Shenzhen announces regulations on registration of processing trade enterprises

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SHENZHEN, Oct. 9 – Processing factories located in South China have until October 23 to decide if they want to register with the Shenzhen or local bureau of trade and industry if they want to retain their ability to import or export restricted materials should they decide to convert themselves into a foreign invested enterprise (FIE) in the future.

According to Article 5 of Announcement No. 44 of the Ministry of Commerce and the General Administration of Customs, the government will “refuse to accept the applications of the eastern region’s enterprises that have not obtained foreign trade rights prior to July 23, 2007 for engaging in processing trade on restricted goods.” However, a recent circular from the Shenzhen Bureau of Trade and Industry states that this article is not applicable to: “productive enterprises that have undertaken consigned processing before and have no foreign trade rights; enterprises that apply for reference before October 23, 2007 and transform into enterprises with foreign trade rights within a specified time; and enterprises that have once been renamed due to restructuring and reorganization but whose legal representatives have not been changed.”

The regulations on the registration of enterprises processing with materials supplied by customers are as follows:

  • processing enterprises that were approved prior to July 23, 3007 and that have developed processing trade must apply for registration to the local distract bureau of trade and industry prior to October 23, 3006
  • processing enterprises whose registration has been approved can continuously engage in the processing of restricted goods should they select to transform into an enterprise with foreign trade rights – those who choose not to transform can carry on processing trade as regulated currently
  • processing enterprises whose registration has been approved will get a “Registration Form of Supplied-materials Processing Enterprises in Shenzhen” from the competent authorities of trade and industry at the municipal or district level
  • the processing trade shall go through registration formalities in a unified way, filing a “Summery Statement for Registration of Supplied-materials Processing Enterprises in Shenzhen”
  • the materials necessary for registering are as follows:
    • Registration Form of Supplied-materials Processing Enterprises in Shenzhen (in duplicate)
    • certificate for operating status and production capacity of the processing trade enterprise (copy)
    • authorized business license of Guangdong province for processing with materials supplied by foreign customers (copy)
    • the original agreement and approval documents on processing and assembling with foreign enterprise (copy)
  • productive enterprises that once undertook consigned processing prior to July 23, 3007 and have no foreign trade rights shall register as regulated herein
  • the district bureaus of trade and industry are required to summarize and submit the names of registered processing enterprises to the Processing Trade Department under the Shenzhen Bureau of Trade and Industry

What this all means is that processing factories operating in Shenzhen can choose whether to register before October 23. Should a factory register, it will still be able to export restricted products and if in the processing factory should convert into a new FICE/WFOE in the future, that new entity shall be deemed as an “old company,” which will allow the new FICE/WFOE to continue to import/export restricted products.

If however, the processing factory chooses not to register by October 23, while the processing factory will still be able to import and export restricted products, should the processing factory convert to a new FICE/WFOE in the future; that new entity will be deemed as a “new company,” and not be allowed to import/export restricted products.

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