REPLY OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE RELEVANT TAXATION ISSUES IN THE GUIDING CATALOGUE OF INDUSTRIES FOR FOREIGN INVESTMENT

State Administration of Taxation

Reply of the State Administration of Taxation Concerning the Relevant Taxation Issues in the Guiding Catalogue of Industries for
Foreign Investment

Guo Shui Han [2005] No. 739

The State Taxation Bureau of Guangxi Zhuang Autonomous Region:

The Request for Instructions on Clarifying the Relevant Taxation Issues in the Guiding Catalogue of Industries for Foreign Investment
(Gui Guo Shui Fa [2005] No. 162 ) has been received, we hereby make the follow reply:

In July of 2004, the National Development and Reform Commission and the Ministry of Commerce jointly promulgated Decree No. 13, a
new Catalogue of Preponderant Industries for Foreign Investment in Central-western Regions (hereinafter refers to as the Catalogue
of Preponderant Industries), which were implemented as of the day of September 1, 2004. The old Catalogue of Preponderant Industries
for Foreign Investment in Central-western Regions promulgated by the original Economic and Trade Committee, the original State Planning
Committee and the original Ministry of Foreign Trade and Economic Cooperation in 2000 shall be annulled therefrom. For the problem
of linking up implementation between the new and old Catalogue of Preponderant Industries involving the exploration of central-western
regions and any other tax preference policies, it shall be implemented in the light of the principles of “the new Catalog applies
to new enterprises and the old Catalogue applies to old enterprises” as prescribed in the Notice of the State Administration of Taxation
on Implementing the Relevant Taxation Issues in the New Guiding Catalogue of Industries for Foreign Investment ( Guo Shui Fa [2002]
No. 63 [2002]) and the specific measures uniformly. The foreign investment projects as approved before September 1, 2004 that exclude
the range of the old Catalogue of Preponderant Industries but falls into the range of the new Catalogue of Preponderant Industries
shall be implemented in accordance with the principles of the original provisions and may not enjoy the relevant tax preference policies
in the light of the New Catalogue ..

State Administration of Taxation

July 23, 2005

State Administration of Taxation
2005-07-23

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION REGARDING THE RELEVANT POLICIES OF ENTERPRISES INCOME TAXES ON THE PURCHASE OF HOME-MADE EQUIPMENT BY FOREIGN INVESTMENT ENTERPRISES AND FOREIGN ENTERPRISES

Ministry of Finance, State Administration of Taxation

Notice of the Ministry of Finance and the State Administration of Taxation Regarding the Relevant Policies of Enterprises Income Taxes
on the Purchase of Home-made Equipment by Foreign Investment Enterprises and Foreign Enterprises

Cai Shui [2005] No. 74

The bureaus of finance of all provinces, autonomous regions, municipalities directly under the Central Government and the cities specifically
designated in the state plan, the state taxation bureaus, the local taxation bureaus and the bureau of finance of Xinjiang Construction
and Production Corps, the financial supervision commissioners’ offices of the Ministry of Finance of all provinces, autonomous regions,
municipalities directly under the Central Government and the cities specifically designated in the state plan:

For the relevant polices concerning the deduction or exemption of the enterprise income taxes by investment for the purchase of home-made
equipment by foreign investment enterprises and foreign enterprises, and the policies concerning the refund of enterprise income
taxes for re-investment of the relevant profits, we hereby make the following notice after deliberation:

In accordance with the provisions of Article 9 of the Law of the People’s Republic of China on the Income Taxes of Foreign Investment
Enterprises and Foreign Enterprises, as for the deduction or exemption of the enterprise income taxes by investment for the purchase
of home-made equipment by foreign investment enterprises and foreign enterprises, the tax amount as deducted or exempted shall be
computed in the light of the enterprise income taxes and the local income taxes as actually collected.

II.

Where a foreign investor of a foreign investment enterprise re-invests the profits got from his investment in China, and if the enterprise
income tax amount of the foreign investment enterprise as actually collected has already deducted or exempted the amount of enterprise
income tax by investment for the purchase of home-made equipment as allowed, the tax refund amount for re-investment shall be computed
according to the actual burden of the enterprise. To be specific, the “original actual applicable enterprise income tax rate” and
the “local income tax rate” in the provisions of Article 82 of the Detailed Rules of Implementing the Law of the People’s Republic
of China on the Income Taxes of Foreign Funded Enterprises and Foreign Enterprises shall be determined in the light of the formulas
as follows:

Original actual applicable enterprise income tax rate = Enterprise income tax amount as actually paid by foreign investment enterprises
in the year of after-tax profits/Payable income tax amount of the foreign investment enterprise in the year

Original actual applicable local income tax rate = Local income tax amount as actually paid by the foreign investment enterprise in
the year of after-tax profits/Payable income tax amount of the foreign investment enterprise in the year

Ministry of Finance

State Administration of Taxation

July 20, 2005

Ministry of Finance, State Administration of Taxation
2005-07-20

REGULATIONS ON DIRECT SELLING ADMINISTRATION

the State Council

Order of the State Council of the People’s Republic of China

No.443

The Regulations on Direct Selling Administration, which were adopted at the 101st executive meeting of the State Council on August
10, 2005, are hereby promulgated, and shall go into effect as of December 1st, 2005.

Premier of the State Council Wen Jiabao

August 23rd, 2005

Regulations on Direct Selling Administration

Chapter I General Provisions

Article 1

With a view to regulating direct selling acts, strengthening supervision over direct selling activities, preventing fraud and protecting
the legitimate rights and interests of consumers and public interests, the present Regulations are formulated.

Article 2

The present Regulations shall be subject to the direct selling activities undertaken within the territory of the People’s Republic
of China.

The scope of direct selling products shall be determined and promulgated by the competent department of commerce of the State Council
jointly with the administrative department of industry and commerce of the State Council on the basis of the development of the direct
selling industry and the demands of consumers.

Article 3

The term “direct selling” as mentioned in the present Regulations refers to a type of business mode, in which direct selling companies
recruit door-to-door salesmen to sell products directly to ultimate consumers(hereinafter referred to as consumers)outside the companies’
fixed places of business.

The term “direct selling companies” as mentioned in the present Regulations refers to the companies which, upon approval, sell products
by way of direct selling according to the provisions of the present Regulations.

The term “door-to-door salesmen” as mentioned in the present Regulations refers to any personnel who sell products directly to consumers
outside the fixed places of business.

Article 4

Any company that is established within the territory of the People’s Republic of China (hereinafter referred to as the company) may,
in accordance with the provisions of the present Regulations, apply for establishing a direct selling company that sells the products
produced by itself or the products produced by its parent company or holding company by way of direct selling.

A direct selling company may obtain the trade right and distribution right according to law.

Article 5

When undertaking direct selling activities, no direct selling company or its door-to-door salesman may conduct any fraudulent or misleading
acts and other drumbeating and sales promotion acts.

Article 6

The competent commerce department and the administrative department of industry and commerce of the State Council shall, in line with
the division of their responsibilities and the provisions of the present Regulations, be responsible for conducting supervision and
administration on direct selling companies and door-to-door salesmen as well as their direct selling activities.

Chapter II Establishment and Alteration of Direct Selling Companies and Their Branches

Article 7

Anyone applying for establishing a direct selling company shall satisfy the following requirements:

The investor shall have good commercial reputation, and have no records of serious illegal operation during the past five years before
filing the application; in the case of a foreign investor, it shall, in addition, have undertaken direct selling business outside
China for at least three years;

The paid-in registered capital shall be no less than RMB 80 million Yuan;

The deposits shall have been fully paid in the designated bank in accordance with the provisions of the present Regulation; and

The system of information reporting and disclosure shall have been established as required.

Article 8

Anyone applying for establishing a direct selling company shall fill out the application form and provide the following application
documents and materials:

the certification documents conforming to the conditions as provided for in Article 7 of the present Regulation;

articles of association of the company; in the case of establishment of a Sino-foreign joint venture or cooperative company, the contract
of the joint venture or cooperative company shall be provided as well;

the report on market plan, including the scheme for service networks in the area where direct selling business is conducted as recognized
by the people’s governments at or above the county level, which is drawn up according to the provisions of Article 10 of the present
Regulations;

descriptions of products up to the national standards;

model sales contract to be signed with the door-to-door salesman;

report on the verification of capital as issued by an accounting firm; and

agreement concluded between the company and the designated bank on using the deposit according to the present Regulations.

Article 9

An applicant shall, through the competent commerce department at the province, autonomous region, and municipality directly under
the Central Government at its locality, file an application with the competent commerce department of the State Council. The competent
commerce department at the province, autonomous region, and municipality directly under the Central Government shall, within 7 days
as of the day of receipt of the application documents and materials, submit the application documents and materials to the competent
commerce department of the State Council. The competent commerce department of the State Council shall, within 90 days as of the
day of receipt of all the application documents and materials, and upon the opinions solicited from the administrative department
of industry and commerce of the State Council, make a decision on whether or not to approve it. And if an approval is granted, it
shall issue the direct selling license.

An applicant shall, upon the strength of the direct selling license issued by the competent commerce department of the State Council,
apply for registration of alteration to the administrative department of industry and commerce according to law. The competent commerce
department of the State Council shall, when carrying out examination and issuing the direct selling license, take into account such
factors as national security, public interests, and the development of the direct selling sector, etc.

Article 10

When undertaking direct selling business, a direct selling company shall, in the administrative regions of the provinces, autonomous
regions, and municipalities directly under the Central Government where it plans to undertake direct selling business, establish
branches(hereinafter referred to as branches), which shall be responsible for the direct selling business within their regions respectively
.

A direct selling company shall, within the area where it undertakes direct selling business, establish service networks which may
facilitate and satisfy consumers and door-to-door salesmen to know about the price of products and returning and changing of products
and for the company to provide other services. The establishment of such service networks shall satisfy the requirements of the local
people’s governments at or above the county level.

When applying for establishment of branches, a direct selling company shall provide the certification documents and materials complying
with the provisions of the preceding paragraph, and shall file an application according to the procedures as provided for in paragraph
one of Article 9 of the present Regulations. After approval is granted to the application, the company shall register with the administrative
department of industry and commerce according to law.

Article 11

In the case of any major alteration in the contents as listed in Article 8 of the present Regulations, a direct selling company shall,
in light of the procedures as provided for in paragraph one of Article 9 of the present Regulations, report it to and seek approval
from the competent commerce department of the State Council.

