Doing Business in Hunan -- china.org.cn

I. Survey

(i) Geographical Position

Hunan Province is located in central south of China, between latitudes 24°39'N to 30°08'N, and longitudes 108°47'E to 114°15'E, covering an area of 210,000 km2. It is located in the south of the famous Dongting Lake, hence the name Hunan, which literally means south of the lake in Chinese. It is also called Xiang for short, named after the longest river in the province. In the north, there is Hubei province. The two provinces are separated by the Yangtze River. Linking the rivers and seas, Hunan belongs to the open and development belt of the middle and lower reaches of the Yangtze River; In the south, it is adjacent to Guangdong and Guangxi provinces, closing with such open coastal areas and Hong Kong and Macao. The direct container trucks can get to Hong Kong within on day; bonded Jiangxi province one the east, Chingqing City and Guizhou province on the west. Hunan, located between the south coastal open belt and the Yangtze open belt, enjoys a favorable geological location.

(ii) Natural Resources

Located in central subtropical zone, Hunan has a continental wet monsoon climate. Its annual temperature averages 16℃-18℃ , sunshine time 1,300-1,800 hours, frost-free period 278-300 days, and precipitation 1,200 - 1,700mm. With sufficient sunshine, plentiful rain and distinct seasons, Hunan has favorable conditions for agricultural production.

(iii) Population and nationalities

The province has a population of 66,977,000, including an urban population of 23,776.800 and a rural population of 43,200,200. Hunan is a province settled with people of multi-nationalities. Besides Han nationality, there are 50 minorities with a population of 5.2 million, accounting for 8% of the province total. The population of 6 minorities including Tujia, Miao, Dong, Yao, Bai and Hui accounts for 99% of the total of all the minorities.

(iv) Natural Resources

Rich in natural resources, Hunan has long been known as a Land of Rice and Fish, the Home of Nonferrous Metals, Home of Non-metallic Minerals and a Tourists Resort. There are more than 2,000 species of woody plants, including 1,000 species of economic plants, 800 species of medicinal plants and 60 species of rare plants (put on the list of the state protection). The growing forest tree amount is 314 million m3, with the forest coverage rate of 53.1%. There are over 40 kinds of rare birds and animals, and over 160 kinds of natural fishes. The surface-water totals more than 200 million cubic meters and the underground water stock comes to 45.5 billion cubic meters. Waterpower resources add up to 15.32 million kW (15,320MW), and exploitable waterpower reaches 10.83 million kW (10,830MW). Of all the more than 160 minerals discovered in the world, Hunan has 141 of them, including 41 kinds such as antimony, tungsten, manganese etc., ranking among the top five in China in terms of recoverable storage amount.

(v) Infrastructure Facilities and Communications

Urban Construction

Hunan has 29 municipal level cities. The capital city of Hunan Is Changsha as the largest city in the province. Other cities include Zhuzhou, Xiangtan, Hengyang, Yueyang, Chenzhou, Changde, Shaoyang etc. There are 72 county towns and 998 administrative towns in Hunan province and the urbanization rate is 37%. The urban and town system frame has been progressively formed.

Airport and Harbors

Airplanes straight frights to Hong Kong, Seoul and Bangkok from Huanghua Airport and Zhangjiajie Hehua Airport, the two first-grade international airports, and domestic flights to all main cities of China are available. Changde Airport and Yongzhou Airport and Huaihua Zhijiang Airport have been put into service for domestic flights. The province owns a 5,000-tonnage capacity berths at Chenglingji of Yueyang Foreign Trade Wharf and a 8,000-tonnage capacity berth at Changsha Xianing Harbor, which formed one of the the largest logistic parks in Central China

Highway

Seven national highways including No.106, 107, 319, 320 extend to every part of the province with total length of 88,200 km. Some high-grade highways have been completed, such as Hunan section of Beijing-Zhuhai Expressway, Changsha-Yiyang-Changde Highway, Xiangtan-Shaoyang Highway, Changsha-Liuyang Highway, Yijiawan-Zhuzhou Highway, Changsha-Yiyang-Changde Highway, Xiangtan-Shaoyang Highway, Hengyang- Zaomupu Highway, Changde-Zhangjiajie Highway, Changsha- Linxiang Highway, Yijiawan-Zhuzhou Highway. By the end of 2005, the expressway length achieved 1,403km, ranking 10th in China . The expressway of Shaoyang-Huaihua is under construction and will be completed soon.

