations on the
establishment of headquarters
of Multinational Companies in
Shanghai (No.28, 2008, Hufufa)
Issuing Authority: Shanghai
Municipal Commission of
Commerce, Shanghai Finance
Bureau, Shanghai Human
Resource and Social Security
Bureau, Shanghai Exit-Entry
Bureau, People’s Bank of China
Shanghai Branch, State
Administration of Foreign Exchange
Shanghai Branch, Shanghai
Customs and Shanghai Exit-Entry
Inspection and Quarantine Bureau
Date of Promulgation: 15/11/2008
Effective Date: 15/11/2008
Main Incentives
Opening Incentive
Regional Headquarters registered
as Investment Holding companies
New
in Shanghai will be granted an
amount of RMB 5 million within 3
three years of their establishment
and as a financial incentive.
Rental Incentive
Regional Headquarters which enter
into lease agreements of a
minimum of a three year term and a
lease area of more than 1,000
square meters will be provided with
a one-off grant of between RMB
500,000- RMB 1,000,000.
Other Incentives
Regional Headquarters registered
as Investment Holding companies
will be provided with a RMB 10
million one-off grant if the annual
turnover exceeds RMB 100 million.
Regional Headquarters registered
as Management Companies will be
provided with a RMB 5,000,000
one-off grant if the annual turnover
exceeds RMB 50 million.
January 2009 (5)
 News

Main Steps:
1. Annual License Reviews

Every Foreign Investment Step 1: Initial Online Application

Enterprises (FIE) will need to and print application forms after
undertake an Annual Co-operative approval received
Examination from 1 March to 30
June and for the previous year. It is Step 2: Official Document Reviews
a bureaucratic process, but it is a by 7 relevant departments
good time to ensure all FIE The 7 departments will cooperate
paperwork is up to date. ensure the annual examination is
completed on or before May 2009.
Concerned Departments:
1. Commission of 2. Foreign investment in
Commerce Shanghai has exceeded US$10
2. Administration of Industry billion in 2008
and Commerce
3. Economic Committee Foreign investment in Shanghai
4. Finance Bureau has exceeded US$10 billion in
5. State Administration of 2008 - more than a tenth of the
Tax nation's total. And the city boasts
6. State Administration of more regional bases of
Foreign Exchange multinational companies than any
7. China Customs other on the Chinese mainland.

January 2009 (6)

 News

3. China issues new product

As of the end of November,
catalog under import/export
Shanghai was home to 223
licensing
regional headquarters of foreign
companies in addition to 178
China will use licenses to manage
investment units and 270 research
imports of two categories of
and development centers .
products and the export of 50 types
of commodities in 2009, the
Still, the city needs to raise
Ministry of Commerce has said.
efficiency in some government
agencies, attract more talented
According to the ministry’s
people and improve the
statement, licenses will be used to
environment, traffic conditions and
control imports of ozone layer
intellectual property rights
depleting substances and major
protection to create an even better
second hand mechanical and
investment environment, said Gong
electrical products in 2009.
Baihua, director of the Shanghai
World Trade Organization Affairs
Meanwhile, the ministry will use
Consultation Center, which was
licenses to manage exports of 50
hired by the Shanghai Commerce
types of commodities including
Commission to evaluate the city's
corn, wheat, cotton, coal and oil.
investment climate.

A new version of the product lists is

available on the ministry’s website
at www.Mofcom.gov.cn.

January 2009 (7)


4. Trade: Export tax rebate net
widened
China has increased the tax
rebates for exports of 533 hi-tech
and machinery products from
January 1, 2009, as part of its
efforts to help exporters struggling
amid the global economic
meltdown.
Investment Zone Introduction
Focus: Chancheng District ,
Foshan City
General Introduction
Foshan is located in the hinterland
of the Pear River Delta that has
maintained average annual growth
rate of 17.4% and ranks the 11th of
all cities in China in 2007. It has
developed into the third largest city
in Guangdong Province and boasts
the most dynamic and innovative
economy in the Pearl River Delta.
News
Exporters of industrial robots and
airplane navigation systems will
now get tax rebates of 17%
compared with 14 and 13%.
Tax rebates for exports of
motorcycles and sewing machines
have been raised to 14% from 11
and 13% respectively.
Chancheng District, where Foshan
Municipal People's Government is
situated, is the central district as
well as the city’s center of politics,
finance, culture, transportation and
information. The district takes 4% of
Foshan’s land but contributes 19%
of the city’s total output with its
GDP yield per km2 outperforming
Foshan’s city average by almost
four times.
January 2009 (8)
 Investment Zone Introduction
Foreign Investment
So far 589 foreign companies have
invested in Chancheng including 16
Fortune 500 companies.
Manufacturing Sector
The central district of Foshan is
now one of the best known
manufacturing bases; Chancheng’s
manufacturing sector has
developed a solid industrial
foundation and secured many
leading positions in China and the
world market:
l40% of national construction
ceramics production;
l40% of national aluminum
production and sales;
l35% of national stainless steel
production and sales;
l17% of world camera production.
Future Development Strategy
As the central district of Foshan
City, Chancheng District adheres to
the strategy of “optimizing the
manufacturing sector and
developing the services sector”,
boosting IT based industrialization
that focuses on the development of
high-tech industries and new
manufacturing industries and, to
match the development of the
leading manufacturing industries,
introducing and developing modern
services such as financing,
convention & exhibition, logistics,
creative industry, leisure &
entertainment and real estate etc.
so as to enhance Chancheng’s
overall competitiveness.
January 2009 (9)
End

Favorable Policies

lFavorable Policy Encouraging the

Development of Software and IT
Industries
lFavorable Policy for Import Taxes
on Equipment for Companies’ Own
Usage
lFavorable Policy for Tax on Key
Infrastructure Projects Encouraged
by the State
lFavorable Policy for Tax on Certain
Environment Protection, Water and
Energy Saving Projects
lFavorable Policy for Tax on Key
High & New Tech Enterprises
Supported by the State

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For enquiries:

Richard Kimber Managing

Partner

rkimber@rhklegal.cn.

www. rhklegal.cn

January 2009 (10)