Article 12

The competent commerce department of the State Council shall promulgate on the government website the name list of the direct selling
companies and their branches, and update it in a timely manner.

Chapter III Recruiting and Training of Door-to-door salesmen

Article 13

A direct selling company and its branches may recruit door-to-door salesmen. Any other entity or individual is not allowed to recruit
any door-to-door salesman.

The lawful selling activities of door-to-door salesmen may not be investigated and punished on the ground of unlicensed business.

Article 14

No direct selling company or any of its branches may promulgate any advertisements drumbeating the remunerations for its door-to-door
salesmen, nor may it have the payment of fees or purchase of commodities as the conditions for becoming a door-to-door salesman thereof.

Article 15

No direct selling company or any of its branches may recruit the following personnel as a door-to-door salesman:

person under the age of 18;

person without capacity or with limited capacity for civil conduct;

full-time school students;

teachers, medical personnel, public servants and soldiers in active service;

formal employees of the direct selling company;

overseas personnel; and

personnel as prohibited from taking part-time jobs by laws or administrative regulations.

Article 16

A direct selling company and its branches shall conclude a sales contract with any door-to-door salesman it recruits, and shall ensure
that its door-to-door salesmen carry out direct selling business only in the province, autonomous region, and municipality directly
under the Central Government where one of its branches has established service location. Any person who fails to conclude a sales
contract with a direct selling company or any of its branches may not carry out direct selling business by any way.

Article 17

A door-to-door salesman may, within 60 days as of the day of conclusion of the contract, rescind a sales contract at any time; after
the 60 days as of the day of conclusion of the contract, it shall notify the direct selling company 15 days before rescinding the
sales contract.

Article 18

A direct selling company shall be responsible for organizing the vocational training and examination of the door-to-door salesmen
it recruits, and shall issue the certificates of door-to-door salesman to the door-to-door salesmen who have passed the examination.
Anyone who fails to obtain the certificate of door-to-door salesman may not undertake direct selling activities.

No direct selling company may charge the door-to-door salesman any fees for the vocational training and examination.

No entity or individual outside a direct selling company is allowed to organize the vocational training of door-to-door salesmen in
any name.

Article 19

The teaching staff who give vocational training to door-to-door salesmen shall be the formal employees of the direct selling company,
and shall satisfy the following requirements:

Having worked in the companies for more than one year;

Having received graduate or post-graduate education and having the relevant professional knowledge of law and marketing;

Having no records of being punishment for deliberate crimes; and

Having no records of major illegal operation.

A direct selling company shall issue the certificates of direct selling trainer to the teaching staff that satisfy the provisions
of the preceding paragraph, and shall report the name list of the personnel who have obtained the certificate of direct selling trainer
to the competent commerce department of the State Council for record. The said department shall promulgate on the government website
the name list of the personnel who have obtained the certificate of direct selling trainer.

No foreigner may undertake the vocational training of door-to-door salesmen.

Article 20

The certificate of door-to-door salesman and the certificate of direct selling trainer issued by a direct selling company shall be
printed in the format as prescribed by the competent commerce department of the State Council.

Article 21

A direct selling company shall be responsible for the legitimacy of the vocational training of door-to-door salesmen, the training
order and the safety of the training places.

A direct selling company and its direct selling trainers shall be responsible for the legitimacy of the teaching contents of vocational
training of door-to-door salesmen.

The concrete measures for the administration of vocational training of door-to-door salesmen shall be separately formulated by the
competent commerce department of the State Council and the administrative department of industry and commerce of the State Council
in conjunction with the relevant departments.

Chapter IV Direct Selling Activities

Article 22

When selling products to consumers, a door-to-door salesman shall comply with the following provisions:

showing the certificate of door-to-door salesman and the sales contract;

not entering into the abode of any consumer to sell products compulsively without the consent of the consumer, stopping promotion
activities immediately and leaving the consumer’s abode if the consumer requires him to do so;

giving consumers detailed account of the company’s system of returning goods before the bargain is struck; and

providing consumers with invoices as well as the sales voucher containing such contents as the system of returning goods, the address
of the local service location of the direct selling company and the telephone number, etc. issued by the direct selling company after
the bargain is struck.

Article 23

A direct selling company shall clearly mark the product price on the direct selling product, and the price shall be consistent with
the price of the product as showed at the service website. A door-to-door salesman shall sell direct selling products to consumers
at the marked price.

Article 24

A direct selling company shall pay remuneration to its door-to-door salesmen at least on a monthly basis. The remunerations paid to
any door-to-door salesman by a direct selling company shall be calculated on the basis of the income gained from selling products
directly to consumers by the door-to-door salesman himself/herself, and the total remuneration (including commission, bonus, various
awards and other economic benefits, and etc.) may not exceed 30% of the income gained from selling products directly to consumers
by the door-to-door salesman himself/herself.

Article 25

A direct selling company shall establish and put into practice the sound system of changing and returning of goods.

Any consumer may, within 30 days as of the day of purchasing any direct selling product, upon the strength of the invoice or the sales
voucher issued by the direct selling company , change or return the product to the direct selling company or its branches, or the
service website at his locality or the door-to-door salesman who sells the product, on the condition that the product remains unopened.
The direct selling company and its branches, the service website at his locality or the door-to-door salesman shall, within 7 days
as of the day when the consumer requests for changing or returning the product, handle the change or return of the product according
to the price as made out in the invoice or the sales voucher.

A door-to-door salesman shall, within 30 days as of the day of purchasing the direct selling product, upon the strength of the invoice
or the sales voucher issued by the direct selling company, change or return the product to the direct selling company or its branches,
or the service website at his locality, on the condition that the product remains unopened. The direct selling company and its branches,
or the service website at his locality shall, within 7 days as of the day when the door-to-door salesman requests for changing or
returning the product, handle the changing or returning of the product according to the price as made out in the invoice or the sales
voucher.

Except for the circumstances as prescribed in the two preceding paragraphs, where a consumer or door-to-door salesman requests changing
or returning any product, the direct selling company or its branches or the service website at his locality and the door-to-door
salesman shall, according to the provisions of the relevant laws and regulations or the stipulations of the contract, change or return
the product.

Article 26

If any dispute arises from changing or returning goods between any direct selling company and any of its door-to-door salesman or
between any direct selling company or its door-to-door salesmen and any consumer, the former shall bear the burden of proof.

Article 27

A direct selling company shall bear the joint responsibility for the direct selling acts of any of its door-to-door salesmen, unless
it can prove that the direct selling act of the door-to-door salesman has nothing to do with the company.

Article 28

A direct selling company shall, in accordance with the provisions of the competent commerce department of the State Council and the
administrative department of industry and commerce of the State Council, establish and put into practice a sound information reporting
and disclosure system.

The provisions on the contents and ways of the information reporting and disclosure of any direct selling company and the relevant
requirements shall be separately prescribed by the competent commerce department of the State Council and the administrative department
of industry and commerce of the State Council.

Chapter V Deposit

Article 29

A direct selling company shall open a special account in the bank designated by the competent commerce department of the State Council
together with the administrative department of industry and commerce of the State Council, and put a deposit into it.

The deposit shall be RMB 20 million Yuan at the time when a direct selling company is established. After the direct selling company
starts operation, the deposit shall be adjusted on a monthly basis, and the amount shall remain at 15% of its sales income from direct
selling products of the previous month, but may not exceed RMB 0.1 billion Yuan at the maximum and not less than RMB 20 million Yuan
at the minimum. The interest of the deposit shall be owned by the direct selling company.

Article 30

In the case of any of the following circumstances, the deposit may be used upon the decision jointly made by the competent commerce
department of the State Council and the administrative department of industry and commerce of the State Council:

A direct selling company fails to pay remuneration to its door-to-door salesmen without justifiable reasons, or fails to pay the money
for returned goods to door-to-door salesmen and consumers;

A direct selling company involves itself in such circumstances as suspension of business, merger, dissolution, transfer and bankruptcy
and etc., and lacks the ability to pay remuneration to its door-to-door salesmen or to pay the refunds to door-to-door salesmen or
consumers; or

A direct selling company shall make compensation for any damage to consumers due to the quality of its direct selling products under
the law, but it refuses to do so without justifiable reasons or lack the ability to make compensation.

Article 31

Where any deposit is used according to the provisions of Article 30 of the present Regulations, the direct selling company shall,
within one month, replenish the deposit to the level as prescribed in paragraph two of Article 29 of the present Regulations.

Article 32

No direct selling company is allowed to offer the deposit as a guarantee or use it to discharge debts in violation of the present
Regulations.

Article 33

Where a direct selling company no longer undertakes any direct selling business, it may withdraw the deposit from the aforesaid bank
upon the strength of the credence issued by the competent commerce department of the State Council and the administrative department
of industry and commerce of the State Council.

Article 34

The competent commerce department of the State Council and the administrative department of industry and commerce of the State Council
shall be jointly responsible for the routine supervision on the aforesaid deposit.

The specific measures for payment and use of the deposit shall be separately formulated by the competent commerce department of the
State Council and the administrative department of industry and commerce of the State Council in conjunction with the relevant departments.

Chapter VI Supervision and Administration

Article 35

The administrative department of industry and commerce shall be responsible for the routine supervision and administration on direct
selling companies and door-to-door salesmen and their direct selling activities. The administrative department of industry and commerce
may conduct on-site inspection by taking the following measures:

conducting inspection by entering into the relevant companies;

requiring the relevant enterprises to provide the relevant documents, materials and certification documents;

inquiring of the parties concerned, the interested parties and other relevant personnel about the relevant issues, and requiring them
to provide the relevant materials;

consulting, copying, seizing and detaining the relevant materials and illegal property of the relevant enterprises that are related
to direct selling activities; and

checking up the certificates of direct selling trainers and the certificates of door-to-door salesmen and other certificates of the
relevant personnel.

When the administrative department of industry and commerce carries out on-site inspection pursuant to the preceding provisions, there
shall be no less than two inspectors who shall show lawful certificates. The implementation of seizure or detention shall be subject
to the approval of the person-in-charge of the administrative department of industry and commerce at or above the county level.

Article 36

When conducting routine supervision and administration, in case the administrative department of industry and commerce discovers that
the relevant enterprises commit any act suspected of violating the present Regulations, it may, upon the approval of the person-in-charge
of the administrative department of industry and commerce at or above the county level, order them to suspend their business operations.

Article 37

The administrative department of industry and commerce shall set up and publicize the informants’ hot-line, and accept the report
and complaints on acts that violate the present Regulations, and make investigation on and handle them in a timely manner.

