Application Procedures for Domestic Sale

An Expert's View about Business Administration in China

Last updated: 22 Feb 2011

1.2 Application Procedures for Domestic Sale of Own Products of FIEs

At present, foreign-invested production enterprises (including foreign wholly-owned, equity joint-venture and contractual joint-venture enterprises) approved by the Chinese authorities can automatically enjoy domestic sales right and no separate approval is required provided that the products sold are products they produce in China. If an enterprise wishes to sell products not produced by itself, it has to proceed to establish a commercial enterprise in accordance with the Measures for the Administration of Commercial Enterprises with Foreign Investment promulgated by the Ministry of Commerce (MOFCOM) on 16 April 2004.

In the past, foreign-invested production enterprises engaging in domestic sales had to appoint a domestic enterprise as agent. However, after the mainland had opened such commercial sectors as wholesale and retail to foreign participation, foreign investors may set up their own marketing or sales department to sell their own products directly to distributors, retailers or consumers.

Should an enterprise wish to set up a marketing or sales department and yet the business of the marketing or sales department is not covered in the business scope of the investment contract signed at the time the enterprise was established, it must apply for approval from the commerce department at the place where the planned marketing or sales department is to be located. For example, if the production enterprise is located in Dongguan and its marketing or sales department is also to be located in Dongguan, then the enterprise has to apply to the Dongguan commerce bureau for approval. If the planned marketing or sales department is to be located in Guangzhou, then the enterprise has to apply to the Guangdong provincial commerce department for approval through the local commerce office. Applications for establishing marketing or sales departments outside Guangdong province also have to be made to the provincial commerce department.

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Posted: 19 February 2011, last updated 22 February 2011

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