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TABLE OF CONTENTS CHAPTER I GENERAL PRINCIPLES CHAPTER II CONDITIONS FOR ESTABLISHMENT CHAPTER III EXAMINATION, APPROVAL AND REGISTRATION PROCEDURES CHAPTER IV ANNUAL EXAMINATION AND CHANGE OF CERTIFICATE CHAPTER V BUSINESS ADMINISTRATION CHAPTER VI PUNITIVE RULES CHAPTER VII SUPPLEMENTARY RULES CHAPTER I GENERAL PRINCIPLES Article 1. In order to safeguard the international freight forwarding market order, strengthen supervision and administration over the international freight forwarding industry and promote the healthy development of China's international freight forwarding industry, with the approval of the State Council, this set of detailed implementing rules are hereby formulated in accordance with the Stipulations of the People's Republic of China Concerning the Administration of the International Freight Forwarding Industry (hereinafter shortened as the Stipulations). Article 2. An international freight forwarding enterprise (hereinafter shortened as the international freight forwarder) may act as agent for the consignee or the consignor of import and export cargo, or act as independent dealer engaged in international freight forwarding operations. The international freight forwarder, when engaged in international freight forwarding operations as agent, shall refer to activities whereby, entrusted by the consignee, consignor or other agents of import and export cargo, it handles related operations in the name of its clients or in its own name, and collect agent fees or commissions. The international freight forwarder, when engaged in international freight forwarding operations as independent operator, shall refer to activities whereby it accepts the entrustment of the consignee, consignor or other agents of import and export, signs and issues transport documents, honors transport contracts and collects transport fees and service charges. Article 3. The name and logo of the international freight forwarder shall comply with the State's relevant stipulations, accord with its operations and be able to demonstrate its sectoral characteristics. Its name shall contain such relevant wordings as "freight forwarding", "transport services", "consolidation" and "logistics". Article 4. The wording "scope of authorization" contained in Section Two, Article 4 of the Stipulations shall mean that, with the entrustment of the Ministry of Foreign Trade and Economic cooperation, competent foreign economic and trade authorities of the people's government of a province, autonomous region, municipality directly administered by the central government, special economic zone or city separately listed on the budgetary plan (hereinafter shortened as competent local foreign trade authorities) are responsible for the exercise of supervision and administration over the international freight forwarding industry in their respective jurisdiction (the MOFTEC and competent local foreign trade authorities shall be generally referred to as competent sectoral authorities). Such a scope of authorization includes: preliminary examination of the application of an enterprise for dealing in an international freight forwarding project, the annual examination and license-change examination of international freight forwarders, business statistics, professionals training, guidance of local sectoral associations in carrying out work as well as working with relevant local administrative authorities in standardizing the operational behaviors of freight forwarders and rectifying the operational order of the international freight forwarding market. Subsidiaries, branches and non-commercial presence in connection with international freight forwarding set up in a city separately listed on the budgetary plan (excluding special economic zones) by enterprises directly affiliated with departments under the State Council or enterprises from other localities, in line with the scope of authorization contained in the above section, shall accept the supervision and administration of provincial foreign trade authorities. Without authorization from the MOFTEC, no other organization shall engage in the examination, approval or administration of the international freight forwarding industry. Article 5. The MOFTEC shall be responsible for training professionals of international freight forwarders and conduct examinations of the qualifications of training organizations. Organizations without approval shall not engage in the qualification training of professionals from international freight forwarders. The conditions for establishment, training contents and training textbooks of training organizations shall be separately stipulated by the MOFTEC. Professionals engaged in international freight forwarding operations shall go through the above-stipulated training. Upon passing the examinations, they shall obtain international freight forwarding qualification certificates. CHAPTER II CONDITIONS FOR ESTABLISHMENT Article 6. The applicant of international freight forwarding operations shall be an organization pertinent to import and export trade or international freight forwarding and have stable sources of cargo. The investor compliant with the above conditions shall account for the majority share in the application project. Article 7. The international freight forwarder shall, according to law, obtain