Railway

Seven trunk railway lines, namely, Beijing-Guangzhou, Hunan- Guizhou, Hunan-Guangxi, Luoyang-Zhanjiang, Shimen-Changsha, Jiaozuo-Liuzhou and Zhejiang-jiangxi, run in all directions linking all parts of China , Hunan section of Chongqing-Huaihua Railway will be completed and put into operation within 2006. The length of operating railway line totaled 2,802 km, and listed the 9th in China .

Finance and Insurance

In the year of 2005, there are 226 banking enterprises in Hunan province, with 99,200 persons employed and total assets RMB 652.122 billion and business income RMB 34.394 billion. The deposit balance of foreign currency and RMB in Hunan's financial institutions amounted to RMB 658.954 billion. 45 enterprises of Hunan are listed in the domestic stock market. There are 15 insurance companies, with total insurance assets RMB 29.83 billion. The insurance policy income hit RMB 12.717 billion.

Main Banking Institutions

Main Insurance Companies

Electric Power

By the end of 2005, Hunan's installed generating capacity is 14.70 MKW, with power generating capacity of 63 BKW.

Telecommunication

Fiber-optical, short wave and microwave communications have formed a telecommunications network linking all parts of the world. By the end of 2005, the whole public telephone switching system contains 12.15 million line/units, with 12.49 million mobile phone users, Every 100 people own 18.1 fixed telephones and 18.6 sets of mobile phones .Hunan has built seven modern telecommunications networks, i.e. Hunan Information Port and Internet, long distance digital transmission network. SPC telephone network, mobile telephone network, conference television & telephone network, numeric data network and speech sound information service network. International and domestic direct dialing telephone service is available in all of Hunan's cities and counties.

Internet

Hunan Information Port (www.hunan.gov.cn）and Red Net (rednet.cn）and website platforms are set up, linking Internet by means of Fiber-optical and Broad-band and digital broadcast etc. The number of Internet users amounted to 3 million.

(vi) Foreign Association

Sister Provinces & States and Friendship Cities　

Hunan has established long term business relationship with 180 countries and regions in the world. It has 10 sister provinces & states and 9 friendship cities in the world.

Conventions and Exhibitions

Hunan holds large sized international commerce activities every year, such as China Hunan International Tourist Festival, China Golden Eagle TV Arts Festival, Hunan ceramics Exhibition In Europe, South China Products Fair ( Bombay, India ), etc.

10 sister provinces and states

Friendship cities established by Hunan's main cities

(vii)Higher Education and Scientific Research

Hunan possesses 93 colleges and universities. The famous universities nationwide include Central South University, Hunan University, Hunan Normal University, Xiangtan University etc. Hunan possesses 45 academicians of Sciences and Social Sciences and 1.2291 million technical persons in various fields. Some of the key Sci-tech achievement such as hybrid rice, super-scale computer and Lanjian locomotive with the fastest speed in China hold a leading position in China even in the world. In 2005, the patents submitted for approval amounted to 8,763 cases with 3,659 patents awarded. The increased value of hi-tech products amounted to RMB 48 billion in the year, climbing by 27.3%. There are 18 national key labs and 32 provincial key labs, 9 state level engineering technology research centers and 22 provincial engineering technology research centers.

Technical personnel in various fields　(Unit: 10,000 persons)

(viii) Tourism

Hunan has green mountains and clear waters, enjoying uncountable scenic spots. Wulingyuan Scenic Zone, with Zhangjiajie National Forest Park as the center, once being developed, reveals its wonderful, elegant, tranquil, and precipitous sceneries, and is inscribed on the World Heritage List by United Nations Educational Scientific and Cultural Organization. Mountain Hengshan or Nanyue Mountain, is a special Buddhism mountain among China's five sacred mountains; Yueyang Pavilion is one of the three famous ancient pavilions in the south of the Yangtze River; Shaoshan, great man's hometown; Yuelu Academy, one of the 4 largest academies in ancient China; Xiangxi (West Hunan) scenic corridor taking Fenghuang Ancient Town as the lead, are all famous scenic spots. In addition, Yuelu mountain in Changsha, Mawangdui Han Dynasty Tomb, Huaminglou, Taohuayuan, Yan Emperor Tomb, Jiuni Mountain, Shun Emperor Tomb, Quyuan Temple are well known at home and abroad by their charming scene and special humanistic history.

