| In you are establishing a company in China, | | | | |
| the Chinese government will require you to | | | | -organizational structure of the new |
| prepare a Feasibility Study Report in order | | | | enterprise and the reasons for it, including |
| to obtain approval for your project. This is | | | | total number, composition and recruiting |
| basically a sales job designed to persuade | | | | sources for employees, departments to be |
| the government that your project will be good | | | | established, and management; |
| for China. | | | | |
| | | | -selection of equipment and manufacturing |
| It bears emphasizing that two versions of the | | | | processes, and the reasons therefore |
| Feasibility Study Report are generally | | | | (including a classified list of domestic |
| required - a preliminary report early on, and | | | | equipment and equipment to be imported); |
| a full report later on. Listed below are the | | | | |
| contents of a full report, which can be | | | | -modes of construction, construction |
| simplified for the purposes of providing a | | | | schedule, and an explanation thereof; |
| preliminary report. Its purpose is to sell | | | | |
| the project to the examination and approval | | | | -a discussion of environmental protection, |
| authority by demonstrating its benefits to | | | | labor safety, and health care issues; |
| the Chinese economy and providing evidence of | | | | |
| the investors' ability to carry out the | | | | -structure of foreign exchange balance and |
| project. | | | | reasons therefore, and statement of planned |
| | | | export percentage of the new enterprise's |
| (1) Proposed name of the proposed enterprise, | | | | products; |
| legal address, scope of business, and scale. | | | | |
| | | | -fundraising methods, including building and |
| (2) Names of investors, countries of | | | | equipment as capital investment, and |
| establishment, legal addresses; name, | | | | calculations therefore; |
| position, and nationality of the new | | | | |
| enterprise's legal representative, and (in | | | | -composite analysis of benefits and foreign |
| the case of Joint Ventures) the name of the | | | | exchange revenues and expenditures using the |
| administrative bureau supervising the Chinese | | | | dynamic, risk, or sensitivity method |
| partner. | | | | (including economic, technical, financial and |
| | | | legal analysis) |
| (3) Details of proposed investment funds | | | | |
| (self-owned funds, loan capital, investment | | | | Appendices: |
| proportion, form of investment - such as | | | | |
| cash, equipment, etc., investment | | | | (i) written comment on planned site selection |
| contribution schedule), and (in the case of | | | | and Letter of Intent confirming the supply of |
| Cooperative Joint Ventures) profit and loss | | | | utilities; |
| sharing ratio among the partners. | | | | |
| | | | (ii) authorization documentation of the legal |
| (4) Term (duration) of the new enterprise. | | | | representatives of the investors (foreign |
| | | | investors should have their documents |
| (5) List of persons responsible for preparing | | | | notarized by home country authorities and |
| the Feasibility Study Report. | | | | authenticated by a Chinese embassy or |
| | | | consulate in its home country); |
| (6) Summary and conclusion (including | | | | |
| problems, issues, and suggestions). | | | | (iii) opinions of the examination and |
| | | | approval authority regarding the funds to be |
| The final Feasibility Study Report should | | | | contributed by the Chinese partner (for Joint |
| also cover the following issues: | | | | Ventures); |
| | | | |
| - production plans and their basis, with an | | | | (iv) annual financial reports, including |
| explanation of market demand both in China | | | | balance sheets and profit and loss statements |
| and abroad, and how the market survey was | | | | of each investor; |
| carried out. Similar facilities already | | | | |
| existing or being built in China or abroad | | | | (v) an approved (standardized) Environmental |
| should be mentioned and commented upon; | | | | Impact Statement if the project will have |
| | | | significant environmental impact (ex: |
| - selection of the location of the project | | | | construction and renovation projects). The |
| and the reasons; necessary supplies of | | | | standardized form is available from the |
| utilities and telecommunications facilities, | | | | local, provincial, or national Environmental |
| and a description of the present situation; | | | | Protection Bureau (depending on which level |
| | | | of government examines and approves your |
| - sources of raw materials, amounts needed, | | | | project), and must be approved by them. |
| and supplier channels; | | | | |