MEASURES OF GENERAL ADMINISTRATION OF CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA FOR SUPERVISING AND CONTROLLING DUTY-FREE SHOPS AND GOODS

General Administration of Customs

General Administration of Customs Order

No.132

The Measures of General Administration of Customs of the People’s Republic of China for Supervising and Controlling Duty-Free Shops
and Goods, adopted the at executive meeting of this Administration on September 30, 2005, is hereby promulgated and shall go into
effect as of January 1, 2006.

Director Mou Xinsheng

November 28, 2005

Measures of General Administration of Customs of the People’s Republic of China for Supervising and Controlling Duty-Free Shops and
Goods

Chapter 1 General Provisions

Article1

These Measures are formulated in order to regulate the supervision and control of duty-free shops and goods by the Customs, in accordance
with the Customs Law of the People’s Republic of China, other relevant laws as well as administrative rules and regulations.

Article2

These Measures shall be applicable to the establishment and termination of duty-free shops, import, sales (including supply for free)
and writing-off of duty-free foods.

Article3

Duty-free goods shall be uniformly imported by operation entities of duty-free shops, and undergo relevant Customs procedures.

Article4

For spare and accessory parts as well as tools for maintenance of duty-free goods, booths and racks for the said duty-free goods,
and such overstocked duty-free goods as originally produced for exports, operation entities shall handle pertinent formalities which
are required for general imported goods.

Article5

A Customs office directly under the GAC of the place where duty-free shops are located or a subordinate Customs authorized by such
Customs office (hereinafter referred to as the competent Customs) shall dispatch personnel to examine operation entities and duty-free
shops in terms of business qualification, warehouse in/out records, sales records, and inventory records of duty-free goods. Operation
entities shall provide duty-free shops with necessary assistance.

Article6

The competent Customs may, according to work requirements, dispatch personnel to conduct supervision and control at duty-free shops,
and duty-free shops must provide necessary office facilities.

Chapter 2 Establishment and Termination of Duty-Free Shops

Article7

An operation entity intending to establish duty-free shops shall file a written application to the General Administration of Customs
and meet the following requirements:

(1)

being qualified as an independent legal person;

(2)

having sales places and supervised warehouses for duty-free goods, which satisfy Customs’ supervision and control requirements;

(3)

having a computer management system, which satisfies Customs’ supervision and control requirements and can provide the Customs with
warehouse in and out information as well as sales information of duty-free goods;

(4)

having a certain scale of business operation. In case of application for establishment of a duty-free shop at a port, there shall
be more than 50 thousand persons entering and leaving the port each year;

(5)

having formulated complete articles of association and established complete internal financial management system, all of which cover
cooperation agreements, scale of business operation, legal representative and others; and

(6)

having met other requirements laid down in relevant laws, administrative rules and regulations, as well as the Customs regulations.

Article8

The General Administration of Customs shall, pursuant to the procedures and periods set forth in the Administrative Licensing Law
of the People’s Republic of China and the Measures of the General Administration of Customs of the People’s Republic of China for
Implementation of the Administrative Licensing Law of the People’s Republic of China, undertake procedures for examination and approval
of duty-free shops.

Article9

The establishment of sales places of duty-free goods shall comply with Customs supervision and control requirements. Sales places
of duty-free shops at a port shall be located within the separation zone of the same port; Sales places for duty-free shops of means
of transport shall be located inside means of transport used for international operation; Sales and delivery-taking points of urban
duty-free shops shall be located within of the in-and out separation zone of a port.

Article10

The establishment of supervised warehouses for duty-free goods shall satisfy the following conditions and requirements:

(1)

Having safety separation facilities which meet Customs supervision and control requirements;

(2)

Establishing a special warehouse management system, preparing monthly statements of warehousing entry, removal and storages, being
equipped with full-time warehouse keepers, and reporting the said system, statements and warehouse keepers to the Customs for the
record;

(3)

Only permitting to place duty-free goods of duty-free shops supervised warehouses belong to; and

(4)

Meeting other conditions and requirements of pertinent State laws, administrative rules and regulations, as well as Customs regulations.

Article11

Any duty-free shop which is approved to be set up shall, on month prior to its commencement of business, file an application to the
competent Customs for acceptance. After passing the said acceptance, the duty-free shop shall handle record-keeping formalities with
the competent Customs and submit the following materials:

(1)

photocopies of approval documents issued by the General Administration of Customs;

(2)

photocopies of the original and duplicate of the industrial and commercial license;

(3)

photocopies of the tax registration certificate;

(4)

floor plans, areas and location plans of business places for duty-free goods and supervised warehouses;

(5)

dies of special business seals of duty-free shops; and

(6)

photocopies of identification certificates of legal representatives of duty-free shops.

Where photocopies are required, originals shall be also submitted at the same time for examination and verification.

Where the aforesaid materials are changed, any duty-free shop shall, within 10 working days form such changes, handle change formalities
with the competent Customs.

