CHINA FRANCHISE NEWS
Vol. 2 , No.8 - April 2, 2001
TOPICS THIS ISSUE:
- Amendments to Joint Venture Law - Further Opening Up
- Wal-Mart Pushes Forward to Beijing
- Kodak Marches Into Express Mail Service
- China Service Industry Thrives in Ninth Five-Year Period
- Wenzhou Shoes Come Back to Shanghai
- Government Pushes for Franchise to Branch Out Even Further
Amendments to Joint Venture Law - Further Opening Up
Amendments to the Law on Chinese-foreign Equity joint venture were approved by the Fourth Session of the Ninth National People's Congress (NPC) at its final sitting on March 20. The decision was published along with the No.48 Presidential Order signed by President Jiang Zemin. A comparison of the Law before and after its revision follows:
I. The 2nd paragraph of old Article 2 read: All activities of the joint venture shall be carried out in accordance with the stipulations of the laws, decrees and relevant rules of the People's Republic of China; The revised version of the same clause reads: All activities of the joint venture shall be carried out in accordance with the stipulations of the laws and regulations of the People's Republic of China.
II. The 4th paragraph of old Article 6 read: The employment and dismissal of workers and staff members of a joint venture shall be stipulated in the agreement or contract between various parties to the joint venture according to law. The revision: The employment, dismissal, remuneration, welfare, labor protection, labor insurance and other matters relating to workers and staff members of a joint venture shall be stipulated through entering into contracts according to law.
III. A new Article 7 reads: Workers and staff members of a joint venture may establish a trade union organization according to law, and carry out trade union activities to safeguard their lawful rights and interests. The joint venture shall provide necessary conditions for the activities of its trade union.
IV. In the revised law, the original Article 8 is changed into Article 9. Before it was revised, the 4th paragraph read: a joint venture shall buy various insurance policies from Chinese insurance companies. The revised version: a joint venture shall buy various insurance policies from any insurance companies within Chinese territory.
V. The 1st paragraph of the old Article 9 was deleted. It read: The production and operation plan of a joint venture shall be filed with the competent department for the record and be executed in the form of an economic contract.
VI. In the revised Law, the original Article 9 becomes Article 10. The 2nd paragraph of the original Article 9 becomes the 1st paragraph of Article 10. The old clause read: The raw and semi-finished materials, fuels, parts and auxiliary equipment needed by the joint venture shall be first bought in China, they can also be bought directly in the international market with foreign exchange raised by the joint venture itself. The revised version: The raw materials, fuels and other materials needed by the joint venture within its approved scope of business shall either be bought in the domestic market or in the international market in accordance with the principle of fairness and reasonableness.
VII. In the revised Law, the original Article 14 is changed into Article 15, and a 2nd paragraph is added: The various parties to a joint venture, which do not include arbitration clauses in their contract, or which fail to reach a written arbitration agreement hereafter, may sue in the people's court.
IIIV. In the revised Law, the stipulation "The power of amendment to this Law is vested with the National People's Congress" is deleted from the original Article 15.
The amendments to the Law are deemed necessary to serve the needs of further opening to the outside world and accelerating the process of China's accession to the WTO.
(Source: People's Daily 03/20/01)
Wal-Mart Pushes Forward to Beijing
Wal-Mart, the world's largest retail chain, intends to march into Beijing - a hot battlefield for the chain store industry - as soon as possible.
Beijing Commerce Committee officials said that, following France-based Carrefour's success in the capital city, Wal-Mart is eyeing the market. "We cannot tell the exact time for the entry since, though they have applied for admission, the approval procedure could take a period of time," said an official of the committee.
Since accessing China in 1995, Wal-Mart has opened chain stores in Shenzhen, Guangzhou, Shanghai, Dalian, Fuzhou and Shantou. The company announced last year that it will open eight new outlets around China in 2001.
In early February, Shanghai Hualian launched a new supermarket group in a joint venture with Beijing's Xidan and Chaoshifa, a consolidation of domestic retailers. The move was made in part to respond to escalating competition in Beijing's retail industry, including possible Wal-Mart expansions.
(Source: Business Weekly 03/13/01)
Kodak Marches Into Express Mail Service
It is reported that Kodak will change its 5,500 Chinese film-processing outlets into convenience stores. Most dramatically, Kodak has proposed to begin express mail service.
