As China Briefing readers probably know by heart, since December 11, 2004, foreign investors have been allowed to engage in wholesale, retailing, agency and franchising activities in Mainland China through the so-called FICE structure (Foreign Invested Commercial Enterprise).

This new legal structure opens up an unlimited range of potential business opportunities. Meanwhile, as the authorities gain more experience, such entities are becoming much easier and quicker to set up. Since March 1, 2006, for example, power of examination and approval for FICEs, has been decentralized from Ministry of Commerce (MOFCOM) to commercial departments of provinces, autonomous regions, municipalities or even directly to the state-level economic and technological development zones.

For Guangdong province (except Shenzhen, where it is the Special Economic Zone authorities), the approving authority for FICE setup is the provincial Bureau of Trade and Industry (BOFTEC). From our recent experience, once you submit properly drafted documents to local BOFTEC, it takes less than one month for formal approval by the provincial BOFTEC. This is a great improvement in one of the most sensitive factors that concern foreign investors – time! Indeed, due to the shortening of the approving process, the total time needed to create a fully operational trading company has been greatly reduced.

Another interesting improvement we have noticed relates to limits on the range of products you can import and export. There in fact very major limitations on the kind of goods themselves, except if you want to trade in sensitive or dangerous goods. For normal products, the only requirement is to list them in your application. But as often happens, the degree of detail you need to provide, which will later limit the range of goods in which you can trade, is not always clear. It often depends on the individual official’s interpretation. But it does seem that the approving authorities are allowing more and more products to be listed in the business scope.

Dezan Shira & Associates maintain offices in Guangzhou, Zhongshan and Shenzhen, advising foreign investors on legal administration, corporate establishment, due diligence and tax policy in the city. Please contact Rosario Di Maggio in Guangzhou, Lisa Qian in Zhongshan, or Alberto Vettoretti in Shenzhen for more information.