Legal Service:

(a) Liberalization Measures
‧ Starting from January 2003, geographical and quantitative restrictions on representative offices of foreign legal firms were lifted. The one—firm one—office system has also been scrapped.
‧ The representative offices may not practice Chinese law. The scope of services they may provide covers investment, finance, litigation and arbitration, trade in goods, technology transfer, real estate, intellectual property rights, stocks and bonds, insurance, guarantee, biotechnology, and information engineering.
‧ The representative offices may not employ Chinese lawyers, and the legal assistants they employ may not provide legal service to clients.
‧ The representatives of these representative offices may not work for more than two offices at the same time.
‧ Representatives must reside in China for at least six months each year, or registration will be denied in the following year.
‧ Fees charged by the representative offices for legal services must be settled within China.
‧ The representative offices are allowed to enter into long—term business relationship with Chinese law firms on a contract basis.

(b) Establishment of Representative Offices
Foreign law firms applying for permission to set up representative offices or appoint representatives in China must meet the following requirements:
‧ The applicant must be in legal practice in its home country and has not been punished for any professional misconduct or violation of the code of practice.
‧ The representatives of a representative office must be practicing lawyers and members of lawyers’ associations in their qualifying countries and must have been in practice for not less than two years outside China and have never been punished for any criminal offence, professional misconduct or violation of the code of practice. The chief representative must be in practice for not less than three years outside China and must be a partner or a holder of an equivalent post in the foreign law firm.
‧ The foreign law firm must have the genuine need to establish a representative office in China to offer legal services.
Similar conditions apply to Hong Kong and Macau law firms applying for permission to establish representative offices in China. They are governed by the Regulations on the Management of Representative Offices Set Up by Law Firms of the Hong Kong and Macau Special Administrative Regions in the Mainland.

(c) Application Procedures and Relevant Rules and Regulations:
(i) Application procedures
Foreign law firms must obtain permission from the Ministry of Justice to establish representative offices and post representatives in China. They should first submit application documents to the local provincial, autonomous region or municipal judicial authorities. Upon exam i nation, the documents will be submitted to the Ministry of Justice, which will make a decision on the issuance of professional licenses.
(ii) Relevant rules and regulations
Representative offices and representatives of foreign law firms in China should engage in legal services in accordance with the Regulations on the Management of Representative Offices Set Up by Foreign Law Firms in China, which became effective on 1 January 2002.

Accounting and Auditing Services:

(a) Market Access and WTO Commitments:
‧ Foreign accounting firms currently operate in China in the form of representative offices, JVs, member firms and associate firms.
- Representative firms are resident representative offices established by foreign accounting firms in the early stage of China’s opening of the accounting sector.
- JVs are Sino-foreign contractual joint venture accounting firms formed by foreign accounting firms and their Chinese counterparts.
- Member firms are Chinese accounting firms that have become members of international accounting firms upon agreement.
- Associate firms are Chinese accounting firms which are not yet qualified for becoming a member firm of an international accounting firm and which are cooperating with the international accounting firm in the form of association with the approval of the Ministry of Finance.
‧ Only CPAs licensed by Chinese authorities are allowed to establish partnership or incorporated accounting firms in China. However, existing JV accounting firm s are not limited only to CPAs licensed by Chinese authorities.
‧ Foreign accounting firms can affiliate with Chinese firms and enter into contractual agreements with their affiliated firms in other WTO member countries.
‧ Foreigners who have Passed the Chinese CPA examination will receive national treatment, in other words, they can form partnership or incorporated accounting firms.
‧ Accounting firms that provide taxation and management consultancy services will not be subject to JV restrictions.

(b) Establishment of Accounting Firms:
To establish a Sino—foreign JV accounting firm, the foreign party must meet the following conditions:
‧ Possess advanced professional expertise and sound reputation.
‧ Have an annual income of not less than US$20 million.
‧ Have 200 or more auditing professionals.
‧ The business scope of resident representative offices of foreign accounting firms is to provide accounting and taxation consultancy services to foreign clients investing and expanding their business in China.
‧ JV accounting firms may provide consultancy services on foreign business information, international taxation and other matters to domestic units.