the enterprise legal person qualification of the People's Republic of China. The enterprise's organizational form shall be limited liability company or joint stock company. Any organization with administrative monopoly powers shall be banned from applying for investment in dealing with international freight forwarding operations. Carriers and other enterprises which may entail unfair competition to the international freight forwarding industry shall not apply for dealing in international freight forwarding operations. Article 8. Operational conditions stipulated in Article 7 of the Stipulations include: (1) With at least five professionals who have been dealing in international freight forwarding operations for over three years and whose qualifications have been certified by their previous employers; otherwise, they shall obtain the qualification certificates issued by the MOFTEC according to Article 5 of this set of detailed rules; (2) With a fixed business venue; property rights certificates shall be presented for self-owned housing and venues; and lease contracts shall be presented for leased housing and venues; (3) With necessary operational facilities, inclusive of a certain amount of telephones, fax machines, computers, short-distance transport tools, loading and unloading equipment, packaging equipment and etc.; and (4) With a stable source of import and export cargo. This shall mean that the amount of import and export cargo in the present area, that the freight forwarding industry has conditions and potentials for further development, and that the application enterprise can get a sufficient source of cargo. Article 9. If the scope of international freight forwarding business operations application for by the enterprise includes the inter-modal transport operations, in addition to meeting with the conditions contained in Article 7 of the Stipulations and in Article 6, 7 and 8 of this set of detailed rules, the following conditions shall also be met with: (1) Having been dealing in the relevant operations listed in Article 32 of this set of detailed rules for over three years; (2) With corresponding domestic and international agent networks; and (3) With international freight forwarding bills of lading registered for file purposes with the MOFTEC. Article 10. The international freight forwarder, when applying for establishing each subsidiary, shall accordingly expand its registered capital by RMB500,000 . If the enterprise's registered capital has exceeded the minimum amount contained in the Stipulations (RMB5 million for sea transport, RMB3 million for air transport and RMB2 million for land transport and express delivery), then the excess amount can be used as the expanded capital when establishing subsidiaries. Article 11. The subsidiaries referred to in the Stipulations and this set of detailed rules shall refer to company branches. CHAPTER III EXAMINATION, APPROVAL AND REGISTRATION PROCEDURES Article 12. To deal in international freight forwarding operations, it is imperative to obtain the International Freight Forwarder Approval Certificate of the People's Republic of China (hereinafter referred to as the Approval Certificate) issued by the MOFTEC. The organization applying for dealing in international freight forwarding operations shall submit the following documentation: (1) The application form, including the name of the investors, application qualification explanations and the application project; (2) The feasibility study report, including basic information, qualification explanations, existing conditions, market analysis, business forecasts, establishment program, economic budget and development budget; (3) Enterprise legal person business licenses (Photostat copies) of the investors; (4) The resolutions of the board of directors, the shareholders meeting or the general assembly of shareholders; (5) The enterprise's articles of association (or draft); (6) Information of major professionals (inclusive of educational experience, majors of study, work experience, qualification certificates); (7) The certificates of credit standing (investment inspection reports of various investors issued by accounting firms); (8) The agreement of investment contribution of investors; (9) The resume of the legal person representative; (10) The format of the international freight forwarding bill of lading (transport document); (11) The pre-approval letter for the name of the enterprise (Photostat copy, issued by the administrative authorities for industry and commerce); (12) The international freight forwarder application form 1 (annex form 1); and (13) Transaction terms. With the exception of Items (3) and (11), the above-mentioned documents shall all be submitted in the original texts and stamped with official seals. Article 13. Competent sectoral authorities shall examine the application project and the examination shall cover: (1) The necessity of establishing the project; (2) The authenticity and integrity of the application documents; (3) The qualification of the applicant; (4) The reputation of the applicant; and (5) The qualification of its professionals. Article 14. After examining the application project, local foreign trade authorities shall submit the preliminary examination opinion (including the scope of business, locality of operation and investors' investment ratios