Hunan's local products are rich and colorful, such as Hunan embroidery, chrysanthemum stone, fireworks, lotus seeds, tea, oil tea, hot pepper, ramie, orange, Hunan yellow chicken, Xupu goose, Ningxiang pig, as well as rice noodle of Hunan, smoked pork, betel palm, fermented bean curd and strong-smelling fermented bean curd etc. Hunan's catering culture is popular all the time. Hunan cuisine is one of the 8 famous cuisine systems in China . Special flavor restaurants cover all cities and towns in the province.

II. Economy

(i) GDP Data

In 2005, its GDP reached RMB 647.361 billion Yuan, ranking 13th in China . GDP per capita is RMB 10,366 Yuan calculated on the basis of the permanent resident population. The proportions of its primary, secondary and tertiary industries are respectively 19.4%, 40.2% and 40.4%.

(ii) Data on Resources, Industry and Agriculture

Industry

Hunan has evolved a complete industrial system. A considerable capacity has been formed in the production of main industrial products. In 2005 total added value of industry in Hunan amounts to RMB 219.991 billion. The ten industries with predominance such as equipment manufacturing, iron and steel, non-ferrous metals, cigarette, foodstuff, electronics and IT and new materials completed the added value of RMB 117.462 billion Yuan. The output of 30 main industrial products (out of the 62) ranks among China's top ten places. For example, it is No.1 in the production of lead, zinc and antimony, No.2 in the production of pesticides and railway wagons, No.2 in cigarette tax of per carton. Other leading products including sulfuric acid, chemical fertilizer, timber, iron alloy, machine-made paper and paperboard, raw coal and cement are of the top ten places.

Output of the Main Industries above Scale of Hunan in 2005

Agriculture

Hunan enjoys exceptional advantages in developing agriculture. As an old saying goes, When crops are good in Hunan and Hubei, the whole country will not be short of grain. Hunan's output of the main agricurtural and side-line products are in leading positions in China. Output of rice, ramie, tea oil, tung oil stands first in China ; live pigs stand second and tea in the forth. Oranges, tobacco, freshwater fish etc. are listed in top 10 of total output in China .

Main Farming Products Output in 2005

(iii) Data on Commerce

Import & Export

The total volume of export and import in 2005 was USD 6.005 billion, including USD 3.747 billion of export. There are more than 3,000 commodities for export, among which more than 50 kinds of bulk merchandise, including zinc, manganese, lead and antimony as well as other nonferrous metal textile product, clothing, chemical products, color TV tube, fireworks, porcelain and ceramics, ferric alloy, steel, rice, shoes and hats, live pig, vegetable products, box and bags and tea etc., gained an annual export sum of over USD 10 million.

Classification Data of Import and Export of Hunan in 2005　(Unit: USD 100 million)

Foreign Investment

In 2005 the actual utilized amount of foreign funds totaled USD 2.333 billion, including 729 newly approved foreign direct investment projects, The contracted value of foreign direct investment amounted to USD 4.24 billion, and actual utilized amount of foreign direct investment totaled USD2.072 billion. There are 39 multinational companies among the World Top 500 having their investment in Hunan.

Foreign Economic Cooperation

In 2005, the value of the newly signed foreign contracting projects, labor cooperation and design and consultation contracts amounted to USD 865 million. The completed business volume reached USD 559 million. The labor service designated to foreign countries amounted to 10,300 persons. In 2005, there were 21 newly approved foreign funded enterprises, with total contract investment USD 36.541 million. The Chinese partner's investment amounted to USD 29.258 million. The investment sectors include new material, machine building, resource development, agriculture development and service industry.

Technology Introduction

From 1995 to 2005, Hunan has introduced 608 technical projects, with contract fund of USD 2.66 billion, involving 36 industry categories, covering 90% of large and medium-sized core enterprises.