The administrative department of industry and commerce shall keep secret of the informants, and shall, according to the relevant provisions
of the State, grant awards to those meritorious informants.

Chapter VII Legal Liabilities

Article 38

Where the relevant departments and their staff members that carry out administration and supervision on direct selling companies and
door-to-door salesmen and their direct selling activities, grant license to any application that fails to comply with the conditions
as prescribed in the present Regulations, or do not perform the duty of supervision and administration in line with the provisions
of the present Regulations, the person-in-charge who is directly responsible and other personnel held directly liable shall be given
administrative sanctions according to law. If a crime is constituted, they shall be investigated for criminal liabilities according
to law. The license granted to any application that does not comply with the conditions as prescribed in the present Regulations
shall be revoked by the relevant department that has made the decision on granting the license.

Article 39

Where a direct selling company violates the provisions of Articles 9 and 10 of the present Regulations by undertaking direct selling
activity without approval, it shall be ordered by the administrative department of industry and commerce to make corrections, and
shall be subject to the confiscation of its direct selling products and illegal sales income as well as a fine of not less than 50,000
Yuan but not more than 300,000 Yuan. If the circumstances are serious, it shall be imposed upon a fine of not less than 300,000 but
not more than 500,000 Yuan, and shall be banned according to law. If a crime is constituted, it shall be investigated for criminal
liabilities according to law.

Article 40

Where an applicant has obtained the licenses as established in Articles 9 and 10 of the present Regulations by cheating, bribery or
any other foul means, the administrative department of industry and commerce shall confiscate its direct selling products and illegal
sales revenue, and impose upon the applicant a fine of not less than 50,000 Yuan but not more than 300,000Yuan. And the competent
commerce department of the State Council shall revoke its corresponding licenses, and the said applicant shall be prohibited from
filing an application again. If the circumstances are serious, it shall be imposed a fine of not less than 300,000 Yuan but not more
than 500,000 Yuan, and shall be banned according to law. If a crime is constituted, it shall be investigated for criminal liabilities
according to law.

Article 41

Where a direct selling company violates the provisions of Article 11 of the present Regulations, the administrative department of
industry and commerce shall order it to make corrections, and impose upon it a fine of not less than 30,000 Yuan but not more than
300,000 Yuan. Where a direct selling company no longer satisfies the conditions for licensing of direct selling, its direct selling
license shall be revoked by the competent commerce department of the State Council.

Article 42

Where a direct selling company violates regulations by undertaking direct selling business beyond the scope of direct selling products,
the administrative department of industry and commerce shall order it to make corrections, confiscate its direct selling products
and illegal sales revenue, and impose upon it a fine of not less than 50,000 Yuan but not more than 300,000 Yuan. If the circumstances
are serious, it shall be imposed a fine of not less than 300,000 Yuan but not more than 500,000 Yuan. And the administrative department
of industry and commerce shall revoke the business license of the branch of any direct selling company which has illegal operation
acts, till the direct selling license of the direct selling company is revoked by the competent commerce department of the State
Council.

Article 43

Where a direct selling company or any of its door-to-door salesmen violates the provisions of the present Regulations by committing
fraudulent, misleading and other drumbeating and sales promotion acts, the direct selling company shall be imposed a fine of not
less than 30,000 Yuan but not more than 100,000 Yuan by the administrative department of industry and commerce; if the circumstances
are serious, it shall be imposed a fine of not less than 100,000 Yuan but not more than 300,000 Yuan. And the administrative department
of industry and commerce shall revoke the business license of the branch of any direct selling company which has illegal operation
acts, till the direct selling license of the direct selling company is revoked by the competent commerce department of the State
Council. The door-to-door salesman shall be imposed a fine of less than 50,000 Yuan by the administrative department of industry
and commerce; if the circumstances are serious, the direct selling company shall be ordered to revoke the qualification of the said
door-to-door salesman.

Article 44

Where a direct selling company or any of its branches recruits door-to-door salesmen in violation of the present Regulations, it shall
be ordered to make corrections by the administrative department of industry and commerce, and imposed a fine of not less than 30,000
Yuan but not more than 100,000 Yuan. If the circumstances are serious, it shall be imposed a fine of not less than 100,000 Yuan but
not more than 300,000 Yuan. And the administrative department of industry and commerce shall revoke the business license of the branch
of the direct selling company that has illegal operation acts, till the direct selling license of the direct selling company is revoked
by the competent commerce department of the State Council.

Article 45

Anyone, who violates the provisions of the present Regulations and undertakes direct selling activity without obtaining the certificate
of door-to-door salesman, shall be ordered by the administrative department of industry and commerce to make corrections, and shall
be subject to the confiscation of its direct selling products and illegal sales income as well as a fine of less than 20,000 Yuan.
If the circumstances are serious, he shall be imposed a fine of not less than 20,000 Yuan but not more than 200,000 Yuan.

Article 46

Any direct selling company that carries out the vocational training of door-to-door salesmen in violation of the provisions of the
present Regulations shall be ordered by the administrative department of industry and commerce to make corrections, and shall be
subject to the confiscation of its illegal gains as well as a fine of not less than 30,000 Yuan but not more than 100,000 Yuan. If
the circumstances are serious, it shall be imposed a fine of not less than 100,000 Yuan but not more than 300,000 Yuan. And the administrative
department of industry and commerce shall revoke the business license of the branch of the direct selling company that has illegal
business acts till the direct selling license of the direct selling company is revoked by the competent commerce department of the
State Council. The teaching staff members shall be imposed a fine of less than 50,000 Yuan, and if they are the direct selling trainers,
the direct selling company shall be ordered to revoke their qualifications as a direct selling trainer.

If an entity or individual outside a direct selling company organizes the vocational training of door-to-door salesmen, the administrative
department of industry and commerce shall order it/him to make corrections, confiscate its/his illegal gains, and impose upon it/him
a fine of not less than 20,000 Yuan but not more than 200,000 Yuan.

Article 47

Where a door-to-door salesman violates the provisions of Article 22 of the present Regulations, the administrative department of
industry and commerce shall confiscate his/her illegal sales income, and impose upon him/her a fine of less than 50,000 Yuan. If
the circumstances are serious, the direct selling company concerned shall be ordered to revoke his/her qualification as a door-to-door
salesman, and shall be imposed upon a fine of not less than 10,000 Yuan but not more than 100,000 Yuan.

Article 48

Any direct sellin

POLICIES FOR AUTOMOBILE TRADE

the Ministry of Commerce

Order of the Ministry of Commerce of the People’s Republic of China

No. 16

The Policies for Automobile Trade, which were adopted at the executive meeting of the Ministry of Commerce upon deliberation, are
hereby promulgated and shall be put in force as of the day of promulgation.

Minister of the Ministry of Commerce Bo Xilai

August 10, 2005

Policies for Automobile Trade

Chapter I General Provisions

Article 1

In order to establish a uniform, open, competitive and orderly automobile market, safeguard the legitimate rights and interests of
automobile consumers, advance the sound development of our automobile industry, promote consumption and expand domestic demand, the
present Policies are specially formulated.

Article 2

The state encourages the development of automobile trade and guides the automobile trade industry to work out an overall plan, to
layout in a reasonable way, to adjust the structure to actively employ modern information technologies, logistic technologies and
advanced operational mode, to promote the electronic commerce, to advance the automobile trade and to realize an intensified, scale,
brand and diversified business operation.

Article 3

In order to create a fair and competitive automobile market environment, bring into play the basic role of the market in resource
allocation, we shall uphold the socialist market economy law, further introduce the competition mechanism, further open up both internally
and externally, break regional blockade and promote the free circulation of automobile products throughout the country.

Article 4

We shall guide automobile trade enterprises to carry out their operations on a legal and credit base, to guarantee the quality of
both products and services and to provide satisfactory services to consumers.

Article 5

In order to elevate the level of our automobile trade as a whole, the state encourages those overseas investors with comparatively
strong economic strength, advanced experience of commercial operations, marketing technologies as well as sound international sales
network to invest in the field of automobile trade.

Article 6

We shall bring into full play the functions of industrial organizations, accreditation organizations and inspection institutions as
a bridge or link, establish and improve an independent, impartial and standardized intermediary service system concerning appraisal,
consultation, accreditation and inspection, and actively advance the marketization process of automobile trade.

Article 7

We shall actively establish and improve the pertinent regulations and systems, accelerate the legalization construction of automobile
trade. The establishment of an automobile trade enterprise shall meet the relevant requirements as prescribed by laws or administrative
regulations. The competent department of commerce of the State Council shall, in conjunction with other relevant departments, deliberate
and formulate and improve the administrative measures, regulations and standards in terms of automobile brand sale, circulation of
second-hand automobiles, circulation of automobile parts and reclamation of discarded automobiles so as to maintain fair competition
in the market.

Chapter II Police Target

Article 8

By way of implementing the present Policies, we shall basically realize the brand sale and services of automobiles, form a circulation
layout of second-hand automobiles with diversified operational subjects and modes, and build up the functions and the system concerning
the sale and after-service of automobiles and second-hand automobiles so that the source, quality and price of automobile parts are
open and transparent, the counterfeit, false and low-quality parts are effectively cracked down, the reclamation and dismantlement
rate of discarded automobiles are increased significantly and a favorable market order of automobile trade takes shape.

Article 9

By 2010, a modern automobile trade system shall be established which is brought in line with the international practice and has its
competitive advantage, and we will have a group of automobile trade enterprises with their own strength, and achieve a considerable
increase in trade volume, a noticeable progress in the level of trade , and a remarkable elevation in the capability of foreign
trade, a coordinated development between the automobile trade and the automobile industry being realized.

Chapter III Sale of Automobiles

Article 10

Automobile manufacturers both home and abroad that sell self-produced automobiles within the territory of China shall establish and
improve their brand sale and service system of automobiles as soon as possible so as to ensure that consumers may receive good service
in the process of purchase and use as well as to maintain the legitimate rights and interests thereof. An automobile manufacturer
may, according to the relevant regulations of the state, make investment by itself or authorize its general distributor to establish
a brand sale and service system.

Article 11

The brand sale and service of automobiles shall be implemented. From April 1, 2005, the brand sale and service shall be implemented
for passenger vehicles. From December 1, 2006, the brand sale and services shall be implemented for all automobiles, with the exception
of special purpose vehicles.

Anyone who engages in the automobile brand sale shall have acquired the authorization from an automobile manufacturer or an authorized
general distributor thereof. The dealers of automobiles (including second-hand automobiles) shall conduct their automobile business
within the scope as verified by the administrative department of industry and commerce.

