CIRCULAR OF THE MINISTRY OF COMMERCE ON PRINTING AND DISTRIBUTING THE DETAILED IMPLEMENTATION RULES FOR BID INVITATION FOR TEXTILE EXPORT QUOTA

Ministry of Commerce

Circular of the Ministry of Commerce on Printing and Distributing the Detailed Implementation Rules for Bid Invitation for Textile
Export Quota

Shang Mao Fa [2005] No.502

The commerce offices or bureaus, quota license administrations, electronic commerce centers, chambers of commerce for the import and
export of textiles, and associations of enterprises with foreign investment of all the provinces, autonomous regions, municipalities
directly under the Central Government, separate planning cities, and of Harbin, Changchun, Shenyang, Nanjing, Wuhan, Chengdu, Guangzhou
and Xi’an, and all the relevant enterprises under the Central Government:

For the purpose of improving the administration of the export of textiles, and upon the approval of the State Council, the Ministry
of Commerce will allocate the export quota of a part of textile in year 2006 through bid invitation. In order to satisfy the need
for the work of managing bid invitation, the Ministry of Commerce has formulated the Detailed Implementation Rules for Bid Invitation
for Textile Export Quota according to the Measures on Bid invitation for Export Commodities Quota (Order No.11 [2001] of the former
Ministry of Foreign Trade and Economic Cooperation), and the Detailed Implementation Rules are hereby printed and distributed to
you.

please implement it earnestly.

Ministry of Commerce

September 16, 2005 Annex:Detailed Rules For the Implementation of Bidding for Quantity of Export License of Textiles

Chapter I General Principles

Article 1

These Detailed Rules are worked out in accordance with Temporary Measures on Management of Textiles Export and Measures on Bidding
for Quota of Export Commodities.

Chapter II Management organs for bidding

Article 2

Bidding Committee for Quantity of Textiles Export License of Ministry of Commerce (hereinafter referred to as ￿￿ Bidding Committee)
has one director, one to two deputy directors and some members.

It is for competent minister of Ministry of Commerce to be the director. It is for the person in charge of Foreign Trade Department
of Ministry of Commerce to be the deputy director. Members are persons concerned of Foreign Trade Department, Department of Foreign
Investment Management, Department of Import & Export Mechanical and Electrical Products Import & Export and Department of Planning
and Finance of Ministry of Commerce.

Article 3

Bidding Committee does following duties:

1.

Examine and approve bidding plan for quantity of export license of textiles (hereinafter referred to as ￿￿export quantity￿￿), including:

(1)

Fix the category, quantity and time of bidding;

(2)

Draw up standard of qualifications for project bidding and verify the qualifications of the enterprises bidding for a project;

(3)

Set the proportion of the payment of the earnest money for winning a bid;

(4)

Other issues that need to be made clear in bidding plan.

2.

All kinds of circulars, announcements and decisions in which bid is published;

3.

Take care of bid opening and bid comparison; and approve bidding result;

4.

Handle the record of the quantity and transferred quantity handed over by the enterprises reported by Bidding Office;

5.

Examine earnest money for winning the tender, the collection of money for winning the tender and the use of export quantity;

6.

Other issues that need to be decided by Bidding Committee.

Foreign Trade Department of Ministry of Commerce is responsible for daily work of Bidding Committee.

Article 4

Bidding Office is composed of one director, one deputy director and some members. The person who is in charge of China Chamber of
Commerce For Import & Export of Textile (CCCT) is the director. The deputy director and the members are representatives and related
professionals of CCCT, China Association of Foreign Invested Enterprises and cooperative departments of corresponding industries.

Bidding Office takes the rules of one person one vote and the minority should be subordinate to the majority.

Article 5

Bidding Office does following duties:

1.

Make bidding plan. Bidding Office organizes the representatives of the industry to discuss the standard of qualifications for entering
a bid and other important issues in the plan, make preliminary plan by vote and then report it to Bidding Committee for approval;

2.

Fix the name list of the enterprises that entering a bid according to the standard of bidding qualifications and report them to Bidding
Committee for approval;

3.

All circulars, announcements and decisions about public bidding are reported to Bidding Committee together for approval;

4.

Choose uniform pattern for all kinds of electronic certificates relating management of public bidding, including Payment Receipt for
Winning a Bid in Public Bidding for Quantity of Export License of Textiles, Certificate of Applying for Export License of Textiles
Under Public Bidding, Certificate of Transferring and Assigning Export Quantity of Textiles Under Public Bidding and etc., and responsible
for electronic transmission and verification of related certificates;

5.