(c) Application Procedures for Establishment of Representative Offices, JV Firms and Member Firms:
(i) Representative offices
‧ A foreign accounting office must obtain the approval of the Ministry of Finance to establish a representative office in China.
‧ The Chinese Institute of Certified Public Accountants (CICPA) has been authorized by the Ministry of Finance to review applications.
‧ CICPA is responsible for approving or disapproving the application, while the Ministry of Finance is responsible for issuing approval certificates to successful applicants.
(ii) JV firms
‧ The Chinese party should submit the application documents to CICPA through the local financial department at provincial level. CICPA will examine the documents and submit the application to the Ministry of Finance for approval.
‧ Upon approval of the Ministry of Finance, the applicant will apply to the Ministry of Commerce for an FIE approval certificate through the local commercial authorities at provincial level.
‧ The successful applicant will register with the local industrial and commercial administration and tax authorities after receiving the approval certificate.
(iii) Member firms:
‧ A Chinese member firm of an international accounting firm is a Chinese accounting firm which, upon approval of China’s Ministry of Finance, has become a member of an international accounting firm by agreement.
‧ To become a member firm of an international accounting firm, a Chinese accounting firm must apply to CICPA, which will forward the application to the Ministry of Finance for approval.
‧ The Ministry of Finance will issue an approval certificate upon approval.
(iv) Points to note:
‧ A Chinese accounting firm can only become a member of one International accounting firm and cannot become a member of two or more international accounting firms at the same time.
‧ After withdrawing its membership from an international accounting firm, a Chinese accounting firm may apply to become a member of another international accounting firm.
‧ The resident representative office of an international accounting firm in a certain region must be disbanded after member firms have been established in that region.
‧ An international accounting firm may have an equity ratio of up to 1/3 of the member firm within the first five years of its establishment. Foreign professionals who have obtained CPA qualifications in China may become partners of a member firm.
‧ The member firms of an international accounting firm are independent accounting firms in China.
(v) Relevant rules and regulations
Accounting firms in China must be established in accordance with the Provisional Regulations on Representative Offices of Foreign Accounting Firms, Notice Concerning Permission for International Accounting Firms to Identify Member Firms in China, and Provisional Regulations on the Management of Sino-Foreign Joint Venture Accounting Firms.

Business Consultants:
Currently, all leading international management consultants have established branches in China. They include McKinsey, Boston Group, Arthur Andersen, KPMG, Price Waterhouse Coopers, and Deloitte & Touché.
According to China’s WTO commitments, foreign management consultants may establish majority—owned JVs in China.
The above restriction was lifted within six years after accession, arid foreign companies are now allowed to establish wholly—owned subsidiaries in China. Market access for commercial consultants is subject to the laws and regulations regarding foreign investment. No specific regulations have been drawn up.

Construction and Engineering Design Services:

(a) Market Access:
Construction
Foreign wholly-owned enterprises are allowed to be set up. According to the Regulations on the Administration of Foreign-invested Construction Enterprises, foreign companies may undertake the following four types of construction Projects according to their qualifications:
‧ Projects funded wholly by investment or donation, or both, from foreign parties.
‧ Projects financed by international financial institutions and have undergone international bidding in accordance with the terms and conditions of the loans.
‧ Sino-foreign JV projects with 50% or more owned by foreign interests; or Sino—foreign JV projects with less than 50% foreign interests approved by the construction department at provincial, autonomous region or municipal level because they cannot be undertaken solely by domestic construction enterprises due to technical constraints.
‧ Projects of Chinese interests that cannot be undertaken solely by domestic construction enterprises due to technical constraint. These projects can be jointly undertaken by domestic and foreign enterprises with the approval of the department at provincial, autonomous municipal level.
‧ Construction enterprises established by Hong Kong and Macau service providers on the mainland may undertake Sino—foreign joint venture construction projects regardless of the percentage of foreign investment.

Engineering design
Foreign wholly-owned enterprises are allowed to be set up. Foreign Service suppliers must be registered architects/engineers or enterprises providing construction/engineering/urban planning services in their home country.