Article12

If applying to suspend, terminate or restore the business operation of their duty-free shops, operation entities shall report to the
General Administration of Customs for approval. Any duty-free shop shall, before an operation entity files an application for suspension
or termination of business operation, undergo relevant Customs procedures, such as the writing-off of duty-free goods from stock.

In the event that a duty-free shops, which is set up with an approval, fails to begin operation without good reasons within one year
from the said approval or suspends its operation for more than one year, or changes its business partners, pertinent application
formalities shall be handled again in accordance with Article7 of these Measures.

Article13

Should names of duty-free shops, addresses or areas of sales places for duty-free goods or of supervised warehouses be changed, operation
entities shall report to the Customs Administration of Customs for approval.

Chapter 3 Import, Warehousing Entry and Removal, and Allotment of Duty-Free Goods

Article14

If importing duty-free goods for duty-free shops, operation entities shall fill a Goods Declaration for Importation of the General
Administration of Customs of the People’s Republic of China, affix a seal for declaration which are kept on file by such operation
entities with the competent Customs, and handle formalities for import of duty-free goods with the competent Customs.

Where duty-free goods are imported from other places, operation entities shall, in accordance with relevant provisions of the Measures
of the General Administration of Customs of the People’s Republic of China for Supervision of Transit Goods, transit duty-free goods
to the competent Customs for handling import formalities.

Article15

After duty-free goods enter supervised warehouses, duty-free shops shall complete a Permit for Entry/Removal of Duty-Free Goods into
and out of Supervised Warehouses (See Appendix for the format) accompanied by other pertinent documents and file an application to
the competent Customs. The competent Customs shall, if there is no discrepancy upon examination, conduct a supervision over the entry
of duty free goods into warehouses.

Without any approval of the Customs, duty-free goods shall not be processed or assembled after entering warehouses.

Article16

Duty-free shops shall, before taking duty-free goods from supervised warehouses and letting such goods enter business places for sales,
complete a Permit for Entry/Removal of Duty-Free Goods into and out of Supervised Warehouses and file an application to the competent
Customs. The competent Customs shall, if there is no discrepancy upon examination, conduct a supervision over the taking of duty
free goods concerned out of supervised warehouses into sales places.

Article17

Where duty-free goods are allocated between/among duty-free shops, duty-free shops which such goods are allocated in shall complete
a Permit for Allotment of Duty-Free Goods (See Appendix 2 for the format) and apply to their competent Customs. Duty-free shops which
such goods are allocated in shall, after obtaining an approval, transit duty-free goods into themselves in accordance with the Measures
of the General Administration of Customs of the People’s Republic of China for Supervision of Transit Goods.

Chapter 4 Sales of Duty-Free Goods

Article18

The wordings of “China Duty Not Paid” both in Chinese and English shall be indicated on remarkable positions inside and outside packages
of duty-free imported tobacco products and alcoholic drinks which are sold by duty-free shops.

Duty-free shops shall prepare sales receipts and delivery orders of duty-free goods according to the Customs requirements, and duty-free
shops at a port shall fill pertinent contents on sales receipts and delivery orders of duty-free goods, such as certificates of means
of transport taken by entering and exiting personnel or valid certificates for entering and exiting personnel to go into and leave
the territory.

Article19

Sales objects of duty-free shops at a port shall be limited to persons who have finished exit formalities and will go out of the territory,
as well as persons who haven’t completed entry formalities. Duty-free shops shall sell duty-free goods according all the said persons
according to certificates of their taken means of transport and valid certificates for them to go into and leave the territory.

Article20

Sales objects of duty-free shops of means of transport shall be limited to entering and exiting personnel taking inward and outward
means of transport. Duty-free shops shall only sell duty-free goods when means of transport are used in international (regional)
voyages. Duty-free shops shall submit to the competent Customs the Sales Details of Duty-Free Goods (See Appendix 3 for the format)
which are signed by a person responsible for means of transport or his/her agent, for examination.

Article21

The sales objects of urban duty-free shops shall be limited to overseas personnel who will leave the territory. Duty-free shops shall
sell duty-free goods according to valid exiting certificates of such overseas personnel and their air tickets (ship tickets and bus
or train tickets), and within the port separation zone deliver duty-free goods to purchasers for taking out of the territory.

Article22

The sales objects of duty-free shops oriented to diplomatic personnel shall be limited to diplomatic representatives and consular
sections of foreign countries in China, diplomatic personnel and consular officials of such consular sections, other institutions
and persons who can enjoy diplomatic privileges and immunities. Duty-free shops shall, according to limited quantity approved by
a Customs office directly under the GAC of the place where the aforesaid institutions and persons reside or a subordinate Customs
authorized by such Customs office in accordance with pertinent provisions, sell duty-free goods in a limited quantity.

Article23

The sales objects of duty-free shops providing vessels shall be limited to vessels of international (regional) voyages leaving the
territory and crew members thereof. Duty-free shops providing vessels shall file an application to the competent Customs for supplying
vessels, complete a Permit for Vessel Supply of Duty-Free Goods (See Appendix 4 for the format) and supply vessels of international
(regional) voyages under the supervision and control of the Customs.