Article 12

An automobile supplier shall work out a plan for the brand sale and service network of automobiles. In order to safeguard the interest
of consumers, the automobile brand sale network may not be more than 150 kilometers away from its service location that supply automobile
parts and provide after-service.

Article 13

An automobile supplier shall strengthen the management of brand sale and service networks, regulate the sale and service and shall,
after the administrative department of industry and commerce of the State Council puts it on record and promulgate it to the general
public, inform the general public on a periodic basis the name list of the enterprises that engage in the brand sale and service
of automobiles and whose authorization has been granted or abolished, and may not provide any automobile resources to a dealer that
has not been authorized or doesn’t satisfy the relevant conditions of business operations. An automobile supplier shall be responsible
for informing the general public in a timely manner of the automobile type whose production has been ceased and take active measures
to ensure the parts supply within a reasonable time limit.

Article 14

An automobile supplier or dealer shall specify each other’s the rights and obligations by concluding a written contract. An automobile
supplier shall offer guidance and technical support to dealers, may not require a dealer to accept an unequal term for cooperation
or determine the sales quantity or carry out any tie-in sale in a compulsive manner, or terminate the cooperative relation with its
dealer at will.

Article 15

An automobile supplier shall, in accordance with the relevant laws and regulations of the state as well as its promise as made to
consumers, perform the obligation of guaranteeing the quality of automobiles and providing after service.

An automobile dealer shall clearly indicate to consumers in its business place the quality guaranty and after service of automobiles
as promised by the relevant automobile supplier and shall, under the stipulation of the authorization contract and the requirements
of service standards, provide the relevant after service.

No automobile supplier or dealer may supply or sell any automobile that does not comply with the state security technical standards
of automobiles and fails to obtain the compulsory product accreditation of the state and be included in the Announcement of Motor
Automobile Manufacturer and Products. Any imported automobile that fails to pass the inspection as prescribed by the Law of the People’s
Republic of China on Import and Export Commodity Inspection and the Rules for Implementation thereof may not be sold or used.

Chapter IV Circulation of Second-hand Automobiles

Article 16

The state encourages the circulation of second-hand automobiles. We shall establish a competition mechanism, open up the circulation
channels, support competent operational subjects, such as automobile brand dealers, to undertake the second-hand automobile business
and establish branches or sub-branches in different places in the form of chain operation.

Article 17

We shall actively create necessary conditions to simplify the procedures for the transaction and transfer of second-hand automobiles,
improve the efficiency of answering any inquiry on the legality and security of automobiles, lower transaction costs, and standardize
the transaction invoice uniformly; we shall intensify the quality management of second-hand automobiles and set an impetus to the
dealers of second-hand automobiles to provide high-quality after service.

Article 18

We shall accelerate the cultivation and buildup of the second-hand automobile market, guide the change in the concept on the second-hand
automobile market, intensify the market administration, and expand the service functions of the market.

Article 19

A voluntary appraisal system of second-hand automobiles shall be adopted. The transaction value of a second-hand automobile shall
be determined through the negotiation of both parties unless it belongs to the state-owned asset. A party concerned may, on a voluntary
basis, entrust a qualified appraisal and evaluation organization of second-hand automobiles to carry out an appraisal for reference.
No entity or department may overtly force them to conduct an appraisal on a traded automobile or do so in any disguised form except
under the provisions of laws or administrative regulations.

Article 20

We shall actively regulate the appraisal and evaluation of second-hand automobiles. An appraisal and evaluation organization shall,
upholding the principle of “being objective, authentic, impartial and open”, carry out the appraisal and evaluation of second-hand
automobiles, produce relevant reports on the appraisal and evaluation of second-hand automobiles and clarify the technical condition
thereof (including such contents as whether the automobile is involved in an traffic accident) according to the relevant laws and
regulations of the state.

Article 21

Where an enterprise that engages in the business operation or auction of second-hand automobiles sells or auctions a second-hand automobile,
it shall provide the authentic information for the buying party, and may not conceal any facts or conduct any fraudulent practice.
An automobile as sold or auctioned shall have the motor vehicle plate, the Registration Certificate of Motor Automobiles, the Operational
License of Motor Automobiles, the valid mark of passing the security technical examination, the policy of insurance of the automobile,
and the proof of payment of relevant taxes and fees.

Article 22

Where an enterprise that engages in the business operations of second-hand automobiles sells a second-hand automobile, it shall make
a promise regarding the quality guaranty and after service to the buying party. Within the warranty period, an automobile supplier
shall, in accordance with the relevant laws and regulations of the state and the promise as made to consumers, commit itself to quality
assurance and after service of automobiles.

Article 23

The business operations concerning auction or appraisal and evaluation of second-hand automobiles shall be subject to the examination
and approval of the administrative department of commerce at the provincial level.

Chapter V Circulation of Automobile Parts

Article 24

The state encourages the circulation of automobile components to develop into large scale, good brand and networked circulation by
way of franchise and chain operation, supports the component circulation enterprises to carry out integration so as to realize the
structural upgrading and improve the economy of scale as well as service quality.

Article 25

A supplier or dealer of automobiles or automobile components shall intensify the quality management and improve the product quality
as well as service quality.

No supplier or dealer of automobiles or automobile components may supply or sell any automobile component that fails to comply with
the relevant laws, administrative regulations, compulsory standards and the requirements of compulsory product certification of the
state.

Article 26

A supplier of automobiles or automobile parts shall inform the general public of the name list of franchised dealers of automobile
parts whose accreditation has been granted or abolished on a periodic basis.

A dealer of automobile parts shall give clear indications of the names, manufacturers and prices of the automobile parts and any other
automobile articles as sold and shall indicate the parts from original plant, the parts that have been accredited by automobile manufacturer
and the reclaimed articles of discarded automobiles as well as renovated components in a separate way. The product identification
of automobile parts shall meet the requirements of the Law on Product Quality.

Article 27

We shall accelerate the circulation of reclaimed articles of discarded automobiles. For the parts that have been dismantled by an
enterprise that engages in the reclamation and dismantlement of discarded automobiles under the relevant provisions and may be sold
out, the sign “reclaimed articles of discarded automobiles” shall be noticeably indicated on the parts.

Chapter VI Discarding of Automobiles and Reclamation of Discarded Automobiles

Article 28

The state adopts a compulsory automobile discarding system., we shall, in light of the different security technical states and purposes
of automobiles, amend the present Automobile Discarding Standards in effect and formulate different compulsory discarding standards
accordingly.

Article 29

An owner of a discarded automobile shall sell or turn over the discarded automobile timely to an enterprise as qualified to engaging
in the reclamation and dismantlement of discarded automobiles.

Article 30

The local administrative department of commerce shall, in accordance with the relevant requirements of the Measures for the Administration
of Discarded Automobile Reclamation (Order No. 307 of the State Council), work out an overall plan as well as a rational layout for
the discarded automobile reclamation and dismantlement industry.

Anyone who engages in the business operations of reclamation and dismantlement of discarded automobiles shall have the relevant qualifications
as prescribed by the relevant laws and regulations. The administrative department of commerce of the State Council shall inform the
general public of those qualified enterprises that engage in the reclamation and dismantlement of discarded automobiles.

Article 31

An enterprise that engages in the business operations of reclamation and dismantlement of discarded automobiles shall, in strict accordance
with the relevant laws and regulations of the state, carry out its business operations and dismantle the discarded automobiles as
reclaimed in a timely manner. The “five assemblies” of engine, front and rear axles, gearshift, steering gear and frame as dismantled
shall be used as waste iron or steel, which may be sold to an iron and steel works as the raw materials for smelting.

Article 32

The administrative departments of commerce at all levels shall, in conjunction with the relevant public security organs, establish
an information exchange system regarding the management of discarded automobile reclamation, realizing the real-time control in the
reclamation process of discarded automobiles so as to prevent the discarded automobiles or the “five assemblies” from flowing into
the market.

Article 33

In order to use the resources in a reasonable and effective manner, the state shall formulate relevant measures for the administration
of reclamation and utilization of discarded automobiles.

Article 34

We shall improve the measures for the administration of subsidy funds for the discarding and renewal of old automobiles and encourage
the discarding and renewal of old automobiles.

Article 35

The storage, transfer and disposal, etc. of the parts of discarded automobile and other waste, harmful materials (e.g., oil, liquid,
battery and harmful metal, etc.) shall comply with the requirements as prescribed in such laws and regulations as the Environmental
Protection Law and the Law on the Prevention and Control of Atmospheric Pollution so as to ensure that they are safe and pollution-free
(or to minimize the pollution).

Chapter VII Foreign Trade of Automobiles

Article 36

Since January 1, 2005, the state implements the automatic import licensing administration over automobiles, under which no bonded
area at an import port of automobiles is allowed to store automobiles with the purpose of entering the domestic market.

Article 37

The state prohibits the import of any old automobile, or the assembly, parts thereof or any automobile whose steering wheel is on
the right (except for the sample automobiles with a right steering wheel that are imported for the purpose of developing products
for export).

Article 38

Imported automobile shall have obtained the Certificate for China Compulsory Product Certification, be labeled with the China Compulsory
Certification mark (CCC), and have passed the sampling inspection conducted by the inspection and quarantine administration and shall
be accompanied by the instructions in Chinese as well.

Article 39

Any unfair deal in the import of automobiles and the relevant products shall be prohibited. The competent organ of the State Council
shall take anti-dumping and countervailing measures as well as safeguard measures for the automobile industry, organize the relevant
industrial associations to establish and improve an early warning system against any damage in the automobile industry and carry
out investigation and researches on the competitive power of the automobile industry. An automobile supplier or dealer shall be obliged
to offer the relevant information to the relevant department of the State Council in a timely and accurate manner.

Article 40

We shall encourage the foreign trade development of automobiles and the relevant products. We shall support and develop the national
export base of automobiles and parts and components, guide the relevant automobile suppliers and dealers to establish the sales and
service network abroad by diversified means, which may be in the form of joint venture, cooperative business operation or sole investment,
so as to optimize the structure of exported products and expand the access to the international market.

Article 41

We shall support the foreign trade development of automobiles and the relevant products by utilizing the Central Foreign Trade Development
Fund.

Article 42

Suppliers or dealers of export automobiles and the relevant products shall establish a necessary sales and service system according
to the relevant laws and regulations of the destination regions.