Verify the enterprises’ payment of earnest money or amount for winning a bid, and report to Bidding Committee;

6.

Accept export quantity handed over by the enterprises, recall export quantity that could not be used, and report to Bidding Committee
for approval. Handle and approve the application of the enterprises for transferring export quantity, and report to Bidding Committee
for record;

7.

Examine and supervise enterprises’ export quantity and the situation of use of License, follow and verify export of commodities for
public bidding and the changes of the market, and report to Bidding Committee quarterly;

8.

Handle other issues relating with public bidding assigned by Bidding Committee.

CCCT is responsible for daily works of Bidding Office.

Chapter III Qualifications for entering a bid

Article 6

Qualifications for entering a bid

All the enterprises that have export qualifications in accordance with related national rules, registered in industrial and commercial
administrations and have export achievements in bidding categories within fixed period in global market may enter a bid.

The period and the standard of export amount stipulated in above paragraph are published by Bidding Committee in the announcement
of public bidding.

Article 7

Examination of the qualifications of entering a bid

1.

Preliminary examination

Commercial Departments (Bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, cities
specifically designated in the state plan, and Harbin, Changchun, Shenyang, Nanjing, Wuhan, Chengdu, Guangzhou and Xi’an (hereinafter
referred to as ￿￿local commercial administrations￿￿) are responsible for preliminary examination of local enterprises’ qualifications
of entering a bid. Beijing Commercial Bureau is responsible for preliminary examination of bid entering qualifications of the enterprises
managed by Central Government in Beijing. Local competent commercial administrations are responsible for preliminary examination
of bid entering qualifications of Central Government-managed enterprises in the local areas.

All local competent commercial administrations should finish preliminary examination within 5 working days at the receipt of the application
and report the result of the examination to Bidding Office.

2.

Reexamination

Bidding Office should make reexamination of bid entering enterprises within 5 working days and submit the result of the reexamination
and related materials to Bidding Committee for approval.

Article 8

The statistical data (Ten commodity codes are used in the calculation) of China General Administration of the Customs should be taken
as criterion for examining export achievements of bid entering enterprises.

Chapter IV Bid evaluation rules and procedures

Article 9

Bidding Office should submit the plan for public bidding to Bidding Committee for approval. After approval, Bidding Committee publishes
the announcement of public bidding in the appointed press medium.

Article 10

Price of bidding a project

Bid entering enterprises decided by themselves the price of bidding a project. In order to avoid unreasonable low price, Bidding Committee
may set and publish the lowest price of bid for a project in advance in light of concrete conditions. Both the bid sheets under the
lowest bid entering price and the high price bid sheets that the price goes against the level of normal price are deemed as rejected
bid,

Article 11

Quantity of bidding for a project

In order to avoid the quantity of bidding for a project is too concentrated or dispersed, Bidding Committee sets the lowest tender
quantity for different categories in light of concrete conditions, grade the quantity and set the superior limit of tender quantity
for the enterprises at all levels according to export amount of the enterprises bidding for a project.

The lowest tender quantity, the standard in grades and superior limit stipulated in above paragraph are published in bidding announcement,

Bid sheets that the quantity is lower than the lowest bidding quantity or higher than superior bidding limit are deemed as rejected
bid.

Article 12

Style of bidding for a project

The enterprises must bidding for a project within fixed time by electronic bid sheets. Electronic tender sheets are taken as criterion
for tender closing, tender opening and tender evaluation. All enterprises can only bid for a project once within the fixed closing
date. The enterprises must receive feedback information of bid sheets arrival sent by China International Electronic Business Center
through computer after the enterprises send electronic bid sheets. Bidding for a project is not finished until the bid sheets are
confirmed arrival safely. If the enterprises can not send their electronic bid sheets within fixed time, they are deemed as giving
up the qualification of bid for a project.

Article 13

Chairman of Bidding Committee is in charge of bid evaluation and confirms qualified bid sheets in accordance with Article 10 , 11
and 12 of these rules.

Article 14

Electronic bid sheets are deemed as rejected tender in case of one of following cases:

1.

The bid sheets that an enterprise applies for rejected bid sheets to Bidding Committee before the stipulated time of opening a bid;

2.

The bid sheets sent after fixed bid closing limit;

3.