(b) Establishment of Construction Enterprises and Engineering Design Enterprises:
(i) Construction enterprises:
‧ To establish a foreign-invested construction enterprise in China to conduct construction activities, a foreign investor should obtain an FIE approval certificate from the Ministry of Commerce, register with the State Administration for Industry and Commerce (SAIC) or its designated local authorities, and obtain a qualification certificate of construction enterprise from the administrative department in charge of construction.
(ii) Engineering design enterprises
‧ To establish a foreign-funded engineering design enterprise in China to undertake the design of construction projects, a foreign investor should obtain an FIE approval certificate from the Ministry of Commerce, register with SAIC or its designated local authorities, and obtain a qualification certificate of engineering design enterprise from the administrative department in charge of construction.
‧ The foreign party and foreign service providers of an engineering design enterprise must be enterprises engaged in engineering design or registered architects/engineers in their home country.
‧ When applying for engineering design enterprise qualification, a foreign—funded engineering design enterprise must possess the right grade of qualification. For a foreign engineering design firm, the number of foreign service providers qualified as registered architects or engineers in China must not be less than a quarter of the total number of its qualified staff of the same grade, and the number of foreign service providers with relevant professional experience must not be less than a quarter of the total number of its core technical staff of the same grade.
‧ For a Sino-foreign equity or contractual JV engineering design enterprise, the number of foreign service providers qualified as registered architects or engineers in China must not be less than one—eighth of the total number of its qualified staff of the same grade, and the number of foreign service providers with relevant professional experience must not be less than one—eighth of the total number of its core technical staff of the same grade.
‧ For a foreign—funded engineering design enterprise, the China-registered architects, engineers and core technical staff of the foreign service provider must reside in China for at least six months each year.

(c) Application Procedures and Relevant Rules and Regulations:
(i) Application procedures for construction enterprises
To establish foreign—funded construction enterprises with special-grade and first-grade qualifications for contracting general construction works and first-grade qualification for contracting specialized works, the application procedures are as follows:
‧ The applicant should submit application to the local provincial, autonomous region or municipal commercial authorities; upon preliminary examination and approval, the application will be forwarded to the Ministry of Commerce.
‧ The Ministry of Commerce will send the application documents to the Ministry of Construction (MOC) for comments.
‧ On the basis on the written comments of MOC, the Ministry of Commerce will issue an FIE approval certificate to the successful applicant, which will then complete enterprise registration formalities with SAIC.
‧ After obtaining its business license, the enterprise may proceed to apply for construction enterprise qualification in accordance with the rules governing the administration of construction enterprise qualifications.
For the establishment of foreign—funded construction enterprises with general contracting construction works qualification, second- or lower grade contracting specialized works qualification, or sub-contracting labor service qualification, the applications are handled by the provincial, autonomous region and municipal construction and trade and economic cooperation authorities.
(ii) Application Procedures for engineering design enterprises:
‧ Application and approval procedures for the establishment of foreign—funded engineering design enterprises and their qualifications differ according to their grade and category.
‧ Application for the establishment of first—grade foreign-funded engineering design enterprises and first- and second-grade foreign-funded engineering design enterprises must be approved by the Ministry of Commerce and their qualifications must be approved by MOC.
‧ Application for the establishment of second— grade foreign—funded engineering design enterprises and third- or lower grade engineering design enterprises must be approved by the provincial, autonomous region or municipal foreign trade and economic cooperation authorities and their qualifications must be approved by the provincial, autonomous region or municipal construction authorities.
‧ To obtain first-grade engineering design qualification and first-grade and second-grade engineering design qualification, the applicant should submit application to the local foreign trade and economic cooperation authorities. Upon preliminary examination, the application will be forwarded to the Ministry of Commerce, which will make a decision after seeking the comments of MOC and issue an approval certificate. With the approval certificate, the applicant may proceed to the department of industry and commerce to complete registration formalities.
(iii) Relevant rules and regulations:
These include the Regulations on the Administration of Foreign—in vested Construction Enterprises, Regulations on the Administration of Foreign—in vested Engineering Design Enterprises, Regulations on the Management of Qualifications of Construction Enterprises, and Regulations on the Management of Prospecting and Design of Construction Projects.
All the information and data above is only for reference, for further information, please feel free to contact us.