Article 43

Intergovernmental consultations shall be intensified, and support shall be provided to exporters of automobiles and related commodities
in their participation of responding to anti-dumping, countervailing and safeguard measures so as to protect the legitimate rights
and interests of China’s exporters of automobiles and related commodities.

Article 44

The automobile industrial association shall intensify the industrial self-discipline and establish competitive and orderly foreign
trade orders for automobiles and related commodities.

Chapter VIII Other Matters

Article 45

The establishment of a foreign-invested automobile trade enterprise shall, in addition to fulfilling the relevant qualifications,
comply with the provisions of the relevant laws and regulations on foreign investment and be subject to the examination and approval
of the administrative department of commerce of the State Council after having passed the preliminary examinations conducted by the
administrative department of commerce at the provincial level.

Article 46

The development of automobile consumption credit shall be accelerated and scale expanded. Support will be provided to the qualified
automobile suppliers for the establishment of automobile financing companies serving the whole industry. And guidance shall be provided
to the automobile financing institutions in their development of cooperative mechanism with other financial institutions, so as to
remarkably elevate the scale of economy and degree of specialization of the automobile consumption credit market and further improve
the risk management system.

Article 47

We shall build up the automobile insurance market, encourage the insurance products to develop toward the direction of individualization
and diversification and improve the automobile insurance service, so as to preliminarily realize a professional and intensified operation
of the automobile insurance industry.

Article 48

All the policies, institutions and regulations as formulated by the people’s governments in all regions concerning automobile trade
shall be in line with the present Policy and shall uphold the principle of being open and transparent. Any discriminative policy
in such respects as the circulation, service and use of the automobiles that are not locally produced or traded may not be adopted.
We shall resolutely prevent anyone from compelling local consumers to buy the locally-produced automobiles or doing so in any disguised
form, or interfering with the choice of an operator on the state licensing production or sale of automobiles by any means.

Article 49

The present Policy shall go into effect as of the day of promulgation. The administrative department of commerce of the State Council
shall be responsible for the interpretation of the present Policy.

Annex:Explanation on the terms as used in the Policies for Automobile Trade

The term “automobile trade” includes the sale of new vehicles, the circulation of second-hand automobiles and automobile parts, the
discarding of automobiles, the reclamation of discarded automobiles as well as the automobile foreign trade.

Unless any automobile brand sale is involved, the term “automobiles” as mentioned in the present Policy includes low-speed product
vehicles, three-wheeled motor car (former agricultural transport vehicles), trailers and motorcycles.

The term “second-hand automobile” refers to an automobile that is traded and whose ownership is transferred in the duration from the
date when the formalities for its registration have been handled to the date when the national compulsory discarding standards are
satisfied.

The term “supplier” refers to a manufacturer of automobiles or automobile parts as well as the general distributor thereof.

The term “dealer” refers to a retailer of automobiles and automobile parts.

the Ministry of Commerce
2005-08-10

THE CIRCULAR OF THE MINISTRY OF COMMERCE AND THE GENERAL OFFICE OF GENERAL ADMINISTRATION OF CUSTOMS ON RELATED MATTERS CONCERNING THE TRADE ADMINISTRATION IN BONDED AREA AND BONDED LOGISTIC PARK

the Ministry of Commerce,the General Administration of Customs

The Circular of the Ministry of Commerce and the General Office of General Administration of Customs on Related Matters Concerning
the Trade Administration in Bonded Area and Bonded Logistic Park

Shan Zi Zi [2005] No.76

The competent department of commerce of all provinces,autonomous regions,municipalities directly under the Central Government,cities
specifically designated in the state plan and Xinjiang Production and Construction Corps,and all customs directly under the General
Administration of Customs:

With a view to taking practical measures to perform the undertakings made by the state in entering WTO,perfecting the trade administration
of the enterprises in bonded area,bonded logistic park,related issues are not notified as follows:

The enterprise,individual in bonded area and bonded logistic park may acquire right to trade and right to apply for distributing in
accordance with the Foreign Trade Law of the People’s Republic of China,the Measures on the File-recording and Registration of Foreign
Trade Operator,the Measures for Administration of Business Area of Foreign Investment and other related provisions.The enterprise
and individual acquiring the above-mentioned rights may conduct trade business with the enterprise and individual (including those
that have not acquired the right to trade)outside the area and park but within the territory.The foreign-funded enterprise acquiring
right to distribute may conduct distribution within the territory.

The foreign trade operator in the bonded area and bonded logistic park selling products outside the area and park but within the territory
or purchasing products outside the area and park but within the territory shall abide by related provisions of the state to import
and export,foreign exchange and the administration of tax collection.

(1)

The entry and exit of goods between the bonded area,bonded logistic park and those outside the area and the park but within the territory
shall handle the import and export procedures in accordance with related provisions of the customs.Where the enterprise within the
area and park distributes goods beyond the area but within the territory as foreign trade operator,it shall handle the formalities
relating to declaration and verification and writing-off of foreign exchange in the name of enterprise in the area or park; where
an enterprise or individual outside the area or park purchases goods from the enterprise or individual in the area or park,it shall
be handled in accordance with current provisions.

(2)

The entry and exit of goods between foreign trade operator within the bonded area,bonded logistic park and those outside the territory
shall not apply to import and export license administration,unless otherwise prescribed by the international treaties to which the
People’s Republic of China is a signatory or a party,or by laws,administrative regulations and related ministerial rules.

(3)

Where the textiles belonging to the Temporary Goods Administrative Catalogue of Textile Export enter into the bonded area,the bonded
logistic park from outside the area and park but within the territory,the customs will not examine the license,and when the goods
really exit the territory and are exported to the countries or regions that the temporary administration of textiles shall be applied
to in accordance with relevant provisions,the customs conducts the examination and release procedures on the strength of the license.

The establishment of enterprise in bonded area,bonded logistic park shall accord with the state industry policies,any enterprise within
the area and park shall not conduct manufacture and business in areas where the investment has been prohibited by the state .

The tax collection,customs supervision,foreign exchange administration of all enterprises in bonded area,bonded logistic park shall
be handled in accordance with relevant provisions of the State Administration of Taxation,the General Administration of Customs,the
State Administration of Foreign Exchange.

The General Office of the Ministry of Commerce of the PRC

The General Office of the General Administration of Customs of the PRC

July 13,2005

the Ministry of Commerce,the General Administration of Customs
2005-07-13

REGULATIONS ON THE ADMINISTRATION OF ENTERTAINMENT PLACES

the State Council

Order of the State Council

No. 458

The Regulations on the Administration of Entertainment Places, which were adopted at the 122nd executive meeting of the State Council
on January 18, 2006, are hereby promulgated and shall come into force as of March 1, 2006.

Wen Jiabao, the Premier

January 29, 2006

Regulations on the Administration of Entertainment Places

Chapter I General Provisions

Article 1

With a view to strengthening the administration of entertainment places and ensuring the healthy development of entertainment places,
the present Regulations are formulated.

Article 2

The “entertainment place” as mentioned in the present Regulations refers to the singing, dancing and game places for profits, which
are opened to the general public and for the self-entertainment of consumers.

Article 3

The competent departments of culture under the people’s government at the county level or above shall be responsible for the supervision
and administration on daily business operation of the entertainment places, and the public security organs at the county level or
above shall be responsible for the supervision and administration on fire control and public security of the entertainment places.

Article 4

No state organ or any of its functionaries may operate entertainment places or participate in the business operation of entertainment
places or do so in any disguised form.

No relative, who has such relationship as husband and wife, lineal descent, collateral consanguinity within three generations or close
affinity with the any functionary of the competent departments of culture or the public security organs, may operate entertainment
places or participate in the business operation of the entertainment places or do so in any disguised form.

Chapter II Establishment

Article 5

Anyone, who is subject to any of the following circumstances, shall not operate entertainment places or work in entertainment places:

(1)

having ever committed the crime of organizing, forcing, tempting, harboring or introducing prostitution, the crime of producing, selling
or disseminating nasty materials, the crime of smuggling, selling, transporting and manufacturing drugs, the crime of rape, the crime
of molesting or humiliating women by forces, the crime of gambling, the crime of money laundering, the crime of organizing, leading
or actively participating in an underworld-style organization;

(2)

having ever been deprived of political rights due to crimes;

(3)

having been forced to give up drug habits because of sucking or injecting addictive drugs; or

(4)

having ever been subjected to administrative detention due to prostitution or going whoring.

Article 6

Foreign investors may establish Chinese-foreign equity or contractual joint entertainment places together with Chinese investors,
other than solely foreign-funded entertainment places.

Article 7

No entertainment place may be established at any of the following places:

(1)

residential buildings, museums, libraries or buildings verified to be cultural relic protection entities;

(2)

surroundings of residential areas, schools, hospitals or governmental organs;

(3)

stations, airports or other densely-populated places;

(4)

places below the first underground floor of buildings; or

(5)

areas adjacent to warehouses of dangerous chemicals.

The boundary noise of an entertainment place shall be up to the standards for environmental noises as provided for by the State.

Article 8

The area of usage of an entertainment place shall not be less than the minimum standard as provided for by the competent department
of culture under the State Council. The establishment of a game entertainment place having electronic game machines shall meet the
requirements on the total amount and overall arrangement as provided for by the competent department of culture under the State Council.

Article 9

To establish an entertainment place, an application shall be filed with the local competent department of culture under the people’s
government at the county level. To establish a Chinese-foreign equity or contractual joint entertainment place, an application shall
be filed with the competent department of culture under the people’s government of the province, autonomous region or municipality
directly under the Central Government.

To apply for establishing an entertainment place, a written declaration that its investors, legal representative or other principals
to be appointed are not under any of the circumstances as prescribed in Article 5 of the present Regulations shall be submitted.
And the applicant shall be responsible for the authenticity of the contents in the written declaration.

The competent department of culture that has accepted the application shall verify the written declaration at the public security
organ or other relevant departments, which shall be cooperative. If the written declaration is true upon verification, the competent
department of culture shall conduct an on-the-spot inspection and make a decision according to Articles 7 and 8 of the present Regulations.
For the approved entertainment place, the competent department of culture shall issue a license for entertainment business operation
and verify the amount of consumers acceptable to the entertainment place according to the prescriptions as set down by the competent
department of culture under the State Council; for the not approved entertainment place, it shall notify the applicant in written
form and explain the reasons.

Where there are provisions of laws or administrative regulations that require the formalities for examination and approval of fire
control, hygiene or environmental protection, such provisions shall be complied with.

Article 10

The competent departments of culture shall hold hearings for the examination and approval of entertainment places. And the procedures
for hearings shall accord with the Administrative License Law of the People’s Republic of China.

