Early in 2000, the Provisional Measures on Administration of the Examination and Approval of Wholly Foreign-Funded Shipping Companies was issued in China. As things have changed much in Chinese shipping market during the following 11 years, the Circular on Strengthening the Administration of the Examination and Approval of Wholly Foreign-Funded Shipping Companies has been announced in August this year. It says that the market access conditions and scope of business for wholly foreign-funded shipping companies will be appropriately relaxed.
Some staff in charge from the MOT says that according to the provisions, so long as a foreign shipping company can prove stable cargo or passenger source in the port city where a wholly foreign-funded shipping company is to be set, it can obtain the approval. To prove the “stable cargo source”, local shipping agency or freight forwarder can provide materials and proof documents. Admittedly, it is a truism that for the sake of cost and management, a shipping company will not risk establishing a wholly foreign-funded shipping company in any place without stable cargo source.
“The modified Circular has nothing to do with inland waterway transport, where a wholly foreign-funded shipping company is only allowed to provide port based services to international shipping services engaged by their parent company, and domestic shipping business is banned.” The same staff clearly stated. The restriction policies on foreign shipping company getting involved in Chinese inland waterway transport will not be altered in a short run.
Release market access requirements and business scope appropriately of shipping service companies
1. If necessary, foreign shipping companies can directly invest and set up their wholly-funded shipping companies in China, and skip to stand representative offices firstly.
2. Foreign shipping companies are allowed to establish their wholly-funded shipping companies in external opening ports where there are stable cargo or passenger source. Unless the registered capital must be in full payment and after operation though one year, companies can be followed in other external opening ports with sufficient cargo and passenger supply as well.
3. An approved wholly foreign-funded shipping company or branch may engage in the following business for the vessels owned and operated by its parent company: cargo collection, issuing hills of lading, issuing passenger tickets, settlement of shipping fees and the entry into service contracts.
Definite the procedure to apply for and set up a wholly foreign-funded shipping company
1. A foreign shipping company shall submit applications to the MOT, and hand in application documents to the transport authorities of the province where new company proposes to be established. Upon receiving all application documents, the mentioned authorities will make examination and then report their conclusions to the MOT within seven working days.
2. The MOT will finish document examination within 20 working days upon receiving the application. If the application documents are true and complete, the application will be approved and official reply will be issued then; for those application documents untrue or incomplete, approval will not be issued, while the applicant will be informed by written form about the reasons. Once approved, the applicant can apply for going through the procedure of new company establishment to the local provincial commerce authorities, supported by the reply from the MOT as well as other necessary documents.
Source: CHINA SHIPPING GAZETTE