1. What's the bonded product display and trading platform?
A: Product display is one of the business activities in all bonded areas. With permission from the customs, enterprises operating in a bonded area can display their goods at designated venues. Goods for display should be presented in files to the customs for review. If an enterprise wants to exhibit products outside the bonded area, it must obtain permission from the customs according to regulations on management of imported goods.
2. What's the meaning of pre-check and "zero waiting" for imports to exit a bonded area?
A: Cargo inspection and quarantine officials perform inspection of goods according to the application of an importer by batches and write them off on exit. Goods that passed pre-check can leave the bonded area directly without further examination.
3. What measures have been taken in the Shanghai FTZ to open the health market to foreign investment?
A: The FTZ allows foreign investors to set up wholly-owned medical establishments such as general hospitals, specialized hospitals and clinics. The negative list made it clear that foreign investment in a medical establishment must be above 20 million yuan. Branch operation is not allowed and the operation of a hospital or clinic is limited to 20 years.
4. How will the Shanghai FTZ further open its education and vocational training sector to foreign investment?
A: The FTZ allows foreign investors to set up joint-venture schools and training institutions. No application is required for establishing such schools and institutions.
5. How did the Shanghai FTZ lower its threshold for foreign advertising companies?
A: Investors are no longer required to show qualification and business performance when setting up companies in the zone and term of operation is not required either. Foreign advertising companies are not longer required to pay their registered capital in one lump sum and have an annual turnover of no less than 20 million yuan.
6. What measures has the Shanghai FTZ adopted to open up the construction market?
A: Foreign construction companies registered in the FTZ can bid for Sino-foreign cooperative projects in Shanghai without investment ratio restrictions.
7. How did the Shanghai FTZ reduce the threshold for foreign engineering companies?
A: Foreign engineering companies (excluding prospecting companies) are not required to show professional qualification and business record when setting up an operation in the FTZ. (They can only participate in Shanghai projects).
8. What has the Shanghai FTZ done to open the employment service sector to foreign investment?
A: Overseas companies (excluding those in Hong Kong and Macau) can set up recruitment joint ventures with a holding of less than 70 percent; Hong Kong and Macau companies can set up wholly-owned employment agencies; the minimum capital required to open a foreign-invested agency has been cut to US$125,000.
9. Has the Shanghai FTZ lowered the threshold for joint-venture travel agencies to do outbound business?
A: The FTZ abolished the requirement that a joint-venture travel agency must operate at least two years in the FTZ before it can organize outbound tours.
10. What are the measures the Shanghai FTZ took to cut restrictions on foreign-invested recreational venues?
A: The FTZ allows foreign investors to open and operate wholly-owned entertainment venues.
11. What measures has the Shanghai FTZ adopted to open the performance market to foreign agencies?
A: Foreign investors are allowed to set up wholly-owned performance agencies in the FTZ.
12. What did the Shanghai FTZ do to open value-added telecom services to foreign investors?
A: The FTZ allows foreign companies to provide value-added telecom services (those not governed by existing laws or regulations must be approved by the State Council). Foreign investors of joint-venture enterprises are allowed to hold majority share.
13. What is definition of shipping finance as promoted in the FTZ?
A: Shipping finance covers all financial activities that occur in the operation of a shipping company, such as loans, insurances, currency custody, currency exchanges, and account settlement. It can be divided into shipping finance, shipping insurance, fund settlement and pricing derivatives.
14. What is the definition of financial lease as promoted in the FTZ?
A: All types of financial lease companies are welcome to open branches in the FTZ and offer their services to customers in China and abroad.
15. What has the Shanghai FTZ done to open the financial lease market to foreign investors?
A: The FTZ did not set minimum capital, but foreign companies must have a minimum capital of 50 million yuan to engage in financial lease services whether as a sideline or main business.
16. What are the requirements and procedures for an accounting firm to set up a branch in the FTZ?
A: The accounting firm should be a partnership or a limited liability partnership for at least one year. It has completed internal restructuring and is operating smoothly. It can set up a branch in the FTZ and must use Shanghai Free Trade Zone in the name of its branch.
The application to set up a branch in the FTZ should be submitted to the Shanghai Finance Bureau for approval.
17. What are the measures the FTZ has taken to open video games and amusement equipment industries to foreign investment?
A: The FTZ allows foreign companies to produce and sell video games and amusement facilities to the domestic market if their products pass content examination by cultural officials.
