The Legal Issues Related Foreign-funded Advertising Enterprises
In recent years, the development of Chinese advertisement market has become the hot spot of the world market
. Like the rapid growth of Chinese economy, China advertising market has furnished life and vigor to the worldwide market while the global economy is down. Data released by China Commodity Marketplace (China CCM.com) showed that the total expenditure of Chinas advertising approximated USD40, 000,000,000, ranked fourth in the world in 2009, by 2010 it is estimated that it will surpass Germany to become the third; and the total expenditure of Chinas advertising will surpass Japan to become the second great advertising country, next only to America by around 2014. At the same time, Chinese government has relaxed restriction on foreign-funded advertising enterprises, and foreign investors in growing numbers begin to march into Chinese advertisement market.
With a view to strengthening the administration on the foreign-funded advertising enterprises, and promoting the sound development of advertising industry, Chinese government formulates suitable regulations constantly. In accordance with existing Chinese regulations and laws of foreign-funded advertising enterprises, the essay will discuss the legal issues when foreign investors invest and merge advertising enterprises in China.
1. Prerequisites of foreign-funded advertising enterprises
The establishment of a Sino-foreign equity joint and contractual advertising enterprise (including Sino-foreign equity joint enterprises and Sino-foreign contractual joint ventures) by investing and merging an advertising enterprise, should meet the following requirements: (1) All partners shall be enterprises engaging in advertising business; (2) All partners shall have existed and have engaged in advertising business for not less than 2 years since establishment; and (3) Having advertising achievements.
Establishing a foreign-funded advertising enterprise through foreign investors investing and merging, the following requirements are necessary: (1) The investor shall be an enterprise mainly engaging in advertising business; and (2) The investor has existed and has engaged in advertising business for not less than 3 years since establishment.
2. The approval authority of foreign-funded advertising enterprises
The project proposal and the feasibility study report of a foreign-funded advertising enterprise shall be subject to the examination and approval of the State Administration for Industry and Commerce and its authorized administration for industry and commerce of provincial level. The contracts and articles of associations of a foreign-funded advertising enterprise shall be subject to the examination and approval of the Ministry of Commerce and its authorized administrative department of the provincial level.
3. The business scope of foreign-funded advertising enterprises
A foreign-funded advertising enterprise that meets the prescribed conditions may engage in designing, making, issuing, or agency of various advertisements businesses both home and abroad. The specific business scope shall be subject to the examination and approval of the SAIC and its authorized administration for industry and commerce of provincial level in pursuance of the Regulations on the Qualifications of Advertising Operators or Issuers of Advertisements and the Phraseology for Determining the Business Scope of Advertising.
4. Other considerations of foreign-funded advertising enterprises
All the documents required to submit shall be expressed in Chinese. While establishing an advertising enterprise, a foreign investor may entrust a qualified agency to handle the application formalities for it.
Establishing a foreign-funded advertising enterprise, one shall abide by the present provisions as well as the Law of the Peoples Republic of China on Sino-foreign Equity Joint Enterprises, the Law of the Peoples Republic of China on Sino-foreign Contractual Joint Enterprises, the Law of the Peoples Republic of China on Foreign-funded Enterprises, the Advertising Law of the Peoples Republic of China, Regulations on the Management of Advertisements, the Regulations on the Qualifications of Advertising Operators or Issuers of Advertisements and the Phraseology for Determining the Business Scope of Advertising, and other relevant laws, regulations and rules. The legal relationship between advertising businesses is more complicated when establishing an advertising enterprise; we suggest that when you invest this industry you may entrust a Chinese agency to agent registration and other correlative events.
by: Sino-Link Consulting
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