Procedures for Administration of Pilot Value-added Telecom Business with Foreign investment in the China (Shanghai) Pilot Free Trade Zone

Article 1

These Procedures are formulated in accordance with relevant provisions of the Regulations of the People’s Republic of China on Telecommunications, the Provisions on the Administration of Foreign-funded Telecommunication Enterprises, the Decision of the State Council on Temporary Adjustments to the Administrative Approval Items or Special Administrative Measures on Access Prescribed in Relevant Administrative Regulations or State Council’s Documents in China (Shanghai) Pilot Free Trade Zone, and the Suggestions of Ministry of Industry and Information Technology and Shanghai Municipal People’s Government on Further Opening up Value-added Telecommunication Business to Foreign Investors in China (Shanghai) Pilot Free Trade Zone for the purpose of adapting to the need of value-added telecommunications business with foreign investment in the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “Pilot Zone”).

Article 2

The value-added telecom business that can be operated by foreign-funded enterprises in the Pilot Zone and the proportion of funds contributed by the foreign investors shall be determined by the Ministry of Industry and Information Technology in accordance with relevant regulations.

Article 3

A foreign-funded enterprise in the Pilot Zone that applies for value-added telecom business shall comply with the following requirements:
1. The operator is a company established in the Pilot Zone according to law;
2. Having appropriate funds and professionals to carry out business activities;
3. Having the reputation or capability to provide long-term services for users;
4. The minimum amount of registered capital is RMB 1 million;
5. Having the necessary premises, facilities, technical solutions and network and information security systems and measures, and the service facilities shall be located in the Pilot Zone;
6. The company as well as its major investors and major managerial executives have not violated the telecom supervision and management system within three years; and
7. Other requirements prescribed by the State.

Article 4

A foreign-invested enterprise in the Pilot Zone that applies for value-added telecom business shall apply to the Shanghai Communications Administration and submit the following documents thereto:
1. A written application for value-added telecom business signed by the legal representative of the company, including the category of telecom business under the application, business coverage, company name, company correspondence address, zip code, contact person, telephone, e-mail address, etc.;
2. Relevant materials on the major foreign investors of the company, including the company registration certificate, brief introduction, recent financial reports audited by an accounting firm, certificate of credit status; and relevant materials on other investors of the company, including the company registration certificate or business license and brief introduction;
3. Copies and photocopies of the company’s Certificate of Approval for Enterprises with Foreign Investment or Certificate of Filing of Enterprises with Foreign Investment /with Investment from Hong Kong, Macao, and Taiwan in the China (Shanghai) Free Trade Zone and the Business License for an Enterprise Legal Person;
4. Company profile, including basic information of the company, staff to be engaged in value-added telecom business, premises and facilities;
5. The articles of association and matters about the equity structure of the company;
6. The business development and implementation plans and technical solutions of the telecom business to be applied for;
7. Measures to provide users with long-term service, quality assurance, and users’ personal information protection;
8. Network and information security systems and measures;
9. Relevant materials to prove the credibility of the company; and
10. Letter of commitment signed by the legal representative of the company on conducting telecom business in accordance with the law.

Article 5

Shanghai Communications Administration shall review the application materials, issue a notice of acceptance to the applicant with the complete application materials in compliance with the legal form, and shall inform at a time the applicant with incomplete application materials or out of compliance with the legal, either on spot or within five working days of all the contents that need to be complemented.

Article 6

Shanghai Communications Administration shall complete the review within 60 days from the date of acceptance and make a decision of approval or disapproval. For the applications that are approved, the administration shall issue an Official Reply of Approval for the Pilot Value-added Telecommunications Business with Foreign Investment in the China (Shanghai) Pilot Free Trade Zone (temporarily valid for 3 years). For the applications that are not approved, the Administration shall notify the applicant concerned in writing and explain the reasons.

Article 7

The Shanghai Communications Administration shall, after issuing an official reply of approval for pilot business to the applicant concerned, report to the Ministry of Industry and Information Technology for filing within 10 days.

Article 8

The foreign-funded telecom enterprises in the Pilot Zone shall conduct operation of value-added telecom business in accordance with the law, protect the legitimate interests of users, report business developments on time, exercise no unfair competition of any kind, properly protect users’ information and maintain network and information security.

Article 9

Shanghai Communications Administration shall implement annual inspection system for foreign-funded telecom companies in the Pilot Zone. The foreign-funded telecom enterprises shall submit the following materials for annual inspection to the Shanghai Communications Administration in the first quarter of the next report year:
1.The operation of telecom business within the year; business developments, changes of personnel and set-up; quality of service and protection of users’ personal information; implementation of the requirements of network and information security management; implementation of relevant regulations of the State and the telecommunications regulatory administrations;
2. Photocopies of company’s business license of enterprise legal person; and
3. Other submissions required by Shanghai Communications Administration.

Article 10

Shanghai Communications Administration shall, when carrying out annual inspection of foreign-funded telecom enterprises, conduct a comprehensive examination of the submissions of the enterprises, and examine such aspects as their business subjects, business practices, telecom charges, service quality and users’ personal information protection, implementation of requirements for network and information safety management, and implementation of relevant regulations of the State and the telecommunications regulatory administrations.
Participation in annual inspection on schedule and with all items complying with the requirements is deemed the annual inspection passed. For failure to participate in annual inspection as required or annual inspection items failing to comply with the requirements, the Shanghai Communications Administration shall make an order for correction and appropriately give administrative punishment in accordance with the law; correction made on time is deemed the annual inspection passes after correction; refusal to correct is deemed failure to pass the annual inspection.
The annual inspection results and the punishment shall be recorded in the Record of Annual Inspection and Violations, attached to Official Rely for the Pilot Business, and shall be released to the public and reported to the administration for industry and commerce.

Article 11

If a foreign-funded telecom enterprise in the Pilot Zone has a situation provided for in Articles 18 to 20 of the Provisions on the Administration of Foreign-funded Telecommunications Enterprises, the Shanghai Communications Administration shall impose punishment in accordance with the law.

Article 12

The Ministry of Industry and Information Technology is responsible for organizing the evaluation on the work of pilot value-added telecom business with foreign investment in the Pilot Zone. Shanghai Communications Administration shall issue an evaluation report on value-added telecommunications business with foreign investment on a quarterly basis based on the annual inspection as well as daily supervision, and submit the report to the Ministry of Industry and Information Technology.

Article 13

These Procedures come into effect on the date of promulgation, and relevant contents are to be adjusted at appropriate time in accordance with relevant decisions of the State Council.

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