and etc. recommended for approval) and all the application documents, in line with the timing requirements provided for in Section One, Article 11 of the Stipulations. Article 15. In case of any of the following scenarios, the MOFTEC shall reject the application and explain why: (1) The documentation is incomplete; (2) The submission procedures are not up to requirements; or (3) The MOFTEC has notified the suspension of handling applications for dealing in international freight forwarding operations. Article 16. In case of any of the following scenarios, upon investigation and verification, the MOFTEC shall give a reply of disapproval: (1) The applicant is not qualified for dealing in international freight forwarding operations; (2) Within five years before submission, the application had been punished by State administrative authorities for industry and commerce due to illegally dealing in forwarding activities; (3) The applicant, on purpose, conceals or misrepresents submission information; or (4) Other scenarios incompliant with the relevant principles provided for in Article 5 of the Stipulations. Article 17. If the application receives the affirmative reply from the MOFTEC, within sixty days of the reply, it shall take its revised enterprise articles of association (original copy) and, upon presentation of the introductory letter from local foreign trade authorities, go to the MOFTEC and obtain the approval certificate. Article 18. One year after establishment and dealing in international freight forwarding operations, the enterprise may apply for expansion of its business scope or locality of business. Local foreign trade authorities, after examination, shall make submission to the MOFTEC in line with the procedures provided for in Article 11 of the Stipulations. One year after establishment and dealing in international freight forwarding operations, on the condition of having formed a certain business scale, the enterprise may apply for establishing branches or subsidiaries. The enterprise shall present the opinion of the local foreign trade authorities of the place where the enterprise is located (in case of Beijing-based enterprises directly affiliated with departments under the State Council, the letter of opinion solicitation from the MOFTEC), make submission to the local foreign trade authorities of the place (excluding cities separately listed on the budgetary plan) where the branch or subsidiary is to be located; in case of a city separately listed on the budgetary plan, submission shall be made to the MOFTEC for approval in line with the provisions of Article 14 of this set of detailed rules. The business scope of the branch or subsidiary shall not go beyond that of its parent company or head office. When setting up non-commercial presence, an international freight forwarder shall make submission to the local sectoral authorities of the place where the presence is located for file purposes and accept administration. Article 19. In case that an enterprise files an application in line with Sections One and Two of Article 18 of this set of detailed rules, in addition to submitting the relevant documentation provided for in Article 12 of this set of detailed rules, the following documents shall also be submitted: (1) The previous reply on international freight forwarding operations (Photostat copy); (2) The approval certificate (Photostat copy); (3) The business license (Photostat copy); (4) The international freight forwarder application form 2 (annex form 2; for setting up a branch, annex form 1); (5) The operational situation report (inclusive of network construction); (6) The resumes of the legal person representative or the executive of the subsidiary; and (7) The annual examination registration form for the previous year. Article 20. For an enterprise to apply for establishing a subsidiary, the application shall, upon receipt of the affirmative reply, within ninety days as from the date of the reply, present a legally valid investment inspection report as well as the revised enterprise articles of association (the original copy) after the head office has expanded the registered capital according to the provisions of Article 10 of this set of detailed rules and the introductory letter from local foreign trade authorities of the place where the subsidiary is to be located before going to the MOFTEC to obtain the approval certificate. Article 21. Should the application fail to go through certificate-obtaining procedures before the deadline or fail to go into operation with no justifiable reasons after 180 days as from the date of obtaining the approval certificate, with the exception of approved postponement, its qualification of international freight forwarding operations shall automatically go out of force. Article 22. The MOFTEC may, based upon such situations as sectoral development and layout of the international freight forwarding industry, decide to suspend the handling of applications for international freight forwarding operations or take restrictive measures The decisions made by the MOFTEC in line with the above section shall be pronounced. Article 23. When the international freight forwarder makes the following changes, it shall submit an application to the MOFTEC for examination and approval and obtain a different approval certificate: (1) Name of the