According to Provisions On the Establishment of Holding Companies by Foreign Investment，No 22，2004，the Order Of the Ministry Of Commerce Of People’s Republic Of China，foreign investors can set up holding companies engaged in direct investment business in China in forms Of sole foreign investment or joint investment with Chinese investors.

The foreign investor shall have a good financial credibility and have a necessary financial capability to set up a holding company with total assets not less than 400 million USD in the year prior to the application. And it shall have set up a foreign-invested company in China with a paid up registered capital over the amount of 10 million USD. Or, the foreign investor shall have a good financial credibility and A necessary financial capability to setup a holding company. This investor shall have set up over 10 foreign-invested companies in China with a total paid up registered capital over 30 million USD. This Chinese investor shall have a good financial credibility and a necessary financial capability to set up an investment company, and its total assets shall not be less than 100 million RMB yuan in the year prior to the application.

The examination and approval procedures for foreign-invested holding companies:

First, the investor shall submit documents for applying to set up a holding company to SMERT(Foreign Investment Commission) as follows:

1. The application report, contract and Articles and Articles of Association signed by all parties of investors to set up a joint venture holding company; (foreign enterprise application from, feasibility study report and Articles of Association signed by the foreign investor who is proposing to set up a wholly foreign-owed holding company);

2. Financial credibility certificates, registration certificates (copy) and legal representatives’ certificates (copy) of all parties of investor;

3. Approval certificates (copy), business licenses (copy) and capital verification reports issued by Chinese certified public accountant (copy) for the enterprises invested by the foreign investor;

4. Legally audited balance sheets of all parties of investors for the last three years;

5. The foreign investor applying for setting up a holding company shall issue a letter of guarantee to the examination and approval authority, which is to guarantee the payment of registered capital of the investment company for its investment in China, and also to guarantee the technology transfer belonging to the foreign investor or its related enterprise. In case of setting up a holding company wholly owned by a foreign company (parent company), the parent company shall submit a letter of guarantee to the examination and approval authority. This letter is to guarantee that its subsidiary company would pay the registered capital to the holding company according to the requirements approved by the examination and approval authority, and also to guarantee the payment of registered capital of this holding company to its investment in China and the technology transfer belonging to the parent company and to the subsidiary company;

6. Other documents required by the Ministry of Commerce;

7. The above documents shall be in original (in duplicate), apart from those indicated as copies. In case the document was signed by a non-legal representative, then a Letter of Entrustment signed by the legal representative is required. In case a legally set up agency was entrusted to go through the application procedures, then a Letter of Entrustment signed by the legal representative is required.

After the preliminary examination by SMERT, the application shall be submitted to the Ministry of Commerce. After the examination of the Ministry of Commerce, the “Approval Certificate of Foreign-invested Enterprise” would be issued to the investor which meets the requirements.

The holding company that has been approved to be set up shall go to the State Administration Bureau for Industry and Commerce, with the approval certificate, to go through the registration procedures within one month after the date of approval.