18. What policies has the Shanghai FTZ adopted to open the shipping industry to foreign companies?
A: The FTZ has relaxed the restriction on the percentage of foreign capital in a joint venture shipping company. Relevant regulations will be made by transport authorities with the State Council.
The FTZ allows domestic enterprises to own or hold shares of foreign-registered vessels. Initially, they are allowed to do container shipping for import and export businesses between Chinese coastal ports.
The FTZ allows foreign investors to establish solely-owned ship management enterprises.
19. How will the tax rebate policy apply to financial leasing companies operating in the FTZ?
A: Financial leasing companies registered in the FTZ or having a subsidiary in the FTZ, both foreign-owned and Chinese-owned, can enjoy the tax rebate policy.
A foreign-owned financial leasing company should be licensed by the Ministry of Commerce. A domestic company should be licensed both by the Ministry of Commerce and the State Administration of Taxation to enjoy the policy. A subsidiary, also called special-purpose vehicle (SPV), refers to the legal entity set up for the specific purpose of isolating risks and obtaining overseas funds.
20. What are new policies for insurance companies in the FTZ?
A: There is a major innovation in professional health insurance services. The FTZ allows foreign companies to set up health insurance institutions. The China Insurance Regulatory Commission also announced to carry out trials for shipping insurance and liability insurance, which involve property insurance. Meanwhile, the CIRC supports insurance companies in the FTZ to conduct cross-border RMB reinsurance business and overseas investment.
21. Do foreign investors have any limits in setting up a professional health insurance company in the FTZ?
A: A Sino-foreign joint venture or a cooperative enterprise must have a capital of no less than 20 million yuan. The Chinese partner must have a 30 percent holding in the company at least. Their term of investment or cooperation is limited to 20 years.
22. What is the meaning of offshore business in the FTZ?
A: Offshore business means that enterprises use overseas resources to manufacture products or provide services for overseas customers. It gives the enterprises four big advantages, namely tax reduction, good trade connections with other countries, freedom from foreign exchange control, and high level of business privacy.
Offshore finance is the main part of offshore business. It absorbs funds from overseas clients and provides loans, documentary bills and other services to overseas clients such as cross-border payment settlement, foreign currency trading, and business consulting.
23. Can private banks in the FTZ do all the businesses of a commercial bank?
A: The FTZ now allows investors to operate banks with a limited business license, which means private banks cannot accept money deposits. Therefore, private banks in the FTZ cannot do all the businesses of a commercial bank.
24. Can a private enterprise open a bank in the FTZ?
A: According to the Master Plan for China (Shanghai) Pilot Free Trade Zone and policies of the China Banking Regulatory Commission, private investors are allowed to open banks in the FTZ and take risks themselves or open a joint venture bank with a foreign financial institution.
25. What does it mean that the FTZ allows foreign companies and Chinese private investors to enter banking business?
A: Banks in the FTZ can do foreign currency businesses with no restrictions. JV banks and banks with limited licenses are allowed to operate in the FTZ.
26. Can Shanghai-registered financial firms move to the FTZ directly? Can they do overseas investment business?
A: Local companies are required to register in the FTZ and return their original licenses to get new ones. Enterprises in the FTZ can do investment or trade outside the FTZ in accordance to relevant laws and regulations.
27. Can financial institutions in the FTZ do cross-border investment and financing business?
A: The FTZ encourages qualified financial institutions and banks to engage in cross-border investment and financial services.
28. What policies has the FTZ taken to open the securities industry?
A: The Master Plan for China (Shanghai) Pilot Free Trade Zone spells three policies, namely allowing the financial market in the FTZ to form an international communication platform, encouraging innovation of financial products, and supporting equity trust companies to establish a platform for comprehensive financial services.
The China Securities Regulatory Commission also issues four policies -- allowing qualified individuals and institutions to invest in foreign and domestic securities markets, allowing overseas parent company of registered entities in the FTZ to issue RMB bonds within China, allowing the transaction of financial derivatives in the FTZ, and allowing securities and futures companies to set up branches in the FTZ.
