PRC PROMULGATED REGULA-TIONS GOVERNING FOREIGN INVESTMENTS IN INTERNA-TIONAL CARGO TRANSPORTA-TION AGENCY BUSINESS

05/01/2003

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The PRC Ministry of Commerce promulgated the Regulations Governing Foreign Investments in Enterprises Engaged in International Cargo Transportation Agent Business on 10 January 2003 so as to boost the development of business. The major points are as follows:

I.Foreign Shareholding Restriction

The regulations allow a foreigner to be engaged in the international cargo transportation agency business in the PRC through a joint-venture company, a cooperation company or an exclu-sive venture, but subject to a restriction on the percentage of foreign shareholding at 75% of the registered capital of a joint-venture company or a cooperation company.


II.Requirements of Investors

Certain requirements are imposed on local and foreign investors, such as:

Both the PRC investors and foreign investors must be corporations or enterprises.

None of the investors has violated any of the regulations relevant to the subject business in the past three years prior to the date of appli-cation.

The PRC investors and foreign investors should respectively meet the following re-quirements:

1.PRC investors: There is at least one PRC investor engaged in the international cargo transportation agency business, import and export business or transportation or ware-housing related business. The PRC inves-tor with any of the foregoing qualifications should be the biggest shareholder among all the PRC investors.

2.Foreign investors: There is at least one foreign investor engaged in the interna-tional cargo transportation agency business for not less than three years. The foreign investor with the foregoing qualifications should be the biggest shareholder among all the foreign investors. A foreign investor who has invested in a corporation in the PRC also engaged in the business may ap-ply for a new investment if the corporation has operated for two years or more.

III.Capital and Business Scope

A foreign invested corporation engaged in the business should have a registered capital of not less than US$1 million, and may conduct the following business activities:

Booking a hold (hiring a vessel, chartering an airplane, chartering a hold), consigning transportation, warehousing, and packing;

Conducting surveillance on stowage and unloading, container and consolidated cargo, distribution, transition and related short-distance transportation services;

Acting as agent for customs declaration, clearance, inspection and insurance;

Producing relevant documents, paying trans-portation fees, clearance and payment of mis-cellaneous fees;

Acting as agent for transportation of interna-tional exhibition goods, personal goods and goods in transit;

Conducting international multiple transporta-tion and consolidated transportation (includ-ing container and consolidated cargo);

Conducting international courier (excluding courier services for personal letters and offi-cial documents issued by political parties, government and military agencies at a higher level than the county government); and

Providing consultation and conducting other international cargo transportation agency business.

IV.Establishment of a Branch

A foreign invested corporation engaged in the business may set up a branch in PRC after one year of its business operations and the investors have paid up their capital contribution; provided, that an additional paid-in capital of US$120,000 is required for each branch.

Taiwanese enterprises may also apply to set up an international cargo transportation agency business in PRC in accordance with the regula-tions.