The bid sheets that an enterprise sends more than two copies (including two) in the fixed time, no matter the content is the same
or not;

4.

Other bid sheets that should be deemed as rejected bid sheets in accordance with these rules.

Article 15

Affirmation of the enterprises winning a bid

Tender price of all qualified enterprises is listed from high to low. Tender quantities of the enterprises bidding for a project are
added up sequentially. When the added tender quantity is equal to total quantity of bid invitation, the enterprise that its quantity
is listed into added total tender quantity (Total quantity of bid invitation) is the enterprise winning the bid.

If the sum of tender quantity of the enterprises whose price is the lowest tender price exceeds surplus export quantity, all the enterprises
that give this price win the tender except for those whose tender quantity is lower than the lowest tender quantity.

Article 16

Affirmation of tender price and tender quantity

The tender price of the enterprise winning the bid is their price to bid for a project. Tender quantity of the enterprise winning
the bid is their tender quantity. If the sum of tender quantity of the enterprise giving the lowest price exceeds surplus export
quantity, the enterprise in the level of this price allocates surplus export quantity according to the proportion of its tender quantity.
If the enterprise’s tender quantity is lower than the lowest tender quantity, it should be dealt with as it doesn’t win the bid.

Article 17

Bidding Committee publishes preliminary result of winning the bid in the day of tender open by electronic ways. If the enterprises
bidding for a project have any questions, they may submit them to Bidding Office within 2 working days as of the date of preliminary
publishing the result of bid winning. Bidding Office should submit preliminary result of bid winning to Bidding Committee for approval
within 3 working days as of the publishing date.

Article 18

Bidding Committee should inform Bidding Office to publish the name list of the enterprises winning the bid within 2 working days after
approval of the result of bid winning.

Article 19

Bidding Office should send formal bid winning result to the enterprises winning the bid in time through electronic tender system in
accordance with the circular of Bidding Committee.

Chapter V Payment for winning a bid

Article 20

The enterprises winning a bid should pay bid winning pond and bid winning money. It can’t be paid by other enterprises:

1.

The enterprises winning a bid should remit bid winning bond to assigned bank account by cheque, draft, remittance and other forms
within fixed period (The date of money arriving the account is taken as criterion), and send Payment Evidence of Bid Winning Amount
of Bidding for Quantity of Export License of Textiles. No matter the export quantity of winning a bid is used up or not, bid winning
bond will not be returned.

2.

Bid winning bond of ten percent of the enterprises that winning a bid at highest price in every lot every category is 100 per cent
of bid winning amount. The proportion of bid winning bond of other enterprises is 30 per cent. The enterprises winning a bid must
pay all bid winning bond for bid winning export quantity of all categories in the same bid inviting lot once. The enterprises of
winning a bid are not allowed to give up export quantity of some categories of winning a bid, and only pay bid winning bond of export
quantity of surplus part of bid winning categories.

3.

The enterprises pay corresponding amount of balance of bid winning bond to appointed bank account according to the quantity of obtaining
the license, and send Payment Evidence of Bid Winning Amount of Export License Quantity of Textiles by electronic ways.

Article 21

At the receipt of bid winning amount paid by the enterprises, Bidding Office sends Certificate of Applying for Export License of Textiles
by electronic ways.

Article 22

Bidding Office should report the payment collection to Bidding Committee within 5 working days after the closing date of collecting
bid winning bond.

Chapter VI Handing over, transferring, assigning and recalling of export quantity

Article 23

The enterprises may hand over or transfer bid winning export quantity in this annual year according to the principle of volunteer
through Bidding Office.

Article 24

The date that enterprises hand over export quantity to Bidding Office should not be later than July 31 of the export quantity in the
same annual year. The export quantity handed over is not listed in wasted quantity.

To the export quantity handed over by the enterprises that Bidding Office receives before July 31, the export quantity that corresponding
bid winning amount has been paid may be returned, but bid winning bond should not be returned.

Article 25

Bid winning enterprises may transfer export quantity after paying corresponding amount of bid winning for the export quantity they
plan to transfer to appointed bank account. They may also transfer it after paying bid winning bond. Surplus amount of bid winning
is paid by assigned enterprise when they use export quantity.

Article 26

The enterprises transferring or accepting export quantity must submit the applications that both sides agree to transfer and accepting
export quantity to Bidding Office in the form of electronic ways for approval. The assigned enterprises must register in industrial
and commercial administrations and have qualifications of export business.

