Business license reform sees increase in market

Pudong has deepened its reform to simplify obtaining a business license by separating it from all matters relating to the approval of enterprise market access.
Business license reform sees increase in market
Wang Rongjiang / SHINE

Cranes are busy loading and unloading containers at Waigaoqiao port of China (Shanghai) Pilot Free Trade Zone in Pudong New Area.

Pudong has deepened its reform to simplify obtaining a business license by separating it from all matters relating to the approval of enterprise market access.

Previously the reform only involved 116 approval items but the list has expanded to all of the 548 items at ministry, municipal and district levels. Amid the launch of the reform, all kinds of new market entities in Pudong increased by 17.4 percent in 2016, compared with the end of 2015.

After the cancellation of the approval for agencies dealing with private entry and exit business, the number of registered agencies of such kind in Pudong has increased from 10 before the reform to 241 at present.

At the same time, the State Council, or China’s cabinet, has decided to promote Pudong’s reform of separating business licenses and administrative approvals in 10 pilot free trade zones around the country.

A recent circular by the State Council said that the trial in the 10 zones, including Tianjin, Liaoning, Zhejiang, Fujian, Henan, Hubei, Guangdong, Chongqing, Sichuan and Shaanxi, will last until December 21, 2018.

The circular required separating business licenses from affiliated permits, except for permits concerning national security, public safety, ecological safety and public health.

For the canceled or separated approvals, the document proposed new management approaches, such as self-discipline management, record filing or an enterprises’ commitment system.

Catalogue and procedure of administrative approvals can improve approvals’ transparency and provide standardized services, said the document.

Efforts should also be made to urge enterprises to file records and fulfill their promises in accordance with industry standards.

The FTZs should strengthen routine regulation aimed at the above management approaches, and speed up sharing of basic information of individuals, enterprises and social organizations, to avoid repeated applications and reviews.

Besides, efforts should be made to improve the national credit information sharing platform and national enterprise credit information publicity system.

Enterprise-related licenses should be integrated, simplified, or canceled as much as possible, the circular said.

The pilot reform was led by provincial-level governments, and the reform plans were submitted to the State Commission Office of Public Sectors Reform before the end of October 2017, according to the circular.

Business license reform sees increase in market
Zhang Suoqing / SHINE

The Jinqiao section of China (Shanghai) Pilot Free Trade Zone

Apart from the successful experience Pudong made in market access, the Shanghai FTZ in the new area reported an increase of 18,000 enterprises with customs registration since the establishment of the Shanghai FTZ four years ago.

Qualcomm Communication Technologies (Shanghai) Co was established last July in Waigaoqiao, as an American multinational semiconductor and telecommunications equipment company — Qualcomm’s only manufacturer in China and one of the Shanghai FTZ’s new settlers with customs registration.

“It was a series of reform and innovation initiatives and advanced management concepts of Shanghai Free Trade Zone which attract us to settle down here,” said a senior executive with Qualcomm (Shanghai).

At present, the total number of enterprises with customs registration in the Shanghai FTZ has reached 27,000. Most of the newly registered companies are in the bonded areas of Waigaoqiao, Yangshan and Pudong International Airport, while the rest are in Lujiazui, Jinqiao and Zhangjiang.

Private companies accounted for 76 percent of them and the rest are foreign invested firms and joint ventures. The newly registered enterprises cover 54 business sectors, while most of them engage in trade and retail.

Around 5 percent of them, or more than 1,000 companies, engage in finance, transport, warehousing, postal, leasing and manufacturing, according to Shanghai Customs.

Transportation services, terminal business, warehousing services and freight forwarding business all reported double digits growth, while the total industrial output of process manufacturing increased by 5 percent from a year ago.

Shanghai Customs canceled administrative approvals in enterprises registration in July 2014 and shortened the entire process from 40 workdays to only three.

It also established online and offline channels to better serve enterprises and help them solve problems immediately. An all-in-one counter offers enterprises an inquiry and paperless declaration service. Most enterprises may complete their customs declaration through just one visit.

Shanghai became home to China’s first pilot free trade zone in 2013, the test bed of new economic and financial policies, such as the negative list for foreign capital management, which defines sectors in which foreign entities can invest, and the wider convertibility of yuan and its cross border payment.

China expects Shanghai to build the city’s free trade zone into a world-class one with liberalized trade and investment, no hidden or opaque rules, fair and efficient supervision, as well as convenient business environment by 2020.

The next phase in the Shanghai FTZ development will further relax regulations on commercial transactions and foreign investment.

The negative list for foreign investment in the free trade zone will be further shortened and management will comply better with international practices in the finance, foreign exchange, investment, and entry and exit areas.

Enterprises within Shanghai FTZ reported more than 30 percent of increase in their total profit, compared with the same period a year ago. Moreover, headquarters economy plays a leading role in the zone.

Three more multinational companies’ regional headquarters have been established in the Shanghai FTZ since the beginning of the year, putting the total number within the zone to 81, accounting for 13 percent of the total number around the city or 30 percent in Pudong New Area.

More than 320 regional headquarters, Asia-Pacific business centers and business operations centers within the zone reported 18 percent of year-on-year increases in business revenue in the first half.

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