29. What sectors are influenced by financial opening policies of the FTZ? What are these policies exactly?
A: Commercial banks, securities and futures trading companies, and financial insurance companies are covered by these policies which consist of two comprehensive documents and four professional documents. The two comprehensive documents are the Master Plan for the Development of China (Shanghai) Free Trade Zone issued by the State Council and the Rules on the Management of China (Shanghai) Free Trade Zone issued by the Shanghai government. The four professional documents are The CBRC Financial Policies for Shanghai FTZ, The CSRC Policies for Shanghai FTZ Capital Market, the CIRC Policies for Shanghai FTZ Development, and Policies for Financial Market Opening in Shanghai FTZ issued by the Shanghai Headquarters of the People’s Bank of China. All these documents can be seen on the official website of Shanghai FTZ.
30. Can overseas capital be channeled into other places in China through the FTZ?
A: According to the Master Plan for Shanghai FTZ, funds inside the FTZ can move abroad freely. Foreign funds can also move freely into the FTZ. However, channeling funds from the FTZ to other places in China will be restricted.
31. What are the changes in the reform of foreign exchange administration in the FTZ?
A: The first change is simplification of procedures. Documents for trade between enterprises in the zone and those abroad have been simplified. The FTZ supports centralized foreign exchange payments and collections and netting arrangements.
The second change is streamlined foreign exchange registration formalities for direct investments. The FTZ allows companies inside the zone to convert foreign exchange funds into RMB to avoid exchange rate risks. Some debt examination formalities are canceled.
The third change is that the FTZ supports the development of headquarter economy and new trade forms and expands the scope of trials by the headquarters of multinational companies, allowing them to conduct centralized management of foreign exchange funds, foreign currency cash pooling, and foreign currency settlement for cross-border trade.
And the fourth change is that the FTZ promotes the development of finance lease business.
32. What are the features of innovative supervision and public services in the FTZ?
A: The features are mainly seen in three aspects:
First, easy entry into the FTZ. Chinese customs in the FTZ carried out innovation in entry-exit supervision, inspection and quarantine, such as cargo supervision by category, bonded product exhibition, and new inspection services.
Second, tight control of goods from the FTZ into the interior regions. The FTZ has simplified customs and quarantine procedures to facilitate cargo flow from the FTZ to other parts of China.
Third, the FTZ is strengthening coordination with relevant government departments in Shanghai to establish a unified port supervision system and develop an electronic fence.
33. Where can I find government policies on outbound investment?
A: You can find relevant policies and information on the websites of the National Development and Reform Commission, the Ministry of Commerce, and the State Administration of Foreign Exchange.
34. What are the requirements for finding a name for a foreign-invested company?
A: The name of a foreign-invested company must comply with Chinese laws and regulations. Unless approved by the Chinese government, the overseas subsidiary of a foreign-owned company in the FTZ must not use the word of “China,” “Chinese” or “National” in its name.
35. What is the difference between outbound investment and investment outside the FTZ in terms of management?
A: The FTZ uses a filing system to manage outbound investment. The files are managed by the FTZ administration as a way to facilitate outbound investment.
36. What is the operating period of a foreign enterprise in the FTZ?
A: Foreign investors must specify the operating period of their enterprises in the FTZ when submitting an application. The operating period of a manufacturing enterprise must not exceed the term of its land lease while the operating period of a commercial enterprise must not exceed 30 years.
37. What are the forms of investment in a foreign-owned enterprise?
A: According to the Company Law, shareholders of a limited liability company can invest in the form of cash capital, fixed assets, intellectual properties, land use right and other non-cash assets.
38. What are the types of foreign-funded enterprises?
A: There are limited liability company, public limited company, and partnership in terms of organizational structure. And there are wholly-owned foreign company, Sino-foreign joint venture and Sino-foreign co-operative enterprise in terms of investment structure.
39. When filling out a business registration form, what should a foreign investor look out for?
A: First, the investor’s information, such as name of the institution or the individual, the country or region the investor is from, the investor’s address, license code, or passport number. Individuals from Taiwan, Hong Kong and Macau must provide the serial numbers of their mainland travel permit and ID card.
Second, the information of the actual controller, who may be a natural person or a legal person or an organization, but not a shareholder of the company. The actual controller controls the company by investor relationship, agreements or other arrangements. The information should cover records of punishment the actual controller received for violating taxation, customs, foreign exchange control, anti-monopoly and anti-bribery laws.
Third, the information about the new enterprise. The company name should be the same as spelled in the name confirmation letter. The information should contain investment figure, registered capital, main business, non-cash investment such as real estate, workshops, machinery equipment, production materials, intellectual properties, and land use right.