Article 27

New adjustment mechanism for export quantity is established in the light of needs in accordance with the measures approved by Ministry
of Commerce.

Article 28

Bidding Office should report the export quantity handed over by the enterprises to Bidding Committee within 3 working days at the
receipt of the export quantity and finfish the approval of the application for transferring and accepting export quantity according
to rules within 3 working days at the receipt of the applications, and report the Certificate of Transferring and Accepting Export
Quantity of Textiles in Bid Invitation of electronic edition to Bidding Committee regularly for record. And at the same time inform
China International Electronic Business Center.

Article 29

Bidding Office should cut the export quantity handed over or transferred by the enterprises from the quantity that the enterprises
handing over export quantity or transfer export quantity of winning a bid, send Certificate of Applying for Export License of Textiles
in Bid Invitation in electronic form to assigned enterprises at the same time when they send Certificate of Transferring and Accepting
Export Quantity of Textiles, and inform related license issuing organs separately in electronic form.

Article 30

Bid winning enterprises must pay 100 per cent of bid winning money to the bank account appointed by Bidding Committee before October
31 of export quantity in this annual year. To the export quantity that 100% bid winning amount has not been paid, Bidding Committee
will deem that it can not be used and recall it and does not return bid winning bond that has already been paid, and also recall
20 per cent of export quantity as wasted export quantity of the enterprise in this category the same year.

Article 31

To export quantity recalled, handed over and other surplus export quantity, Bidding Committee may make bid invitation again or deal
with in other forms approved by Ministry of Commerce according to the quantity.

Chapter VII Export License

Article 32

Name list of the enterprises winning a project in bidding of export quantity and the quantity won by the enterprises are approved
by Ministry of Commerce and distributed to all related license issuing organs and local competent commercial administrations.

Article 33

Export license of tender commodities may be issued not only in accordance with the regulations of export license management but also
in accordance with Certificate of Transferring and Accepting Export Quantity of Textiles or Certificate of Applying for Export License
of Textiles Under Tendering distributed by Bidding Office in electronic form.

Chapter VIII Punishment Principles

Article 34

Punishment should be given in accordance with Measures on Quota Tender of Export Commodities and Measures for Implementation of Administrative
Punishment of Ministry of Commerce in case of following activities during public bidding in accordance with Measures on Bidding for
Quota of Export Commodities and Measures for Implementation of Administrative Punishment of Ministry of Commerce. The serious cases
should be transferred to judicial departments for investigating and affixing criminal responsibilities.

1.

Any cheating activities of violating these rules;

2.

The activities of disturbing public bidding by acting in collusion to tender, false declaration of tender qualifications and other
means;

3.

The activities that one wins a project but doesn’t pay tender bond in accordance with regulations;

4.

Other activities that disrupt public bidding intentionally.

Article 35

Export quantity should be deemed as wasted export quantity if the enterprises do not hand over, transfer the quantity in accordance
with rules and do not obtain export license before the closing date of period of validity, or though obtain export license, do not
use the same export quantity in the license.

The enterprises whose wasted rate of tender export quantity is less than 5 per cent is exempted from punishment. If the enterprises
whose waste rate of tender export quantity less or equal to 5 per cent is less than 30 percent, their tender qualifications in next
year should be cancelled. If the enterprises whose waste rate of tender export quantity is more than 30 per cent, their tender qualification
for the same category of commodities in the next two years is cancelled.

The account formula of wasted rate for export quantity of winning a bid is as follows:

Waste rate of export quantity of winning a project = (The quantity that 100 percent amount of winning a project has been paid, but
the quantity has not been used + wasted rate of 20 per cent of recalled quantity of winning a bid) / (Tender winning quantity – transferred
quantity + assigned quantity – quantity handed over)

Chapter IV Supplementary Articles

Article 36

Bidding Committee open special account in the appointed bank for collecting tender bond and tender amount. CCCT is trusted to handle
concrete affairs. Bank of deposit and account information are published in the announcement for bidding by Bidding Committee.

Article 37

The announcement, circular and etc. of bidding for export quantity of textiles are published in International Business Daily and China
International Electronic Business Net by Bidding Committee.

Article 38

Any units, organizations or individuals can not publish regulations, announcements or circulars relating to bidding for export quantity
of textiles without the approval of Ministry of Commerce or Bidding Committee.

Article 39

The interpretation of these rules is vested in Ministry of Commerce.