Article 11

An applicant may go through the registration formalities at the administrative department for industry and commerce and obtain a business
license, only after it has obtained a license for entertainment business operation and other approval documents on fire control,
hygiene and environmental protection.

The entertainment place shall report to the local public security organ at the county level for archiving purposes within 15 days
after obtaining the business license.

Article 12

Where an entertainment place rebuilds or expands its business place or alters its business place, main facilities and equipment, investors
or other matters as stated in the license for entertainment business operation, it shall apply to the original license-issuing organ
for reissuing upon verification a license for entertainment business operation and put this on records at the public security organ.
If the alteration registration is required, it shall go through the alteration registration at the administrative department for
industry and commerce.

Chapter III Business Operation

Article 13

The State promotes and develops the excellent national culture, and prohibits entertainment activities containing the following content
at the entertainment places:

(1)

violating the fundamental principles specified in the Constitution;

(2)

disserving the unity, sovereignty and territorial integrity of the State;

(3)

disserving the security, honor or interests of the State;

(4)

instigating ethnic animosity or ethnic discrimination, damaging national sentiment or aggrieving ethnic customs and habits, or destroying
ethnic solidarity;

(5)

violating religious policies of the State, or instigating heresy or superstition;

(6)

instigating the obscenity, gambling, violence or drug-related crimes, or abetting others to commit crimes;

(7)

in violation of social morality or excellent ethnic cultural heritage;

(8)

insulting or defaming others or infringing on the lawful rights and interests of others; and

(9)

any other content prohibited by laws or administrative regulations.

Article 14

No entertainment place or any of its staff members may conduct the following activities or provide conditions for the people who enter
the entertainment place to conduct the following activities:

(1)

selling or providing drugs, or organizing, forcing, abetting, tempting, cheating or harboring others to suck or inject drugs;

(2)

organizing, forcing, tempting, harboring, or introducing others for prostitution or going whoring;

(3)

manufacturing, selling or disseminating obscene materials;

(4)

providing accompanies or doing so for profits;

(5)

gambling;

(6)

taking part in heresy or superstitious activities; or

(7)

other illegal activities or crimes.

No staff member of an entertainment place may suck or inject drugs, prostitute oneself or go whoring; no entertainment place or any
of its staff members may provide conditions for people who enter the entertainment place to conduct the above-mentioned activities.

Article 15

The singing and dancing entertainment place shall install the monitoring equipments of closed circuit television at the entrances,
exits and main passageways of its business places according to the prescriptions of the public security organ under the State Council,
and shall ensure that the monitoring equipment of closed circuit television be normally operated and not be interrupted during the
business hours.

The singing and dancing entertainment place shall keep the video materials recorded down by the closed circuit television for 30 days
for future reference, and shall not delete them or use them for any other purpose.

Article 16

The boxes and compartments of a singing and dancing entertainment place shall not be separated, and shall be installed with transparent
doors and windows through which the whole indoor environment can be seen. The doors of boxes and compartments shall not be installed
with inner-locks.

Article 17

The lightness inside a singing and dancing entertainment place during the business hours shall not be lower than the standard as provided
for by the State.

Article 18

The audio-video products and electronic games used in an entertainment place shall be those published, manufactured or imported according
to law.

The songs played or video images shown at a singing and dancing entertainment place or the game programs installed in electronic game
machines at a game entertainment place shall not contain the contents as prohibited by Article 13 of the present Regulations; and
the song ordering system used in a singing and dancing entertainment place shall not be connected to any foreign song database.

Article 19

The game entertainment place shall not install electronic game machine models, machine types, circuit boards or other game facilities
or equipments that have gambling function, award the winner with cash or securities or repurchase awards.

Article 20

The legal representative or the main principal of an entertainment place shall be responsible for the fire control and other safety
matters of the entertainment place.

The entertainment place shall ensure that its buildings and facilities are in line with the safety standards and fire control technical
criteria of the State, regularly check the situation of fire control equipments and timely maintain and upgrade them.

The entertainment place shall formulate a scheme on safety work and an advance scheme on emergency evacuation.

Article 21

The entertainment place shall, during the business hours, keep its evacuation channels and safe exits free, and shall not block or
lock them or setup barriers or other obstacles at evacuation channels or safe exits that will affect the evacuation.

The entertainment place shall setup eye-catching direction marks at evacuation channels and safe exits, and shall not shelter or cover
such direction marks.

Article 22

No one may illegally carry guns, ammunitions, controlled instruments, or explosive, combustible, poisonous or erosive dangerous articles
or pathogens of infectious diseases into entertainment places.

The discotheque shall install safety checking equipments and carry out safety inspection of the people who enter its business places.

Article 23

No singing and dancing entertainment place may receive minors. The electronic game machines in a game entertainment place shall not
be provided to minors except on the statutory national holidays.

Article 24

No entertainment place may employ minors. If an entertainment place employs foreigners, it shall obtain the licenses for the employment
of foreigners according to the relevant provisions of the State.

Article 25

The entertainment place shall sign the responsibility letters on civilized services with its staff members, and establish a roster
of staff members, which shall record the true names of the staff members and photocopies of their identity cards, and licenses for
the employment of foreigners.

The entertainment place shall setup a log of business operation that indicates the duties, working hours and working places of its
staff members, and shall not delete or alter the log of business operation and keep it for 60 days for future reference.

Article 26

The entertainment place shall conclude security service contracts with security service enterprises and hire professional security
personnel, and shall not hire others to engage in the security-related work.

Article 27

The staff members of an entertainment place shall, during the business hours, wear uniforms and job marks, and carry identity cards
or licenses for the employment of foreigners with themselves.

The staff members shall comply with occupational morality and sanitation criteria, be honest, faithful and polite, and shall not damage
the personnel and property rights of consumers.

Article 28

No entertainment place may conduct business operation between 2-8 o’clock a.m. every day.

Article 29

The entertainment place shall clearly mark the prices of the entertainment items and services it provides, and show the price list
to the customers; and the entertainment place shall not force or cheat customers to receive services or purchase commodities.

Article 30

The entertainment place shall, at the eye-catching sites of the halls, boxes and compartments of its business places, setup warning
marks on prohibiting drugs, gambling, prostitution or going whoring as well as the marks on prohibiting or restricting minors from
entering. Such marks shall indicate the tip-off phone numbers of the public security organ and of the competent department of culture.

Article 31

The entertainment place shall establish a patrolling system, and shall immediately report to the local public security organ and the
competent department of culture under the people’s government at the county level if it finds any illegal activity or crime therein.

Chapter IV Supervision and Administration

Article 32

When the functionaries of the competent departments of culture, the public security organs or other relevant departments are performing
the duty of supervision and administration according to law, they have the right to enter the entertainment places, and the entertainment
places shall offer their cooperation and shall not reject or obstruct such entrance.

When the functionaries of the competent departments of culture, the public security organs or other relevant departments are performing
the duty of supervision and administration according to law and need to consult the video materials recorded down by closed circuit
television, the roster of staff members or the log of business operation, etc., the entertainment place shall supply them in a timely
manner.

Article 33

The competent departments of culture, the public security organs or other relevant departments shall record down the conditions on
supervision and inspection and the handling results. The supervision and inspection notes shall be affixed with the names of the
supervision and inspection personnel and put on records. And the general public shall be enpost_titled to consult such supervision and
inspection notes.

Article 34

The competent departments of culture, the public security organs or other relevant departments shall establish a warning and recording
system of illegal activities of entertainment places, and timely announce the entertainment places as listed in the warning notes
to the general public, so as to reinforce the supervision and inspection strength.

Article 35

The competent departments of culture, the public security organs or other relevant departments shall establish a mutual information
reporting system so as to timely report the supervision and inspection conditions and the handling results.

Article 36

Where any entity or individual finds any activity in violation of the present Regulations undertaken at an entertainment place, he/she
shall be enpost_titled to tip it off to the competent departments of culture and the public security organs, etc.

The competent departments of culture, the public security organs or other relevant departments shall, upon receipt of a tip-off, record
it down and timely investigate and handle it; if it is outside the scope of their respective duties, they shall timely transfer the
tip-off to the relevant competent department.

Article 37

When necessary, the competent departments of culture and the public security organs at the higher levels may investigate and handle
the cases as investigated and handled by the competent departments of culture and the public security organs at the lower levels
according to the present Regulations.

The competent departments of culture and the public security organs at the lower levels may require transferring those significant
and complicated cases they consider to the competent departments of culture and the public security organs at the higher levels for
investigation and handling.

Article 38

In case the competent departments of culture, the public security organs, any other relevant department or any of their functionaries
violates the present Regulations, any entity or individual may tip off the violation to the competent organs at the same or next
higher level. And the organ that receives such tip-off shall timely investigate and handle the case.

Article 39

The trade association of entertainment places shall, according to the articles of association, formulate the self-discipline trade
rules and strengthen the guidance and supervision on the business operation of its members.

Chapter V Legal Liabilities

Article 40

Where the business operation undertaken by any entertainment place violates the present Regulations, it shall be banned by the administrative
departments for industry and commerce and the competent departments of culture. And the public security organs shall ban the illegal
business operation undertaken by any entertainment place without permission it finds when investigating and handling cases related
to public security or crimes.

Article 41

Where any license for entertainment business operation obtained by fraud or any other unjustifiable means in violation of the present
Regulations, it shall be revoked by the original license-issuing organ.

Article 42

Where any entertainment place carries out activities prohibited by Article 14 of the present Regulations, the public security organ
at the county level shall confiscate its illegal proceeds and properties, and order it to suspend its business operation for rectification
for 3 up to 6 months. If the circumstance is serious, the original license-issuing organ shall revoke its license for entertainment
business operation and impose a fine of 10,000 Yuan up to 20,000 Yuan on the principal and other persons directly responsible.

Article 43

Where any entertainment place violates the present Regulations and is under any of the following circumstances, the public security
organ at the county level shall order it to make corrections and give it a warning. If the circumstance is serious, the entertainment
place shall be ordered to suspend its business operation for rectification for 1 up to 3 months:

(1)

The installation of illuminating equipment, boxes or compartments or the use of doors or windows is inconsistent with the present
Regulations;

(2)

It does not install the monitoring equipment of closed circuit television according to the present Regulations or interrupts the use
thereof;

(3)

It does not keep the video materials recorded down by the closed circuit television according to the present Regulations, or deletes
or alters the video materials as recorded down;

(4)

It does not install the safety inspection equipment or carry out the safety inspection of the people who enter its business places
according to the present Regulations; or

(5)

It does not employ security personnel according to the present Regulations.

