Chapter I General Provisions

Chapter II Procedures for Establishment

Chapter III Form of Organization and Registered Capital

Chapter IV Methods of Contributing Investments and the Time Limit

Chapter V Use of Site and the Site Use Fees

Chapter VI Purchasing and Marketing

Chapter VII Taxation

Chapter VIII Control of Foreign Exchange

Chapter IX Financial Affairs and Accounting

Chapter X Workers and Staff Members

Chapter XI Trade Union

Chapter XII Term of Operations， Termination and Liquidation

Chapter XIII Supplementary Provisions

Chapter I General Provisions

Article 1 These Rules are formulated in accordance with the provisions in Article 23 of The Law of the People's Republic of China on Foreign-Capital Enterprises.

Article 2 Foreign-capital enterprises shall be under the jurisdiction of and protection by China's laws.

Foreign-capital enterprises， while engaged in business operational activities within the territory of China， must abide by Chinese laws and regulations and must not jeopardize the social and public interests of China.

Article 3 A foreign-capital enterprise to be established in China must be conducive to the development of China's national economy， be capable of gaining remarkable economic results and shall meet at least one of the following conditions：

（1） the enterprise is to adopt advanced technology and equipment， engage in the development of new products， conserve energy and raw materials， and realize the upgrading of products and the replacement of old products with new ones which can be used for placing similar imported goods；

（2） its annual output value of export products accounts for more than 50% of the annual output value of all products， thereby realizing the balance between revenues and expenditures in foreign exchange or with a surplus.

Article 4 No foreign-capital enterprise shall be established in the following trades：

（1） the press， publication， broadcasting， television， and movies；

（2） domestic commerce， foreign trade， and insurance；

（3） post and telecommunications；

（4） other trades in which the establishment of foreign-capital enterprises is forbidden， as prescribed by the Chinese government.

Article 5 The establishment of foreign-capital enterprises shall be restricted in the following trades：

（1） public utilities；

（2） communications and transportation；

（3） real estate；

（4） trust investment；

（5） leasing.

The application for the establishment of a foreign-capital enterprise in the trades mentioned in the preceding paragraph shall be submitted to the Ministry of Foreign Economic Relations and Trade of the People's Republic of China （hereinafter referred to as the Ministry of Foreign Economic Relations and Trade） for approval， except as otherwise provided by Chinese laws and regulations.

Article 6 Application for the establishment of a foreign-capital enterprise shall not be approved if the proposed enterprise would involve one of the following circumstances：

（1） injury to China's sovereignty or to social and public interests；

（2） impairment of China's national security；

（3） violation of Chinese laws and regulations；

（4） incompatibility with the requirements of China's national economic development； or

（5） possible creation of environmental pollution.

Article 7 A foreign-capital enterprise shall make its own managerial decisions within the approved scope of business operations and shall not be subject to intervention.