Commodity Circulation

Total Retail Amount of Consumer Goods of Hunan in 2005

(Unit: RMB 100 million)

III. Investment

(i) Policy and Administrative Rules

Catalogue of Related Laws

Foreign Trade Law of the People's Republic of China

Customs Law of the People's Republic of China

Law of the People's Republic of China on Import and Export Commodity Inspection

Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures

Law of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures

Law of the People's Republic of China on Foreign-Capital Enterprises

Company Law of the People's Republic of China

Law of the People's Republic of China on the Entry and Exit Animal and Plant Quarantine

Law of the People's Republic of China on Control of the Entry and Exit of Aliens

Law of the People's Republic of China on the Control of the Exit and Entry of Citizens

Securities Law of the People's Republic of China

Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises

Individual Income Tax Law of the People's Republic of China

Law of the People's Republic of China on the Administration of Tax Collection

Environmental Protection Law of the People's Republic of China

Law of the People's Republic of China on Evaluation of Environmental Effects

Law of the People's Republic of China on Promotion of Cleaner Production

Law of the People's Republic of China on Prevention and Control of Desertification

Marine Environment Protection Law of the People's Republic of China

Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution

Law of the People's Republic of China on Prevention and Control of Environmental Pollution by Solid Waste

Law of the People's Republic of China on Prevention and Control of Water Pollution

Law of the People's Republic of China on Prevention and Control of Environmental Noise Pollution

Law of the People's Republic of China on Prevention and Control of Radioactive Pollution

Frontier Health and Quarantine Law of the People's Republic of China

Labour Law of the People's Republic of China

Trade Union Law of the People's Republic of China

Searching Website for the Related Laws

1. Searching System of Laws and Regulations of China (website of National People's Congress of China)

http://law.npc.gov.cn:87/home/begin1.cbs

2. China Legislative Information Network System

http://www.chinalaw.gov.cn/jsp/jalor/index.jsp

3. Ministry of Commerce

http://www.mofcom.gov.cn

The above-mentioned websites are for reference only.

(ii) Key Industries with Outstanding Development

1. Hydropower: Foreign investors are encouraged to set up small-sized rural hydropower projects. Projects with investment of below RMB 30 million yuan or installed capacity of below 5000KW shall be checked and approved by the city and county-level governments.

2. Mineral products: Development of such key mineral products as manganese, aluminum, zinc, magnesium, barium, phosphorus and so on shall be emphasized.

3. Processing of forest products.

4. Processing of agricultural products.

5. Industry of traditional Chinese medicine.

6. Tourism.

Foreign Exchange Registration

Foreign Exchange Registration Application of Foreign-funded Enterprises

Before registered in the Administration of Foreign Exchange, the foreign-funded enterprise shall obtain approval document and Certificate of Approval for Establishment of Enterprises with Foreign Investment from the administrative department of commerce, and obtain the Business License issued by administrative department for industry and commerce.

After registered in the Administration of Foreign Exchange, the enterprises may obtain Foreign Exchange Registration Certificate for Foreign-funded Enterprise, which shall be presented during handling foreign exchange business in the Administration of Foreign Exchange or in the banks.

Application Documents

1. Registration Form Providing General Information about the Foreign-funded Enterprise and Foreign Exchange Registration Certificate of Foreign-funded Enterprise with the official seal of the applicant.

2. Duplicate of Business License; Non-corporation Contractual Joint Venture Shall Submit the business license (examining the original copy or the duplicate with the original seal; keeping the duplicate on file);

3. Approval document and the original copy of the Certificate of Approval for establishment of enterprises, issued by administrative department of commerce;

4. Contracts and Regulations of Equity Joint Venture & Contractual Joint Venture (examining the original copy or the duplicate with the original seal; keeping the duplicate on file);

5. Code Certificate of Institutional Framework issued by State Administration of Quality and Technology Supervision;

6. A Lost Notice shall be issued on the nationwide newspapers for reapplying the Foreign Exchange Registration Certificate for Foreign-funded Enterprise.

Note: Other issues may be consulted at the local Adminstrative Department of Foreign Exchange.

Hunan Bureau of State administration of Foreign Exchange

Address: No.2, Cai'e zhong Road, Changsha, Hunan

Postal Code: 410005

Tel: 86-731-4301658

(iii) Procedures for Foreign-funded Projects

Examination and Approval Procedure for Establishment of Chinese-foreign Joint Venture and Cooperative Enterprise in Hunan Province

Examination and Approval Procedure for Establishment of Wholly Foreign-owned Enterprise

Note: The issues involved in land shall be contacted and negotiated with local government.

Rules on Employment

Any company established in Hunan shall pay series social welfare for staff members, including pension, work insurance, medical insurance and labour union fee.

The detailed payment shall be paid in accordance with a certain proportion of the staff salary based on the regulations of the local government (refer to the Table as follows).