enterprise; (2) Type of the enterprise; (3) Equity relationship; (4) Decrease in the registered capital; (5) Scope of business; (6) Locality of operation. In case of the following changes, after submitting an application to the MOFTEC for file purposes, a different approval certificate can be directly obtained: (1) Mailing address or operation venue; (2) Legal representative; (3) Increase in the registered capital; (4) Affiliation with authorities. Article 24. The international freight forwarder shall present the approval certificate when it goes through registration formalities with administrative authorities for industry and commerce and the custom service. No organization which has not obtained the approval certificate shall, in its business license, use the expression "international freight forwarding operations" or words similar or identical with its meaning. CHAPTER IV ANNUAL EXAMINATION AND CHANGE OF CERTIFICATE Article 25. The MOFTEC shall institute an annual examination and certificate change system for international freight forwarders. Article 26. The MOFTEC shall be responsible for the annual examination of Beijing-based enterprises directly affiliated with departments of the State Council as well as the change of certificates of international freight forwarders throughout the nation. Local foreign trade authorities shall be responsible for the annual examination of international freight forwarders within their respective jurisdiction (including the branches and subsidiaries established by enterprises directly affiliated with the departments of the State Council and by enterprises from other localities. Article 27. The international freight forwarder shall, before the end of March each year, submit the annual examination registration form (annex form 3), the investment inspection report and the business license (Photostat copy) in order to apply for going through the annual examination. The focus of the annual examination work shall be to examine the enterprise's operations and their compliance and implementation of the Stipulations and other laws, regulations and decrees. After the enterprise has passed the annual examination, the competent sectoral authorities shall add the seal of "passing the annual examination" to its approval certificate. Article 28. The validity period of the approval certificate shall be three years. The enterprise shall, 60 days before the expiry of the validity of the approval certificate, submit an application with local foreign trade authorities for certificate change. When applying for change of the approval certificate, the enterprise shall submit the following documentation: (1) The registration form of certificate change application (annex form 4); (2) The approval certificate (the original copy); and (3) The business license (Photostat copy). Article 29. If the enterprise passes for three years in a row the annual examination, local foreign trade authorities shall, 30 days before the expiry of the validity of the approval certificate, submit an application with the MOFTEC to obtain a changed approval certificate. Article 30. When the international freight forwarder applies for certificate change, competent sectoral authorities shall examine its operations qualification and operational situation and refuse to grant approval certificate change in case of any of the following scenarios: (1) Failure to comply with the provisions of Article 27 of this set of detailed rules; (2) Failure to punctually go through certificate change formalities; (3) Transfer of equity stakes without authorization; or (4) Change of such major items as the enterprise's name, operation venue and registered capital without authorization and failure to make submission for file purposes in line with relevant provisions. Article 31. If, for its own reasons, the enterprise fails to apply for change of the approval certificate before the deadline, its qualification of international freight forwarding operations shall automatically go out of force as from the date when the validity of the approval certificate expires. The MOFTEC shall make a pronouncement of the above situation. Administrations for industry and commerce shall write off the above enterprise or order it to go through formalities for change in business scope. Should an enterprise, which has lose its qualification to deal in international freight forwarding operations, desire to continue with this business line, it shall file another application in compliance with relevant provisions. CHAPTER V BUSINESS ADMINISTRATION Article 32. The international freight forwarder may act as agent or independent operator when dealing in business operations. Its business scope includes: (1) Canvassing cargo, booking space (including ship renting, plane chartering and ship space booking), consignment for shipment warehousing and packaging; (2) Supervision of cargo loading and unloading, container stuffing, distribution, transit, and related short-distance transport services; (3) Declarations to the custom service, the commodity inspection service and insurance purchases; (4) Making, signing and issuing relevant documents and bills, payment of transport fees, settlement and payment of miscellaneous charges; (5) International exhibits, personal articles and goods in transit agency; (6) Inter-modal transport, consolidation (including