Regulation of Guangdong Province on the Foreign Processing and Assembling Business

Regulation of Guangdong Province on the Foreign Processing and Assembling Business

Announcement of the Standing Committee of the People's Congress of of the Tenth People's Congress of Guangdong Province No.31

July 29, 2004.

(Adopted at the 2nd meeting of the Standing Committee of the 8th People's Congress of Guangdong Province on May 14, 1993, and amended pursuant to the Decision on Amending the Relevant Administrative Licensing Clauses in Such Ten Regulations as the Regulation of Guangdong Province on the Foreign Processing and Assembling Business as adopted at the 12th meeting of the Standing Committee of the 10th People's Congress of Guangdong Province

Article 1 For the purpose of promoting the development of foreign processing and assembling businesses of this province and strengthening the administration thereof, the present Regulation is formulated pursuant to the relevant state provisions and the actual situation of this province.

Article 2 The present Regulation shall be applicable to those foreign processing and assembling businesses that are carried out by enterprises (excluding foreign-funded enterprises) as legally established within this province.

Article 3 The foreign processing and assembling businesses shall refer to those businesses that the foreign parties provide raw materials, accessories, parts, components and packing materials (hereinafter referred to as materials and parts) for processing or assembling by Chinese factories in accordance with the requirements of foreign parties, and that all finished products shall be delivered to foreign parties for sale, and Chinese factories shall charge fees for the processing and assembling.
The original plants and facilities may be used for carrying out foreign processing and assembling businesses, or the foreign party may gratuitously or non-gratuitously provide facilities or capitals for building plants to carry out the business. In the case of the non-gratuitous method, the Chinese party shall repay it with the processing and assembling fees.

Article 4 The foreign economic relations and trade administrative departments at all levels shall be in charge of the foreign processing and assembling businesses and the implementation of the present Regulation.
The customs, industry and commerce, finance, taxation, foreign exchange, bank and other relevant departments shall be separately responsible for supervising and administrating the foreign processing and assembling businesses pursuant to the relevant state provisions and the present Regulation.

Article 5 A written agreement (contract) shall be concluded for carrying out the foreign processing and assembling businesses.
Chinese laws and regulations shall be abided by for concluding the agreements (contracts), and the social public interests of our country may not be harmed.

Article 6 Any of the following methods may be adopted for undertaking the foreign processing and assembling businesses:
(1) Any productive enterprise that has the management right of import and export may directly sign an agreement (contract) with a foreign party;
(2) An enterprise that has not the management right of import and export may sign an agreement (contract) with a foreign party together with a foreign trade company, industry and trade company or foreign processing and assembling service company; or
(3) A foreign trade company, industry and trade company or foreign processing and assembling service company may sign an agreement (contract) with a foreign party, and organize factories for production.

Article 7 Both parties to the agreement shall provide with each other an identification card of the signer, a certificate of authorization (letter of attorney) issued by the company (enterprise) or any other economic organization, a registration certificate of the enterprise, a certificate of financial standing and other relevant materials.

Article 8 An agreement (contract) shall include:
(1) Names, registered addresses and bank accounts of the parties to the agreement (contract), and names, nationalities and posts of legal representatives;
(2) Objects of the agreement (contract), and rights, obligations and legal liabilities of all parties;
(3) Names, brands, specifications, qualities, quantities, prices, packing requirements, acceptance standards and procedures of supplied materials and parts by the foreign party;
(4) Names, specifications, qualities, quantities, norm quota of raw material consumption, proportion of wasters and defective products, trial production period and batches, acceptance standards and procedures, brands to be used and packing requirements of processed and assembled products;
(5) Technologies, patents and technical services as provided by the foreign party, and names, models, specifications, producing areas, performance parameters, degree of depreciation, qualities, quantities, prices, payment methods, installation, trial production progresses, acceptance standards and procedures of facilities that are provided by the foreign party;
(6) Transport methods, and place, time and method of delivery;
(7) Computing methods and payment conditions of processing and assembling fees ( settlement bank, currencies adopted, payment methods and guaranty conditions);
(8) Insurances;
(9) Liabilities for breach of contract;
(10) Force majeure;
(11) Arbitration or other methods for disposing disputes;
(12) Term and conditions for effectiveness, modification, cancellation and termination of the agreement (contract)
(13) Date and place for signing the agreement (contract); and
(14) Other matters required by both parties to be stipulated.

Article 9 The agreements (contracts) shall be examined and approved according to the division of functions of various levels as prescribed by the People's Government of Guangdong Province for examining and approving the use of foreign capitals.
The competent departments of foreign economic relations and trade of the county or city or the departments and bureaus directly under the Province shall, on the basis of the enterprises' affiliation, be responsible for examining and approving the agreements (contracts) of foreign processing and assembling projects for which the foreign parties gratuitously provide or donate production equipment and materials to fit out factories, and which don't involve the national and provincial comprehensive balance.
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