Data source: 1. Changsha Municipal Bureau of Labor Force; 2. Changsha Municipal Housing Accumulation Fund Administration Center; 5% from salary for housing fund is compelling, some company may select extra allowance for the housing

The companies in Hunan implement standard one week working hours. The staff enjoys public vacations stipulated by State. Normally, one week working time is 40 hours. From Monday to Friday, the overtime work and extra work hour is permitted, but the case shall be established in accordance with agreement of employee and employer. The employment contract can be terminated sententiously, but it shall meet the regulations.

In China there are 2 documents related to the labor force. One is the Labor Law that is applicable to all companies established in Chinese territory; the other is Administrative Regulations on Labor of Foreign-funded Enterprises (1994), which is formulated for the foreign-funded enterprise only.

(iv) Residence Environment

Preferential Policy Concerning the Administration of Entry and Exit

1. Senior foreign talented persons and investors, after submitting relevant certificates, can obtain F visa with at least 2 valid terms and valid period of at most 5 years or residence permission for 2 to 5 years. The application times are not limited. Foreigners who have fairly large investment in China and have made great contributions, after submitting relevant certificates, can obtain permanent residence right (green card) in Hunan. Green card bearers are exempted from going through entry and exit visa formalities.

2. All Taiwan investors who set up factories on the mainland and senior managerial persons and their accompanying spouses or children may obtain endorsement for at most 5 years' residence and multientry and exit permission. Taiwan residents who are employed to work on the mainland may apply for endorsement for residence and multi-entry and exit permission after submitting their employment certificates or labor contracts. Those who come to the mainland for investigation, negotiation, agreement signing and preparation work may apply for endorsement for 1-year multientry and exit permission after submitting the documents issued by the relevant administrative departments.

3. Taiwan residents who accord with the following conditions may obtain permanent residence on the mainland after approval:

(1) Investors who pay an annual tax amount of at least RMB 500,000 or invest at least USD 2 million in Hunan;

(2) Much-needed talents who are engaged in scientific & technology, education & culture, medical treatment, agriculture and other fields and their spouses and children, confirmed by the Ministry of Personnel or State Administration of Foreign Experts Affairs;

4. Convenience will be brought to the overseas Chinese, the residents of Hong Kong and Macao who stay in Hunan province. With the same treatment of the domestic residents, the above personnel (including accompanying spouse and children) who invest for enterprise, study or purchase houses in Hunan and will stay for more than 3 months, will not need apply for The Temporary Residence Permit for the overseas Chinese, and the residents of Hong Kong and Macao.

5. Those who are from other provinces to Hunan, work in Chinese-foreign joint ventures, cooperative joint ventures, solely foreign-funded enterprises and enjoy impermanent dwell for more than 1 year, may apply to the public security organ where the enterprises are located to handle relevant procedures as long as they need a business visit abroad or to Hong Kong and Macao. The public security organ, after checking the applicant's registered permanent residence, will issue the permit in accordance with relevant laws.　

Directions for Foreigners Employed in Hunan

In accordance with Stipulations of Administration for Foreigners Employed in China and Measures of Hunan Province in Implementation of Stipulations of Administration for Foreigners Employed in China, the foreigners employed in Hunan shall implement the employment license system (foreigners refer to those who have not owned Chinese nationality based on the rules of the Law of Nationality of P.R.China, foreigners employed in Hunan refer to the foreigners who have not obtained the right of residence in Hunan but been engaged in society work and obtained work payment in Hunan's administrative region). The foreigners employment license system is applicable to the foreigner employed in Hunan and the organizations with foreigners employed.

Hunan Provincial Department of Labor and Labor's Social Insurance shall set up a special organ in charge of the management of foreigner employed in Hunan.

1. Operation Procedures.

In case the organizations employ foreigners, such employment application shall be submitted and approved by authorities in charge. The foreigners with approval for employment in Hunan may hold the approval certificate and invitation signed by organizations with the right of handling foreign affaires to apply for working visa in Chinese embassy and consulate. After entry the foreigners may apply and obtain the Employment Certificate, then apply and obtain Residence Certificate and Working Visa with multi-entry and exit within one year.