Article 44

Where any entertainment place violates the present Regulations and is under any of the following circumstances, the public security
organ at the county level shall confiscate its illegal proceeds and properties, and impose on it a fine of 3 up to 5 times of the
illegal proceeds. If there is no illegal proceeds or the illegal proceeds is less than 10,000 Yuan, it shall be concurrently imposed
on a fine of 20,000 Yuan up to 50,000 Yuan. If the circumstance is serious, the entertainment place shall be ordered to suspend its
business operation for rectification for 1 up to 3 months:

(1)

installing electronic game machine models, machine types, circuit boards or other game facilities and equipment that have gambling
function; or

(2)

awarding the winners with cash or securities or repurchasing awards.

Article 45

Where any entertainment place instigates or connives with its staff members to infringe on the personal rights of consumers, it shall
assume the civil liability, and the public security organ at the county level shall order it to suspend its business operation for
rectification for 1 up to 3 months. If the circumstance is serious, the original license-issuing organ shall revoke its license for
entertainment business operation.

Article 46

Where an entertainment place fails to report it to the public security organ for archiving purpose according to the present Regulations
after obtaining a business license, the public security organ at the county level shall order it to make correction and give it a
warning.

Article 47

Where any entertainment place violates the present Regulations and is under any of the following circumstances, the competent department
of culture at the county level shall confiscate its illegal proceeds and properties, and impose on it a fine of 1 up to 3 times of
the illegal proceeds. If there is no illegal proceeds or the illegal proceeds is less than 10,000 Yuan, it shall be imposed on a
fine of 10,000 Yuan up to 30,000 Yuan concurrently. If the circumstance is serious, the entertainment place shall be ordered to suspend
its business operation for rectification for 1 up to 6 months:

(1)

The song ordering system used in a singing and dancing entertainment place is connected to any foreign song database;

(2)

The songs played or video images shown at a singing and dancing entertainment place or the game programs installed in electronic game
machines of a game entertainment place contain the contents prohibited by Article 13 of the present Regulations;

(3)

The singing and dancing entertainment place receives minors;

(4)

The game entertainment place provides its electronic game machines to minors on the days other than the statutory national holidays;
or

(5)

The consumers contained in an entertainment place exceed the prescribed amount.

Article 48

Where an entertainment place violates the present Regulations and is under any of the following circumstances, the competent department
of culture of the people’s government at the county level shall order it to make correction and give it a warning. If the circumstance
is serious, the entertainment place shall be ordered to suspend its business operation for rectification for 1 up to 3 months:

(1)

It fails to apply to the original license-issuing organ for re-issuing upon verification a license for entertainment business operation
according to the present Regulations when it alters the relevant matter;

(2)

It undertakes business operation within the time during which the business operation is prohibited by the present Regulations; or

(3)

Its staff members fail to wear uniforms or job marks during business hours.

Article 49

Where an entertainment place fails to work out a roster of its staff members or a log of business operation according to the present
Regulations, or fails to tip off illegal activities or crimes it finds according to the present Regulations, the competent department
of culture under the people’s government at the county level and the public security organ at the county level shall, upon the strength
of their authorities, order it to make correction and give it a warning. If the circumstance is serious, the entertainment place
shall be ordered to suspend its business operation for rectification for 1 up to 3 months.

Article 50

Where an entertainment place fails to hang warning marks or the marks on prohibiting or restricting minors from entering according
to the present Regulations, the competent department of culture under the people’s government at the county level and the public
security organ at the county level shall, upon the strength of its authorities, order it to make correction and give it a warning.

Article 51

Where an entertainment place employs minors, the administrative departments for labor and social security shall order it to make correction
and impose on it a fine at the rate of 5,000 Yuan per month for each employed minor.

Article 52

Where the business operation of any entertainment place undertaken without permission are banned according to law, the investors or
principals thereof shall not invest in entertainment places or act as the legal representative or principal of any entertainment
place for life.

Where any entertainment place violates the present Regulations and its license for entertainment business operation is revoked or
cancelled, its legal representative or principal shall not act as the legal representative or principal of any other entertainment
place for 5 years from the day when its license is revoked or cancelled.

Where an entertainment place has be warned for 3 times during 2 years due to violation of the present Regulations, and is given an
administrative sanction again due to the violation of the present Regulations, the competent department of culture under the people’s
government at the county level and the public security organ at the county level shall, upon the strength of their authorities, order
it to suspend its business operation for rectification for 3 up to 6 months. Where it has been ordered to suspend its business operation
for rectification for 2 times during 2 years, and is given an administrative sanction due to violation of the present Regulations
again, the original license-issuing organ shall revoke its license for entertainment business operation.

Article 53

Where any entertainment place violates the laws or administrative regulations on the public security management or fire control management,
the public security organ shall punish it according to. If a crime is constituted, it shall be subject to criminal liabilities.

Where an entertainment place violates the laws or administrative regulations on hygiene, environmental protection, price or labor,
the relevant department shall punish it according to law. If a crime is constituted, it shall be subject to criminal liabilities.

Where there is any dispute between an entertainment place or its staff member and consumers, the dispute shall be solved according
to the law on the protection of rights and interests of consumers. Where the personal or property damage is caused to the consumers,
the entertainment place shall compensate the consumers.

Article 54

Where the license for entertainment business operation of an entertainment place is revoked or cancelled due to its violation of the
present Regulations, it shall go through the alteration or cancellation registration at the administrative department for industry
and commerce. If it fails to do so within the time limit, it business license shall be revoked.

Article 55

Where a state organ or any of its functionaries operates entertainment places, participates in the business operation of any entertainment
place or does so in any disguised form, the principal and other persons directly responsible shall be given an administrative sanction
of dismissal from their post or expulsion.

Where any functionary of the competent department of culture or the public security organ clearly knows that any of his relatives
operates an entertainment place or participates in the business operation of an entertainment places or does so in any disguised
form, but does not stop him or does not try his best to stop him, he shall be given an administrative sanction. If the circumstance
is serious, he shall be given an administrative sanction of dismissal from his post or expulsion.

Article 56

Where any functionary of the competent department of culture, the public security organ, the administrative department for industry
and commerce or any other relevant department commits any of the following acts, the principal and other persons directly responsible
shall be given administrative sanctions; and if a crime is constituted, they shall be subject to criminal liabilities:

(1)

issuing licenses, approval documents or business licenses to the entities that do not meet the statutory conditions for establishment;

(2)

failing to fulfill the duty of supervision and administration, or failing to ban the business operation of entertainment places, which
are illegally carried out and which it/he finds, or failing to investigate or handle illegal activities it/he finds;

(3)

failing to investigate or handle illegal activities upon receipt of a tip-off or report thereon;

(4)

seeking for or accepting properties of any other, or seeking for other interests by making use of his rights and authorities;

(5)

taking part in or harboring illegal activities by making use of his rights and authorities, or sending inside messages to the relevant
entities or individuals; or

(6)

any other act of misusing his rights and authorities, neglecting his duties or seeking for private interests or resortin

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION AND THE MINISTRY OF COMMERCE ON FURTHER REGULATING THE BUSINESS ORDER IN FOREIGN TRADE EXPORT AND BETTER STRENGTHENING THE ADMINISTRATION OF EXPORT REBATES (EXEMPTION) FOR EXPORT GOODS

State Administration of Taxation, Ministry of Commerce

Circular of the State Administration of Taxation and the Ministry of Commerce on Further Regulating the Business Order in Foreign
Trade Export and Better Strengthening the Administration of Export Rebates (Exemption) for Export Goods

Guo Shui Fa [2006] No.24

Bureaus of State Taxes and Commerce Authorities in Charge in all provinces, autonomous regions, municipalities directly under the
Central Government, and cities specially designated in the state plan:

This Circular on relevant issues is hereby given in order to guarantee a constant, healthy and stable development for China’s foreign
trade export, to further regulate the business order in foreign trade export, to prohibit the export enterprises from engaging in
such nonstandard export operations as “Four Selfs and Three Nos ( the Four Selfs are the investor or intermediary’s bringing clients
itself, bringing supply of goods itself, bringing the bill of exchange itself and declaring at the customs itself, and the Three
Nos are the export enterprise’s having no export goods, no suppliers of goods and no foreign businessmen)” etc., to tighten the administration
of export rebates (exemption) for export goods, and to prevent and crack down such illegal and criminal activities as gaining tax
rebates by cheat.

The export enterprise shall regulate its export operations, further establish and improve its internal management system, strengthen
its training on its employees, and conduct export operations strictly in accordance with the normal trade procedures. The export
enterprise shall substantively engage in the export trade activities, guarantee the authenticity of its export operations, and abide
by strictly relevant laws and regulations concerning export rebates.

II.

In order to maintain the normal business order of China’s foreign trade, to guarantee the stable operation of the national export
rebates regime, and to avoid a loss of the national property, and in case that any of these circumstances occurs in the self-support
or entrusted export operation, the export enterprise shall not apply this operation concerned to the taxation authorities for the
handling of formalities of export rebates (exemption):

The export enterprise gives such documents for export rebates (exemption) as the vacant customs declaration bill for export goods,
verifying and writing-off instrument for export proceeds etc. to the freight forwarding company and customs broker without a contract
of entrust, or to other unit or individual for use except the freight forwarding company designated by the foreign importer; and

The export enterprise pretends to conduct export operations in the name of self-support, while its export operations are really conducted
by other operators (enterprise, self-employed individual or other individuals) rather than the export enterprise itself or its invested
enterprises in the name of this export enterprise itself; and

Where the export enterprise conduct export operations in the name of self-support, its export goods of the same batch have both purchase
contract and export brokerage contract;

After the check and clearance of the customs authorities, the export enterprise itself or its entrusted freight forwarding carrier
alters the contents of such items as “name of article”, “specification” etc. in the maritime bill of lading (if transported by other
means, the transport document given by the carrier to the deliverer shall be referred to, the same hereinafter), as result of which
conflicts occur in the contents of between the customs declaration bill for export goods and the maritime bill of lading;

Where the export enterprise conduct export operations in the name of self-support, it, however, fails to assume the risks of quality
of exported goods, exchange settlement or export rebates, i.e. it fails to assume the liabilities of compensation claimed by foreign
parties in case that quality problem of the exported goods occurs (except that liability-assumption concerning quality problem is
already agreed in the contract); fails to assume the liabilities of verifying and writing-off unable to be conducted due to the unscheduled
exchange settlement (except that liability-assumption concerning exchange settlement is already agreed in the contract); and fails
to assume the liabilities of export rebates unable to be conducted due to the problems in the submitted documents of export rebates;

The export enterprise fails to substantively engage in the export operations, and accepts and engage in other export operations introduced
by intermediaries while conducting export operations in the name of self-support; and

Other activities in violation of relevant national laws and regulations concerning export rebates.

