Requirements for Chinese law for foreign-invested enterprises ways of investment

In accordance with the Chinese laws and regulations, the ways of investment for foreign-invested enterprises shall meet the following requirements:

1) The foreign-invested enterprises can pay in cash, substantial matters, ownership of workshop, industrial property right, patent technology and other property rights

2) The foreign investors pay in cash by foreign currencies not by RMB. Under this condition, the foreign investor shall submit the foreign currency converted in RMB at the benchmark rate of the day or contracted foreign currency promulgated by the People’s Bank of China. They, of course, may invest in China by RMB gained outside China.

3) The substantial goods, foreign or Chinese investors, must be owned by themselves and not be mortgaged to property rights with effective certificates of ownership and disposal right. No party shall pay by loan, equipment or other property obtained by the name of enterprise or other’s property not owned by itself; nor is guaranteed by property and right obtained from invested enterprise or other’s right. The machine or other materials invested by foreign investor shall be submitted for ratification.

4) The industrial or patent technology invested by foreign investor shall be owned by itself and not be set for any industrial right, patent technology. Those obtained only by license agreement shall not be used for investment. Those industrial property right, patent technology for investment, the investor shall offer effective certifications of ownership and disposal right, as well as the technical materials concerned, including duplicate of patent certificate or trademark certificates, effective conditions and technological features, real value, calculating basis, reckoning agreement attached thereof.

In addition, the foreign investor, upon approval, may invest by RMB gained from his/her other China-based enterprises.