2. Foreigners employed in Hunan shall meet following conditions:

a. Aged 18 or above, in good health

b. Possessing needed professional skill and related working experience in his/her employment post

c. Without criminal records

d. With organizations' confirmation for the employment

e. With valid passport or other international travel documents which can replace the passport

3. Application documents for approval of foreigners employment

a. Employer's invitation

b. Letter of Intent for the employment

c. Foreigner's working experience and education background

d. Work Qualification Certificate of the Foreigners for the Employment

e. Health Status Certificate

f. Other documents according to laws and decrees

Residence Admission

The administrative procedures of entry and exit concerning foreigners:

1. The foreigners's application for entry visa, stay extension, additional visa, and visa change is called visa application and residence permit.

2. Foreigners who hold D, Z, X and J-1 visas must apply to the administrative department of entry and exit of the Public Security Bureau in the county or city where they reside for the foreigner residence permit or the foreigner temporary residence permit, not later than 30 days after the entry date.

3. Relevant status will be stated in the application process and shall answer the inquiries, and these procedures are to be followed:

a. Submit the passport, the visa and relevant effective certificate concerning international travel, including diplomatic, public affair passport

b. Fill in the visa and residence application form and submit a recent bust bareheaded picture of 2 inches.

c. Submit certificates concerning the visa and residence permit

For the personnel employed or on the duty, the investors and the legal representatives in the enterprise may obtain 2 years of effective residence permit, and other persons may obtain 1 year of residence permit.

The Procedures of Entry and Exit Concerning Taiwan Residents

1. Application for visa endorsement of entry and exit. The applicant shall apply to the administrative department of entry and exit of the Public Security Bureau in the county or city where they reside for the return, multi-entry and stay extension permit. The applicant shall go through following procedures and shall answer the inquiries:

(1) Submit a valid Certificate for Taiwan Residents Entry and Exit of China's Mainland;

(2) Fill in Application Form of Taiwan Residents Entry and Exit of China's Mainland and Pass Endorsement；

(3) Submit a recent bust bareheaded photos of 2 inches.

(4) Submit relevant certificate originals and duplicates concerning the application

2. Application for residence endorsement.

The application for residence endorsement shall be handled by the administrative department of entry and exit of the Public Security Bureau in the county or city where the applicant resides. The endorsement validity period is from 6 months to 5 years in accordance with the applicant's detailed situation.

Urban Living Environment

Changsha is the capital of the consumers and the city of fashion. In many respects Changsha can be compared with Shenzhen, Shanghai and Beijing. The market is bred fully, free, open and regular. The retail giants in the world such as Walmart, Carrefour and Metro and several renowned retail chain enterprises at home and abroad gather in Changsha, building up thick commercial atmosphere. The commodities with all colors and patterns are displayed. Changsha is called the paradise of the consumers. Hunan's catering culture has far-reaching influence. Hunan cuisine is one of the eight cuisine systems in China , with various special flavor restaurants covering all corners of the province. In 2005, the catering industry earned RMB 32 billion. The booming tourism industry promoted the hotel industry development. In Changsha there are 59 hotels above 3 star level, including 6 five-star hotels. Many high and medium grade recreation and holiday inns are distributed in towns and villages. Hunan has convenient transportation system, with expressways linking all parts of the province. It is building a 3 hour economic circle around Changsha as the center. The entertainment is rich and colorful. The cultural and amusement industry is well developed. Hunanese focus on the physical undertaking, owning public sport facilities and high grade golf course.

Education and Public Health

Hunan has long been known for respecting education. It has the earliest scholar cradle in China—Yuelu Academy and Lushan International School specially established for the children of foreign businessmen in Changsha. There are 4,097 medical institutions with 152,200 patient beds.

Driving License

The drivers holding the license of Hong Kong, Macao, and Taiwan or the foreigners holding international driving license may apply for local driving license or temporary license.

The Vehicle Administration Office may issue driving license or temporary license to the investors who are qualified after examination.

The drivers holding the license of Hong Kong, Macao, and Taiwan or the foreigners holding international driving license shall take part in the examinations of Traffic Rules and related skills and the road practical driving.

The holders who have the driving experience for 3 years may not take part in the examination of the road practical driving.

