Provisional regulation for encouraging the establishment of regional headquarters of foreign MNC in Shanghai
(Promulgated by Shanghai municipality on Jul. 20, 2002)

Article 1 Purpose and background In accordance with the relevant laws and regulations and with the consideration of the realities in Shanghai, the current regulation is formulated in order to further open to outside world, promote the economic development and encourage the foreign MNC to set up its regional headquarters in Shanghai.

Article 2 Definition The regional headquarters of foreign MNC stipulated in the regulation refers to a unique leading organization, which is invested or authorized by the foreign MNC in Shanghai to manage and serve its subsidiaries within more than one country. The regional headquarters may be established by the foreign MNC in Shanghai in the forms of investment company, administrative company and etc.

Article 3 Applicable scope The regulation applies to the regional headquarters established by the foreign MNC in Shanghai. (Hereinafter referred to as the Regional Headquarters)

Article 4 The administrative department Shanghai Foreign Economic Relation and Trade Commission (hereinafter referred to as SMERT) is responsible for examining and approving the regional headquarters of the foreign MNC as well regulating the administrative works of relevant departments to the regional headquarters of foreign MNC. The relevant departments such as industrial and commercial administrative bureau, finance bureau, taxation bureau, departments for foreign affairs and police should efficiently undertake administrative works in their own spectrums.

Article 5 Condition The Regional Headquarters in Shanghai shall meet the following requirements: 1) It shall be a legal person. 2) The total net assets of the parent company shall not be less than USD400 million. 3) Accumulative amounts of investments by the Company in China shall not be less than USD30 million. 4) The enterprises invested or managed with authorization of the parent corporation by the Regional Headquarters within or outside the territory of China shall not be less than 3, and the Regional Headquarters is entitled with the functions of managing and serving the mentioned enterprises. The foreign investment company, which meets the requirements, may apply for recognition as a Regional Headquarters. The foreign MNC, which has not established investment company in Shanghai may apply to establish a regional headquarters with registered capital not less than USD2 million in the form of management company. The MNC with great contributions to Shanghai’s economic development, which basically meets the requirements stipulated in the first paragraph of this article and meets the requirements of state regulations on the directions of foreign investments, may apply to establish a Regional Headquarters with reference to this article.

Article 6 Business operation, management and service The Regional Headquarters established in accordance with the laws and regulations shall be engaged in the following operation, management and services. 1) Decision-making of operation and investment activities. 2) Marketing service. 3) Financing and finance management. 4) Technical support and R&D. 5) Information service. 6) Staff training and management. 7) Other operation, management and service activities stipulated in the laws and regulations.

Article 7 Application materials To establish a regional headquarters in Shanghai the following materials shall be presented to SMERT: 1) The application letter signed by the legal representative of the parent corporation. 2) The document signed by the legal representative of the parent company with authorization to set up the Regional Headquarters and description of its basic functions. 3) The credit certificate of parent company, its registration certificate (copy) and certificate of status of the legal representative (copy). 4) The copies of approval certificate and business license issued to the enterprise invested by the parent company in China. 5) The document signed by the legal representative of the parent corporation with granting authority to the legal representative of the Regional Headquarters, his resume and the relevant proving materials of his status. 6) The other materials required by the laws and regulations. The aforesaid documents shall be originals except those indicated as copies.

Article 8 Approval or not approval The SMERT shall finish the examination and make final decision of approval or not approval within 30 days since receiving the application materials. If it is approved, the recognition or approval certificate shall be issued.

Article 9 For file The recognition and approval of the Regional Headquarters of the MNC shall be put on records to MOFTEC by SMERT in time.

Article 10 Registration and annual inspection by Industrial and Commercial Administrative Bureau Having got the recognition or approval certificates, the Regional Headquarters shall be registered in Industrial and Commercial Administrative Bureau within 30 days since receiving the certificate. The Regional Headquarters shall be inspected annually by the administrative departments.

Article 11 Preferential policies The Regional Headquarters established in Shanghai, which has function of R&D, shall enjoy all preferential policies regulated for the high-tech enterprises, and the Regional Headquarters registered in Pudong new district shall enjoy all preferential polices of the Pudong new district. The Regional Headquarters, which train its staffs with key skills, shall be supported financially in accordance with the relevant regulations.

Article 12 Import and export license and tax-return Establishment of multinational purchasing center and logistic center in Shanghai shall be encouraged and supported. Being approved, the centers shall entitled with the import and export rights in accordance with the regulations, meanwhile the centers shall enjoy the tax-return policies for its exported goods.

Article 13 The capital management The Regional Headquarters with function of investment management, shall build a integrative system of internal capital management to manages its own capital. In transactions of foreign currencies it should be carried out in accordance with regulation on foreign currency.

Article 14 Simplifying the formalities of entering and leaving the country The convenience shall be provided for the Chinese staffs of the Regional Headquarters to leave the country for Hongkong, Macao, Taiwan and abroad for business purpose. The foreign staffs of the Regional Headquarters, who come to China many times with temporary stay here, may apply for the multi-entry visiting visas with period from 1 to 5 years and stay for less than a year per time. The foreign staffs of the Regional Headquarters, who reside in Shanghai for long period, may apply for resident license for foreigners with period from 1 to 5 years and the multi-entry working visas with the same period. The foreign staffs of the Regional Headquarters, who come to China temporally, shall apply for the entry visas in Chinese embassy or consulate abroad. If time is urgent, they may apply to the relevant department of Police for the entry visa on the port in accordance with the state regulations.

Article 15 Applicable with reference to this regulation This regulation is applicable for the establishments of the Regional Headquarters in Shanghai by the MNCs from Hong Kong, Macao, Taiwan.

Article 16 Management of the matters not mentioned The matters, which are not mentioned in the regulation, shall be fulfilled in accordance with the relevant provisions of the laws and regulations.

Article 17 The date of coming into force The provisions of the regulation shall come into force on date of its promulgation.