container stuffing); (7) International express delivery (excluding private correspondence); and (8) Consulting and other international freight forwarding operations. Article 33. The international freight forwarder shall engage in operations in accordance with the business scope and locality as listed on the approval certificate and the business license. Article 34. The MOFTEC may, in light of the industry's development, entrust the sectoral association to work out standard international freight forwarding terms and conditions based upon internationally-accepted practices, which can be invoked by the international freight forwarder with no requirement of the consent of the MOFTEC. The international freight forwarder can also formulate its own terms and conditions; however, they may be used only after they have been submitted to the MOFTEC for file purposes. Article 35. The international freight forwarder shall submit business statistics to the competent sectoral authorities and be responsible for the authenticity of statistical figures. The methods of formulating and submitting these business statistics shall be stipulated by the MOFTEC in other provisions. Article 36. The international freight forwarder, when acting as agent who accepts entrustment for handling relevant operations, shall sign a written entrustment agreement with the consignee and the consignor of import and export cargo. When the two parties get involved in a business dispute, the signed written agreement shall be used as the basis for dispute settlement. The international freight forwarder, when acting as independent operator dealing in relevant activities listed in Article 32 of this set of detailed rules, shall sign and issue transport documents and bills to the owner of cargo. Should a business dispute occur with the owner of cargo, the signed transport documents and bills shall be used as the basis for dispute settlement. When a business dispute occur with the actual carrier, the transport contract signed with the actual carrier shall serve as the basis for dispute settlement. Article 37. The international freight forwarding bill of lading used by the international freight forwarder shall be subject to a registration and numbering system. Each and every international freight forwarding bill of lading signed and issued inside the Chinese territory shall be submitted by the international freight forwarder to the MOFTEC for registration and addition of the approval numbering on the bill. The international freight forwarder shall strengthen management of its international freight forwarding bills of lading. Lending shall be banned. In case of loss or version revision, submission shall punctually be made to the MOFTEC for file purposes. The transfer of an international freight forwarding bill of lading shall following the following provisions: (1) Straight bill of lading: transfer shall be banned; (2) Order bill of lading: to be transferred after endorsement in full or endorsement in blank; (3) Bearer bill of lading: unnecessary to be endorsed before transfer. The international freight forwarding bill of lading shall be subject to the system of liability insurance. Liability insurance shall be covered by an insurance company approved by the People's Bank of China. Article 38. When the international freight forwarder, acting as independent operator, is responsible for honoring, or organizing the honoring of, the inter-modal transport contract, the period of its liability starts with receipt of cargo and ends with delivery of cargo. The basis for undertaking liabilities, maximum amount of liability, exemption conditions and preconditions for losing liability restrictions shall be specified in relevant legal provisions. Article 39. The international freight forwarder shall use the name of enterprise and the code number of enterprise when dealing in international freight forwarding operations and print the name of enterprise and the code number of enterprise in major office stationery and documents and bills. Article 40. The international freight forwarder shall not use the registered capital within the specified scope for other purposes. Article 41. The international freight forwarder shall not transfer, or transfer in a distorted form, the international freight forwarding operation right; it shall not permit other organizations or individuals to deal in international freight forwarding operations in the name of the enterprise itself or its sales offices; it shall not sign any agreement with any organization without the international freight forwarding operation right aimed at enabling the latter, either separately or in conjunction with the former, to deal in international freight forwarding operations, collect agent fees, commissions or obtain other interests. Article 42. As agent, the international freight forwarder may collect agent fees from the owner of cargo and obtain commissions from the carrier. The international freight forwarder shall not, in any form, share commissions with the owner of cargo. As independent operator engaged in relevant operations listed in Article 32 of this set of detailed rules, the international freight forwarder shall collect fees from the owner of cargo in accordance with relevant tariff rates. In this situation, it shall not accept commissions from the actual carrier. Article 43. The