China sets transport investment rules

China sets transport investment rules

New rules taking effect June 1 will allow overseas maritime and related businesses to make direct investments in China's transport sector, but there are a number of conditions.

Foreign investors will be allowed to provide international shipping services, international agency or management services, international container freight station and container yard services through a Chinese-foreign equity joint venture, or a Chinese-foreign contractual joint venture.

The Ministry of Communications and Ministry of Commerce -- which must approve all foreign investment in China -- said foreign investors wishing to provide international maritime warehousing services or routine services for vessels owned or operated by the investor can operate in three ways: a wholly foreign-owned enterprise; a Chinese-foreign contractual joint venture, or a Chinese-foreign equity joint venture in China.

To win ministerial approval, a foreign-funded international shipping firm must meet a number of conditions:

-- at least some vessels must carry the Chinese flag

-- the chairman of the board and general manager are to be appointed by the Chinese side

-- foreign investors cannot hold more than a 49 percent interest in the joint venture

In addition, foreign-funded international shipping companies must include at least two Chinese senior executives with three years' experience in international maritime transportation.

Firms must also provide electronic data interchange facilities with ports and customs.

When an application is approved, the successful company must obtain a business license before a permit or registration certificate will be issued by the Ministry of Communications to begin operations.