Member Article

The Ministry of Commerce (“MOFCOM”) promulgated the Measures for the Administration of International Freight Forwarding Enterprises with Foreign Investment on 19 October 2005. The Measures, which entered into force on 11 December 2005, repeal regulations of the same name and their supplementary regulations issued in 2003. WTO obligations The Measures implement China’s WTO obligation to allow wholly foreign-owned investment in the international freight forwarding sector four years after China joined the WTO, i.e. from 11 December 2005. International freight forwarding enterprises with foreign investment (“freight forwarding FIEs”) may from this date onward take the form of wholly foreign-owned enterprises as well as of Chinese foreign equity or cooperative joint ventures. MOFCOM is responsible for the approval and administration of freight forwarding FIEs engaged in international express delivery services, while the provincial level commerce authorities are in charge of other types of freight forwarding FIEs. Establishment The Measures do not impose any qualification requirements on the foreign or Chinese investors in freight forwarding FIEs. The Measures lower the minimum registered capital requirement for the establishment of a freight forwarding FIE to the same level as those applicable to similar companies with only domestic investment. The Regulations of the People's Republic of China for the Administration of the International Freight Forwarding Industry of 1994 set forth the following minimum registered capital requirements for domestic international freight forwarding companies: • those engaging in ocean international freight forwarding services shall have a minimum registered capital of RMB 5 million; • those engaging in air international freight forwarding services shall have a minimum registered capital of RMB 3 million; • those engaging in land international freight forwarding or international express delivery services shall have a minimum registered capital of RMB 2 million. Those engaging simultaneously in more than one of the above services shall satisfy the higher minimum registered capital requirements. Business Freight forwarding FIEs are allowed to conduct some or all the business services detailed below: • booking (leasing of ships, and chartering of airplanes and shipping space), consignment, warehouse storage and packing; • supervising loading and unloading, container grouping and unpacking, allocating goods, providing transit as well as related short-distance transport services; • arranging customs declarations, customs examination and inspection, and insurance; • filling out of relevant documents, payment of transportation fees, settlement of accounts and miscellaneous freight charges; • agency business of international exhibits, personal items and transportation of transit cargoes; • arranging international multimodal transportation and container transport (including the packing of containers); • international express delivery (excluding personal mail and postal services for official documents of provincial or higher branches of the party, government or military); and • consultancy and other international forwarding agency business. Other provisions Freight forwarding FIEs which have been in operation for one year and have paid up their entire registered capital may apply to set up branch companies in other places in China.