Introduction of Foreign-Invested Commercial Enterprise(FICE)


-- Obtain trading and distribution rights in China

Before 11th December 2004, Foreign-invested enterprises (FIEs), i.e. enterprises established by foreign investors in China (including wholly foreign-owned enterprises [WFOEs] or joint ventures [JV]) were only permitted to import raw materials and semi-manufactures for their own use and to export self-manufactured products directly. In this sense, FIEs generally were not permitted to trade in other products, including products manufactured by their parents and affiliates, causing inefficiencies by compelling the use of oligopolistic trading intermediaries.

But on 16th April 2004, the new Measures for Foreign Investment in Commerce (MFIC) was promulgated by Ministry of Commerce of the People's Republic of China (MOFCOM). According to the Measures, Foreign-invested commercial enterprises (FICEs, one type of FIE) can distribute imported and locally manufactured products through their own wholesale, retail and franchise systems and to provide a host of related services, including storage, warehousing and garage services, inventory management, repairs, maintenance, training and delivery after December11, 2004. It's considerable progress in the implementation of China's WTO commitment to allow foreign-invested enterprises (FIEs) to exercise trading and distribution rights.

Overall, Foreign companies now may choose one of two ways to acquire trading and distribution rights. They can set up a new, standalone foreign-invested commercial enterprises (FICE) or apply to expand the business scope of an existing FIE. Existing manufacturing FIEs, free-trade zone trading FIEs, investment companies, and regional headquarters FIEs may all apply to expand their business scopes.

Following are the updated policy of trading and distribution rights:

Trading Rights Opening Time From 1st July 2004, FIEs can obtain Import/Export license
Business Scope Import/Export product or technology
National treatment Have the national treatment on "Internal sale"; "Offering for sale"; "Purchase"; "Transportation"; "Distribution"; "Using" or "Directly access to end-users"
Investment Capital Minimum 1 million RMB (around 140,000USD$)
Distribution Rights Opening Time From 11th Dec, 2004 all the restriction removed
Business Scope Wholesale, retail and franchise
Still under restriction Books, newspapers, journals, pharmaceuticals, chemical fertilizers, pesticides, mulching films, processed and crude oil, motor vehicles, grain, vegetable oil, sugar and cotton
Investment Capital Minimum 500,000 RMB (around 65,000USD$) for the wholesale; Minimum 300,000 RMB (around 38,000USD$) for the retail

Details of establishing a FICE under the Measures

1. Definition of a Foreign Invested Commercial Enterprise (FICE) under the Measures

A foreign invested commercial enterprise means a foreign invested enterprise, which engages in following areas:

  • Agency with commission: selling other owned goods and providing related services by sales agency of goods, broker, or auctioneer or other wholesaler on the basis of contractual relationship.
  • Wholesale: selling goods and providing related services to retailer, industrial user, commercial user, organizational user and other wholesaler.
  • Retail: selling goods and providing related services to individual or collective consumer in fixed locations or by means of television, telephone, internet and automat.
  • Franchise: licensing of trademark, trade name and business mode by entering into a contract with others for the purpose of returns and license fee.

2. Business scope of a FICE

  • A FICE in retail can engage in following businesses upon approval: Retail/Import of self-operation goods/Purchase and export of domestic goods/other related services.
  • A FICE in wholesale can engage in following businesses upon approval: Wholesale/Agency with commission/Import and Export/ other related services.

3. Requirements for establishing a FICE

  • Minimum registered capital shall be in compliance with respective requirements in company law of PRC.
  • Other requirements with respect to registered capital and investment amount of FIE shall be satisfied (registered capital for a FICE shall be RMB 500,000.00 according to company law and Rules for the Implementation of the Law of the People's Republic of China on Foreign-Capital Enterprises).
  • The general period of operation of a FICE shall not exceed 30 years, and the general period of operation of FICE located in the middle and western region shall not exceed 40 years.

Documents Required & Registration Procedures of FICE Condition(s):

Wholesale FICE's minimum capital: RMB 500,000
Retail FICE's minimum capital: RMB 300,000
Obtaining the import/export license and VAT invoice recommended capital: USD$140,000

Documents Required

The documents required for setting up a FICE in China are listed below:

  • 2x Certificate of Incorporations or Equivalent document certified by Chinese embassy or Chinese consulate overseas; [Sample] As for individual investor: The passport copy of Investors need be certified by Chinese embassy or consulate. Double check with us if individual investor is in China currently
  • 2x Bank Reference Letters from investor’s bank to declare a good standing [ Sample ]
  • Passport copy of: (i) Parent company's director (ii) New China Legal Representative and (iii) New China FICE's Supervisor
  • China FICE Legal Representative provides: 6 photos (2 inches size), brief resume [ Sample ]
  • Brief introduction of the foreign investor(s) including name, address and telephone number
  • Registered capital; Business Scope; Custom HS Code of proposed Import/Export products [Codes]
  • Office address, 2x leasing contracts of office in China[ Sample ] , 2x certificate of real estate ownership [Sample], and 2x landlord identification [Individual, Company]
  • Letter of Authorization [ Sample ]
  • The latest annual audit report copy from the parent company which provided by a Certified Public Accountant (CPA) [ Sample ] No need for individual investor

Registration Procedures

Foreign companies are not allowed to directly submit the application documents to the relevant authorities. They must retain a PRC entity that is authorized or permitted by relevant authorities to act as a sponsor. The sponsor will submit all the documents to the examination and approval authority on behalf of the foreign investors. Procedures to set up the Foreign-Invested Commercial Enterprise(FICE) in Shanghai, Beijing China as following:

  • Name registration with State Administration of Industry and Commerce (SAIC)
  • Retail license from Local Economy Committee (if applicable)
  • Certificate of Approval by Ministry Of Commerce or Foreign Economical Cooperation Bureau
  • Apply for Business License with SAIC
  • Company Chops made by Public Security Bureau (PSB)
  • Organization Code License by Technical Supervision Bureau (TSB)
  • Tax Certificate by Tax Bureau
  • Registration and Approval with State Administration of Foreign Exchange (SAFE)
  • Open Foreign Currency and RMB bank account
  • Inject Capital from investor’s overseas bank account
  • Capital Verification Report by Certified Public Accountant (CPA)
  • Apply for Permanent Business License with SAIC
  • Financial Certificate Registration
  • Statistics License Registration
  • Obtain the Import/Export license
  • VAT invoice (Optional)

Fee for FICE Registration (Based in China)

Government Fee:

Procedures Government Fee(RMB)
Company name approval 80
Company approval 10
Company bulletin 4000
Company registration(base on USD$200,000 capital) 1333
Business IC card 280
Company Seal 500
Organization Code license 228
RMB currency a/c IC card 250
Foreign currency a/c IC card 250
Tax registration 100
Import/Export license and VAT invoice 3000
Custom registration 175
Check capital(base on USD$200,000 capital) 3000
Statistical license 20
Finance license 20
Total: 13246RMB (~USD$1658)

DISCLAIMER: The official registration filing fees above are subject to change without notice. We get our information directly from the government. We do our best to keep our web site up to date. The accurate amount will be billed separately with supporting official receipt issued by the Chinese Government.

Service Fee:

FICE Registration Service Fee: RMB 26,000