3-3 Policies Governing Foreign Enterprises Sourcing in China for Sale Locally
Upon entering the WTO, China pledged to fully liberalise its distribution sector within three years. Under the new Measures on the Administration of Foreign-invested Commercial Enterprises, foreign-invested distribution operations such as commission agencies and wholesale and retail enterprises are no longer subject to geographic, equity or quantitative restrictions, while market entry thresholds such as minimum assets and sales volume have been lowered. The Measures stipulate that starting 11 December 2004, wholly foreign-owned commercial enterprises can be established in China, and foreign-invested wholesalers may engage in commission agency and franchising. Furthermore, under CEPA, Hong Kong companies may establish wholly-owned wholesale operations to engage in commission agency, wholesale and retail businesses in the mainland, while Hong Kong permanent residents of Chinese nationality may establish individually-owned businesses in the mainland.
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