China representative office of a foreign enterprise (including that from Hong Kong, Macao, Taiwan districts; applicable hereinafter) can only engage in non-directly-commercial operations in the form of representing that enterprise in making business contacts, introducing products, conducting market research and technical exchanges within its scope of business. Article 44. The international freight forwarder shall, upon Presentation of the approval certificate, obtain and purchase invoices from the tax authorities and use them in accordance with the stipulations of the tax authorities. Article 45. The international freight forwarder shall not engage in operational activities by issuing false advertisements, sharing commissions, returning rebates or other unfair competition methods. CHAPTER VI PUNITIVE RULES Article 46. Should the international freight forwarder violate the provisions of Articles 19 and 21 of the Stipulations and Section Two of Article 23, Article 34 and Article 35 of this set of detailed rules, the MOFTEC shall authorize local foreign trade authorities to issue a warning and an order to make corrections within a specified period of time; if no correction is made within this period, local foreign trade authorities may recommend that the MOFTEC revoke its approval certificate. Article 47. Should the international freight forwarder violate the provisions of Section Two of Article 17 and Articles 20 and 22 of the Stipulations and Section Three of Article 18, Section One of Article 23, Articles 24, 27, 39, 40, 41, 42, 43, 44 and 45, with the authorization of the MOFTEC, local foreign trade authorities may, pending upon degrees of violation, mete out punishments such as issuing a warning and ordering business suspension for rectification. As regards a serious violator, a recommendation can be submitted to the MOFTEC that it revoke its approval certificate. The enterprise which has been punished in the form of having its approval certificate revoked shall go to administrative authorities for industry and commerce for change or cancellation of registration. This enterprise shall not file another application for dealing in international freight forwarding operations within five years. The enterprise that has been punished in the form of suspension of business for rectification shall possess the following conditions before resuming operations: (1) Having conducted rectification; (2) Major persons in connection with violations have been dealt with or punished; and (3) Compliant with other conditions as required by competent sectoral authorities. Upon receipt of the enterprise's application for resumption of business operations and relevant documentation, competent sectoral authorities shall carry out an examination and decide whether to consent to its resumption of business activities. Article 48. With regard to any organization which, in violation of the provisions of the Stipulations and this set of detailed rules, engages in international freight forwarding operations without authorization, competent sectoral authorities shall ban its illegal operating activities; administrative authorities for industry and commerce shall, according to relevant laws and administrative regulations, mete out punishments; and the competent sectoral authorities shall make a pronouncement of this. After pronouncement, local foreign trade authorities shall make a submission to the MOFTEC for file purposes. That organization shall not independently engage in or participate in international freight forwarding operations within five years. CHAPTER VII SUPPLEMENTARY RULES Article 49. The international freight forwarders may, proceeding from the voluntary principle, establish the international freight forwarding association (hereinafter referred to as the sectoral association) according to law. Article 50. The sectoral association shall be a non-profit non- governmental mass organization aimed at serving its members and carrying out work in line with its articles of association under the supervision and guidance of the competent sectoral authorities. Its objectives are to promote the member enterprises to forge horizontal links, exchange information, increase mutual collaboration; to encourage and supervise the member enterprises to operate according to law and standardize their competition, represent according to law the sectoral interests, safeguard the members' legitimate rights and interests, assist the relevant government authorities in strengthening sectoral administration and facilitating the sector's healthy development. Article 51. The sectoral association shall, according to the provisions of Article 34 of this set of detailed rules, formulate the international freight forwarding terms and conditions, which will be used by the whole sector after obtaining approval from the MOFTEC. Article 52. The Stipulations and this set of detailed rules shall be applicable to foreign-invested international freight forwarders; however, if otherwise provided for in laws, regulations and decrees pertinent to foreign-invested enterprises, the latter shall prevail. Article 53. The MOFTEC shall be responsible for interpreting this set of detailed rules. Article 54. This set of detailed rules shall go into force as from the date of promulgation. Annex: omitted. |
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