III.

In case that the export enterprise applies for export rebates (exemption) while engaging in any of such activities as mentioned in
Article II of this Circular and once detected, the rebated (exempted) tax payment shall be recovered, and unhandled application for
export rebates (exemption) shall not be handled. With regard to those gain export rebates by cheat, the taxation authorities shall
recover their cheated tax payment, impose on them a fine of more than one time and less than five times the cheated tax payment,
and cease, with approvals from the taxation authorities of above-provincial (included) level, their rights to export rebates for
more than half a year. During the period of ceased rights to export rebates, any application of this enterprise for export rebates
(exemption) may not be handled with regard to this enterprise’s export goods in the forms of self-support, entrustment or proxy.
In case that a crime is constituted, it shall be transferred to the judicial authorities to investigate criminal liabilities.

IV.

The taxation authorities and commerce authorities in charge at all levels shall further enhance cooperation between them, do well
the work of policy publicities, guide actively the export enterprises to engage in normal export trades, regulate the business order
in foreign trade, and strengthen the administration on export rebates (exemption) for export goods. The taxation authorities in charge
of export rebates (exemption) shall do well the administration work of export rebates (exemption) application, examination, and approval
in accordance with the currently-prescribed requirements of application, examination and approval. Meanwhile, the taxation authorities
and commerce authorities in charge shall strengthen communications between them, pay close attention to the new tendencies in tax
fraudulence, and strictly treat the found activities in violation of laws and regulations, and shall not appease or connive the export
enterprises at engaging in export operations in violation of relevant national provisions and normal procedures for export operation.

This Circular shall enter into force as of the date of March 1, 2006 (the date of export specified on the customs declaration bill
for export goods (exclusively used for export rebates) shall prevail).

State Administration of Taxation

Ministry of Commerce

February 13, 2006

State Administration of Taxation, Ministry of Commerce
2006-02-13

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 16 – GOVERNMENT SUBSIDIES

The Ministry of Finance

Accounting Standards for Enterprises No. 16 – Government Subsidies

Cai Kuai [2006] No.3

February 15, 2006

Chapter I General Provisions

Article 1

In order to regulate the recognition, measure government subsidies, and disclose the relevant information, these Standards are formulated
in light of the Accounting Standards for Enterprises – Basic Standards.

Article 2

A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the government, but excluding the
capital invested by the government as the owner of the enterprise.

Article 3

Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income.

The government subsidies pertinent to assets mean the government assets that are obtained by enterprises used for purchase or construction,
or forming the long-term assets by other ways.

The government subsidies pertinent to income refer to all the government subsides except those pertinent to assets.

Article 4

Other related accounting standards shall apply to the items as follows:

(1)

The Accounting Standards for Enterprises No. 12 – Debt Recombination shall apply to the debt exemptions; and

(2)

The Accounting Standards for Enterprises No. 18 – Income Tax shall apply to the deductions and exemptions of income tax.

Chapter II Recognition and Measurement

Article 5

No government subsidy may be recognized unless the following conditions are met simultaneously as follows:

(1)

The enterprise can meet the conditions for the government subsidies; and

(2)

The enterprise can obtain the government subsidies.

Article 6

If a government subsidy is a monetary asset, it shall be measured in the light of the received or receivable amount.

If a government subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair value cannot be obtained in a
reliable way, it shall be measured at its nominal amount.

Article 7

The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of
the relevant assets, and included in the current profits and losses. But the government subsidies measured at their nominal amounts
shall be directly included in the current profits and losses.

Article 8

The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows:

(1)

Those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income
and shall included in the current profits and losses during the period when the relevant expenses are recognized; or

(2)

Those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the
current profits and losses.

Article 9

If it is necessary to refund any government subsidy which has been recognized, it shall be treated respectively in accordance with
the circumstances as follows:

(1)

If there is the deferred income concerned, the book balance of the deferred income shall be offset against, but the excessive part
shall be included in the current profits and losses; and

(2)

If there is no deferred income concerned to the government subsidy, it shall be directly included in the current profits and losses.

Chapter III Disclosure

Article 10

In its notes, an enterprise shall disclose the information concerning the government subsidies as follows:

(1)

The type and amount of the government subsidies;

(2)

The amount of the government subsidies which are included in the current profits and losses; and

(3)

The amount of the government subsidies refunded in the current period as well as the reasons.

The Ministry of Finance
2006-02-15

CIRCULAR OF THE MINISTRY OF FINANCE OF THE PEOPLE’S REPUBLIC OF CHINA, ON ANNULLING THE ADMINISTRATION LICENSING FEES OF FOREIGN ACCOUNTING FIRMS IN IMPLEMENTING INTERIM AUDITING BUSINESS IN CHINA

Ministry of Finance

Circular of the Ministry of Finance of the People’s Republic of China, on Annulling the Administration Licensing Fees of Foreign Accounting
Firms in Implementing Interim Auditing Business in China

Cai Kuai [2006] No. 7

March 2, 2006

The Financial Offices (Bureaus) in all the provinces, autonomous regions, municipalities and Financial Bureaus of Shenzhen City:

In accordance with Law of the PRC on Certified Public Accountants, Foreign Accounting Firms’ relevant business in China shall be approved
by finance department of the People’s Government of related provinces, autonomous regions, municipalities.

In accordance with Law of Administrative Licensing, the administration licensing fees of Foreign Accounting Firms in implementing
interim auditing business in China shall be annulled as of the date of promulgation of this Circular.

Ministry of Finance
2006-03-02

LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING THE APPROVAL TO DALIAN BRANCH OF JAPAN MIZUHO CORPORATE BANK, LTD. TO DEAL IN PROVIDING RMB BUSINESS SERVICE FOR NON-FOREIGN-FUNDED ENTERPRISES

Letter of China Banking Regulatory Commission concerning the Approval to Dalian Branch of Japan Mizuho Corporate Bank, Ltd. to Deal
in Providing RMB Business Service for Non-foreign-funded Enterprises

Japan Mizuho Corporate Bank, Ltd

The letter which was sign by Hiroshi Saito, president of your bank, and was addressed to this Commission has been received.

The following reply is hereby given to you according to the Regulation of the People’s Republic of China on the Administration of
Foreign-funded Financial Institutions (Order No. 340 of the State Council, hereinafter referred to as the Regulation) and the Detailed
Rules for the Implementation of the Regulation of the People’s Republic of China on the Administration of Foreign-funded Financial
Institutions (Order No. 4 of China Banking Regulatory Commission, hereinafter referred to as the Detailed Rules):

Your Dalian Branch is approved to deal in RMB business services for non-foreign-funded enterprises under the scope prescribed in Article
17 of the Regulation.

After going through the statutory formalities in accordance with the Regulation and the Detailed Rules, your Dalian Branch may, under
Article 35 of the Detailed Rules, deal in providing foreign exchange services for various clients under the following scope; providing
RMB business services for foreign-funded enterprises, China-based foreign institutions, mainland-based representative offices of
the enterprises set up by Hong Kong, Macao and Taiwan, aliens, compatriots from Hong Kong, Macao and Taiwan, and the non-foreign-funded
enterprises; pooling public deposits, granting short-term, medium-term and long-term loans, transacting acceptance and discount of
negotiable instruments, buying and selling government bonds and financial bonds, buying and selling non-stock negotiable instruments
denominated in a foreign currency, providing services on letter of credit and guaranties, transacting domestic and overseas settlements,
buying and selling foreign currencies, buying and selling foreign currencies for itself or on a commissioned basis, converting foreign
currencies, inter-bank funding, bank card business, safety-deposit box, providing credit-standing investigation and consultation
services, as well as other business activities upon approval of China Banking Regulatory Commission.

China Banking Regulatory Commission

March 13, 2006

China Banking Regulatory Commission
2006-03-13

1 234...25 Page 3 of 25

Probate

CIRCULAR OF THE MINISTRY OF FINANCE ON PRINTING AND DISTRIBUTING THE PROVISIONAL MEASURES FOR FISCAL AND FINANCIAL ADMINISTRATION OF...

GUIDING OPINIONS OF THE CSRC, SASAC, MOF, PBC, AND THE MOFCOM ON SHARE-TRADING REFORM OF LISTED COMPANIES

REPLY OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE RELEVANT TAXATION ISSUES IN THE GUIDING CATALOGUE OF INDUSTRIES FOR FOREIGN INVESTMENT

NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION REGARDING THE RELEVANT POLICIES OF ENTERPRISES INCOME TAXES ON THE PURCHASE OF HOME-MADE EQUIPMENT BY FOREIGN INVESTMENT ENTERPRISES AND FOREIGN ENTERPRISES

REGULATIONS ON DIRECT SELLING ADMINISTRATION

POLICIES FOR AUTOMOBILE TRADE

THE CIRCULAR OF THE MINISTRY OF COMMERCE AND THE GENERAL OFFICE OF GENERAL ADMINISTRATION OF CUSTOMS ON RELATED MATTERS CONCERNING THE TRADE ADMINISTRATION IN BONDED AREA AND BONDED LOGISTIC PARK

REGULATIONS ON THE ADMINISTRATION OF ENTERTAINMENT PLACES

CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION AND THE MINISTRY OF COMMERCE ON FURTHER REGULATING THE BUSINESS ORDER IN FOREIGN TRADE EXPORT AND BETTER STRENGTHENING THE ADMINISTRATION OF EXPORT REBATES (EXEMPTION) FOR EXPORT GOODS

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 16 – GOVERNMENT SUBSIDIES

CIRCULAR OF THE MINISTRY OF FINANCE OF THE PEOPLE’S REPUBLIC OF CHINA, ON ANNULLING THE ADMINISTRATION LICENSING FEES OF FOREIGN ACCOUNTING FIRMS IN IMPLEMENTING INTERIM AUDITING BUSINESS IN CHINA

LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING THE APPROVAL TO DALIAN BRANCH OF JAPAN MIZUHO CORPORATE BANK, LTD. TO DEAL IN PROVIDING RMB BUSINESS SERVICE FOR NON-FOREIGN-FUNDED ENTERPRISES

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7