Commission Agents’ and Wholesale Trade Services

• By December 11, 2002, foreign service suppliers will be permitted to provide commission agents’ and wholesale trade services of all imported and domestically produced products through minority foreign-owned or 50-50 joint ventures, with the following exceptions:

• salt and tobacco;

• books, newspapers, magazines, pharmaceutical products, pesticides, and mulching films (restriction to be lifted by December 11, 2004);

• chemical fertilizers, processed oil, and crude oil (restriction to be lifted by December 11, 2006). 

• By December 11, 2003, all geographic and quantitative restrictions will be lifted and foreign majority ownership will be permitted. 

• By December 11, 2004, these services will not be subject to market access restrictions, except for the distribution of chemical fertilizers, processed oil, and crude oil, which will become unrestricted by December 11, 2006.

• Foreign service suppliers may provide retail services (excluding tobacco) through joint ventures, subject to geographic restrictions. By December 11, 2003, foreign majority control will be permitted.

• Geographic Restrictions:

• Prior to China’s accession, foreign service suppliers could form joint ventures to provide retail services in the five Special Economic Zones (Shenzhen, Zhuhai, Shantou, Xiamen, and Hainan) and six cities (Beijing, Shanghai, Tianjin, Guangzhou, Dalian, and Qingdao).

• In Beijing and Shanghai, no more than four joint venture retailing enterprises are permitted. In each of the other cities, no more than two joint venture enterprises may be established. Two enterprises out of the four established in Beijing may set up their branches in Beijing.

• In addition, joint venture retailing enterprises may be established in Wuhan and Zhengzhou. 

• By December 11, 2003, all provincial capitals as well as Chongqing and Ningbo will also be open to joint venture retailing enterprises. 

• Foreign service suppliers may engage in the retailing of all products with the following exceptions: 

• books, newspapers, and magazines (restrictions to be lifted by December 11, 2002);

• pharmaceutical products, pesticides, mulching films, and processed oil (restrictions to be lifted by December 11, 2004);

• chemical fertilizers (restriction to be lifted by December 11, 2006). 

• By December 11, 2004, these services will not be subject to market access restrictions (this includes the removal of all geographic and quantitative restrictions), except for (1) the distribution of chemical fertilizers, which will become unrestricted by December 11, 2006, and (2) chain stores that sell products of different types and brands from multiple suppliers with more than 30 outlets. Foreign majority ownership of these chain stores will not be permitted if such stores distribute motor vehicles, any of the products listed above, or those products listed in Annex 2A of the Protocol of China’s WTO accession. The equity limitation pertaining to distribution motor vehicles will be lifted by December 11, 2006. 

• Market access and national treatment restrictions on franchising and wholesale or retail trade services away from a fixed location will be lifted by December 11, 2004.

• Foreign-invested enterprises are permitted to distribute their products manufactured in China –  including those excepted products noted above – and provide the full range of related subordinate services, including after-sales services (as defined in Annex 2 to the Schedule of Specific Commitments on Services). Similarly, foreign service suppliers are permitted to provide those subordinate services for the products they distribute.

• Managers, executives, and specialists of a representative office, branch, or subsidiary in China, temporarily moving as intra-corporate transferees, will be permitted an initial stay of three years.

• Managers, executives, and specialists of foreign-invested enterprises in China will be granted a long-term stay permit as stipulated in the terms of contracts concerned or an initial stay of three years, whichever is shorter.

• Service salespersons who are not based in China, and who meet certain other conditions set out in China’s services schedule, are limited to a 90-day stay.

• China reserves the right to place market access and national treatment restrictions on the cross-border supply of commission agents’ and wholesale trade services as well as retailing services, except for mail order services.

• The cross-border supply of franchising and wholesale or retail trade services away from a fixed location is not subject to market access restrictions and is accorded national treatment.

• The provision of all of the above distribution services outside of China is not subject to market access restrictions and is accorded national treatment. 

• The conditions of ownership, operation, and scope of activities for an existing foreign service supplier, as set out in the supplier’s contract or shareholders’ agreement or in a  license establishing or authorizing the supplier’s operation or supply of services, will not be made more restrictive than they were on December 11, 2001.

• China made other specific commitments that relate to distribution, including transport services and freight forwarding services (see separate fact sheets on Transportation and Related Services and Courier and Packaging Services).