(v) Reference Prices of Basic Elements

List of the elements price for reference

Labor Costs and other Charges

Ordinary management personnel: USD 2,000 for one person per year

Ordinary workers: USD 1,000 for one person per year

Other cost of ordinary workers: USD 50 for one person per year

Charges of Transportation

Railway

Shanghai-Changsha 1,193km

Full carload for No.6 cargo a wagon (60t) RMB 8,277 yuan, RMB 138 yuan/ton;

Less than carload No.21 RMB 11.5 yuan/100kg

Highway

Changsha-Shanghai 1,350km

Full carload RMB600-800 yuan/ton;

Less than carload RMB 880yuan/ton

Water Transport

Changsha-Shanghai RMB55-100yuan/ton

Cultivated Land Expense

Benchmark Land Price in 14 Municipalities (Prefectures) of Hunan Province　 (Unit：RMB yuan/square meter)

Note: According to the rules of Doc. (GTZF (2001) No.174) promulgated by Ministry of State Land and Resources, the Datum Price of Land of the cities shall be renewed and adjusted timely. In case the datum price has no changes after 3 years, the newly- published by local government shall prevail.

Expenditure of mine prospecting right:

RMB 100 yuan shall be paid for 1km2 from the first prospecting year to the third prospecting year; RMB 100 yuan is increased every year per square kilometer from the forth year but the max amount is RMB 500 yuan per square kilometer.

Expenditure of mining right: RMB 1000 yuan every year per square kilometer

Payment of mine prospecting right: paid by once or installments based on the evaluation result confirmed

Payment of mining right: paid by once or installments based on the evaluation result, but the period for the payment shall not exceed 6 years

Mine resources compensation cost:

Mine products sales income×compensation rate×re-mining coefficient

The compensation rate shall be 0.5%-4% of the sales income based on different minerals.

State Land Source Administration Fee

(1) Administrative Fee for Land Use and Requisition:

For the use of land involving in full contract (for work, fee and time) with requisition for lump-sum cultivated land over 66.67 ha (1,000 Chinese mu) and non-cultivated land over 133,34 ha (2,000 Chinese mu), the administrative fee shall be levied 3% of the total land compensation paid for the land requisition. For the cultivated land in lump-sum requisition less than 66.67 ha. and non-cultivated land less than 133,34ha, the administrative fee shall be 4% of the total land compensation paid for the land requisition.

In case of the land requisition in semi-contract with lump sum requisition for cultivated land over 66,67 ha (1,000 Chinese mu) and non-cultivated land over 133,34 ha (2,000 Chinese mu), the administrative fee shall be 2% of the total land compensation payment. For the cultivated land requisition less than 66.67ha. and the non-cultivated land less than 133.34 ha. the administrative fee shall be 2.5 % of the total royalty.

In case of cultivated land requisition in single contract over 66.67 ha. and non-cultivated land over 133,34 ha, the fee shall be 1.5% of the total royalty. For the cultivated land requisition less than 66.67 ha. and non-cultivated land less than 133.34 ha., the fee shall be 2% of the total land compensation payment.

The use of land for project construction with the land requisition formalities to be supplemented, which is not necessary to handle the affairs compensation and resettlement but necessary to be re-surveyed and registered, the fee levied shall be RMB 100 yuan per Chinese mu, including the project land by utilizing state-owned wasteland and waste mountain allocated free of charge.

(2) Cost of approval document for project land:

Cost of certificate for use of land: RMB 5 yuan for individual, RMB 10 yuan for organization one certificate;

Special certificate: RMB 20 yuan for one certificate

(3) Prospecting and mining license:

Catalogue I, II prospecting project license: RMB 100

Other geological survey project license: RMB 50

Survey license change and replace: RMB 50

(4) Registration cost for mining:

Large scaled mine: RMB 500/ one mine;

Medium sized mine: RMB 300/ one mine

Small sized mine: RMB 200/ one mine;

Mine renewal and site change: RMB 100/one mine

IV. Development Zones

Main Development Zones

Administration and Service Department

Hunan Provincial Department of Commerce

Hunan Provincial Department of Commerce is an agency authorized by the provincial government to take charge of foreign trade, economic cooperation, investment promotion and foreign direct investment introduction of the whole province.

Tel: 86-731-2287125　2284442

86-731-2287057　2287124　2287190

Fax: 86-731-2284442 2287124

E-mail: hninvest@163.net

Website; www.hninvest.gov.cn

Hunan Association of Enterprises with Foreign Investment (HAEFI)

Add: 98 Wuyi Road, Changsha City, Hunan Province, China

Tel: 86-731-2299706, 2286819

Fax: 86-731-2288393

Organizations on Foreign Affairs