Eastman Kodak Co., the industrial giant holding a 50% share of the Chinese film processing market, plans to double its current scale by 2003, that is, to achieve a total of 10,000 color film-developing stores, many of which will be located in western cities.
Now Kodak's ambition is to develop the 5,500 color film-processing outlets into convenient stores, said Li Ming, an officer of Great China Region of Kodak's Asia Pacific headquarters. Li also confirmed Kodak's intention to go into express mail service.
As its business has spread in more than 500 cities all over the country, Kodak has begun to invade the logistics business using its huge service network. Kodak's biggest competitor in express mail service is Emergency Mail Service (EMS) which relies on China Postal Bureau. EMS has 40% of the market. Another strong competitor is FedEx , known for its speedy service.
Nonetheless, the Shanghai-based Kodak Asia Pacific headquarters revealed that, although Kodak cooperates with FedEx in Taiwan, they have not decided if FedEx will be their partner in mainland China. Kodak's participation would transform the express service market.
(Source: Sina News 03/07/01)
China Service Industry Thrives in Ninth Five-Year Period
China's service industry, viewed as a gauge of market modernization, caught the world's attention during the Ninth Five-Year Period (1996-2000). In 2000, it contributed 28 percent to the GDP. Traditional sectors such as wholesale, retail, food and beverage maintained steady growth, while new professions such as securities, real estate, information, tourism and consulting services emerged.
China's information industry made great strides. The telecom networks went manual to automatic systems and from single to multiple functions. By the end of 2000, the total length of fiber-optic cable in use in the country surpassed one million kilometers, with over 37,000 broadband networks. There are over 215 million telephone users and 22.5 million Internet users.
In a time when Chinese have greater cash flow and more leisure time, tourism has entered a golden season. China aims to become an international tourist destination. During the Ninth Five-Year Plan period, a yearly average of 727 million foreigners traveled in China. In 1999, China had 7,326 travel agencies, twice the number of 1995.
(Source: China Daily 03/10/01)
Wenzhou Shoes Come Back to Shanghai
Ten years ago, Wenzhou-branded shoes had been driven out of Shanghai and other 10 cities nationwide due to poor quality. Recently in Nanjing Road, Shanghai's shopping center, a Wenzhou-branded shoe outlet, Aokang Shoe Store, was opened by Wenzhou-base Aokang Group. The Wenzhou shoe industry is recovering.
Wenzhou, a small city in Zhejiang Province, was the cradle of the Chinese leather industry since the middle of the 15th century. However, the shoe industry of Wenzhou gained a bad reputation for the inferior goods during 1980s.Wenzhou-branded shoes disappeared in Shanghai and other big cities.
The Wenzhou Leather Industry Association, revealed that during the latest five years, Wenzhou shoe-making enterprises have established more than 1000 product lines and the capital contribution for technology reform amounts to 500 million yuan (US$60 million) every year. Wenzhou successfully hosted shoe and leather tech expos in several years since 1996. To further assist the shoe and leather industry, the Wenzhou government has begun to establish a China Shoe Capital covering 3000 mu (about 2 million square meters).
(Source: Xinhua News 03/20/01)
Government Pushes for Franchise to Branch Out Even Further
It is reported that chain stores have become an important part of China's economy. At the end of 2000, there were 410 franchisers and 11,000 franchisees on the Chinese mainland, according to the latest statistics from the China Chain Store & Franchise Association (CCFA).
In 2000, the sales turnover gained by companies through franchise operations reached about 19 billion yuan (US$2.3 billion), excluding the sales turnover of chain gas stations and car dealerships.
The Chinese government has attached great importance to the development of the franchise operation mode in recent years:
The former Ministry of Internal Trade issued its Administrative Regulation on Commercial Franchise Operation (trial) in November 1997;
The CCFA established the Commission of Franchise Operation in 1998; and
The CCFA entered the World Franchise Council (WFC) in 2000. The association is the 51st member of the WFC, an organization designed to coordinate international exchange in relation to franchise operations worldwide.
In order to boost the development of franchise operations even further in China, the government has entrusted the CCFA to establish trade standards, to administer voluntary disciplinary measures for trade violations, and to organize seminars and exhibitions on trade management and training, the report stated.
(Source: Chinaonline News 03/23/01)
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