Chapter 5 Loss Reporting, Verification and Writing-off of Duty-Free Goods

Article24

Where duty-free goods are over-landed or found short when undergoing warehousing entry procedures, duty-free shops shall timely report
to the competent Customs in writing. The competent Customs shall, after verifying correct, issue examination and inspection records
and allow duty-free shops to amend pertinent data and contents indicated on the Permit for Entry/Removal of Duty-Free Goods into
and out of Supervised Warehouses.

Article25

Where duty-free goods are destroyed or lost during the storage or sales period, duty-free shops shall timely report to the competent
Customs in writing. If the said destruction or losses are resulted from events of force majeure, duty-free shops shall complete a
Permit for Loss Reporting of Duty-Free Goods (See Appendix 5 for the format). The competent Customs shall, after verifying correct,
approve to grant tax exemption and write off such destroyed or lost goods.

Where duty-free goods are destroyed or lost during the storage or sales period due to other reasons, duty-free shops shall pay taxes
of destroyed or lost duty-free goods according to law.

Article26

Should duty-free goods, after being kept for a period longer than their shelf lives, be unable to be used or become deteriorated,
duty-free shops shall timely report to the competent Customs in writing, and complete a Permit for Loss Reporting of Duty-Free Goods.
The competent Customs shall, after conducting examination, inspection and verification, approve to return or destroy under the supervision
and control of the Customs the said duty-free goods.

Article27

Duty-free shops shall establish special account books, before the 25th day of the first month during each quarter prepare lists on
warehousing entry and removal, sales, inventory, allotment, destruction, losses, period longer than shelf lives of duty-free goods
for the last quarter, complete pertinent documents, such as a Detailed Account of Duty-Free Goods (See Appendix 6 for the format),
accompanied by sales receipts and delivery orders, an Inventory Quantity of Duty-Free Goods (See Appendix 7 for the format), and
a Declaration for Exportation of Goods, and shall handle formalities for verifying and writing off duty-free goods with the competent
Customs. The competent Customs may, if deeming necessary, dispatch its personnel to conduct a site inspection at business places
and supervised warehouses of duty-free goods.

Chapter 6 Legal Liability

Article28

If committing any of the following acts, operation entities or duty-free shops shall be ordered by the Customs to make corrections,
may be given warnings and, if circumstances are serious, given punishments in accordance with Article26 and Article27 of the Regulations
of the General Administration of Customs of the People’s Republic of China for Implementation of Administrative Penalties:

(1)

selling duty-free goods to objects other than those specified herein;

(2)

selling duty-free goods of classes, in a limited quantity and value more than those approved by the Customs;

(3)

failing to sell duty-free goods within stipulated territories;

(4)

failing to deal with formalities regarding import declaration, warehousing entry and removal, sales, verification, writing-off and
so on of duty-free goods; and

(5)

leasing, assigning or transferring the right to deal with duty-free shops.

Article29

Where committing other illegal acts in violation hereof, operation entities or duty-free shops shall be punished by the Customs in
accordance with the Customs Law of the People’s Republic of China and the Regulations of the General Administration of Customs of
the People’s Republic of China for Implementation of Administrative Penalties; If their offences constitute crimes, operation entities
or duty-free shops shall be investigated to bear criminal liabilities.

Chapter 7 Supplementary Provisions

Article30

For the purpose of these Measures, the following terms shall have the meanings ascribed to them as follows:

“Operation entities” refer to enterprises which are approved by the State Council or its authorized departments, and are qualified
for engaging in business of duty-free goods.

“Duty-free shops” refer to enterprises, which are, with the approval of the General Administration of Customs, set up by operation
entities at places approved by the State Council of the People’s Republic of China or its authorized departments, have sales places
and supervised warehouses of duty-free goods that meet Customs supervision and control requirements, and sell duty-free goods to
sales objects, more specifically, including duty-free shops at a port, duty-free shops of means of transport, urban duty-free shops,
duty-free shops of diplomatic personnel and duh-free shops supplying vessels.

“Duty-free goods” refer to imported commodities which are tax free transported by operation entities into the territory based on operational
classes approved by the General Administration of Customs, for duty-free shops to sell to sales objects, including free samples and
imported free gifts.

“Sales places of duty-free goods” refer to special places used by duty-free shops to sell duty-free goods.

“Supervised warehouses of duty-free goods” refer to warehouses specially used by duty-free shops to store duty-free goods.

Article31

The General Administration of Customs shall be responsible for the interpretation of these Measures.

Article32

These Measures shall com into effect as of January 1, 2006.

Appendices: (Omitted)1.

Permit for Entry/Removal of Duty-Free Goods into and out of Supervised Warehouses

2.

Permit for Allotment of Duty-Free Goods

3.

Sales Details of Duty-Free Goods

4.

Permit for Vessel Supply of Duty-Free Goods

5.

Permit for Loss Reporting of Duty-Free Goods

6.

Detailed Account of Duty-Free Goods

7.

Inventory Quantity of Duty-Free Goods

8.

List of Abolished Documents