Optimization of the Business Environment in Beijing – An Update

In the following we will provide you with a short overview of the main changes and updates as mentioned in the Regulations:

Already since 2014 (and even a few years earlier) Beijing, Tianjin and Hebei have been working on a joint development plan known as "Jing-Jin-Ji". The name for the metropolitan region is composed of the names BeiJING, TianJIN and the abbreviated provincial name JI of Hebei Province.

With Art. 8 of the new Regulations the gradual unification of government service standards, mutual recognition of qualifications, and regional coordination between Beijing, Tianjin and Hebei Province shall be promoted.

With the inclusion of the municipality of Tianjin and Hebei province in a grand project centered around the economic powerhouse Beijing the region's overall competitiveness shall be improved.

For instance, the latest opening of the Daxing International Airport located between Beijing and Langfang (Hebei Province) in autumn 2019 is just one piece of the jigsaw in further internationalizing and integrating the overall “Jing-Jin-Ji” region.

Art. 12 of the Regulations mentions diverse novelties that are intended to simplify various procedures. Where, in the case of certain registration procedures, the applicant undertakes that the materials submitted are complete, true, lawful and effective, the Administration for Market Regulation (“AMR”) shall conduct a formal examination of the submitted materials, whereas an examination in terms of content is not expressly mentioned.

However, the downside of such a procedure is that where a person makes a false promise, the decision shall be revoked directly and the relevant activities shall be investigated for corresponding legal liabilities. The respective information is therefore incorporated into the municipal credit information platform (Social Credit System), which, under certain circumstances, can have an impact on the corporate credit ranking.

Also new is that multiple market entities now may use the same address as their registered domicile. Later on, they may announce the address of the actual place of production and operation via the National Enterprise Credit Information Publicity System.

Also, when an enterprise establishes a branch, it may apply to indicate the domicile of the branch on its business license, instead of separately applying for a business license for the branch.

Moreover, a unified municipal government affairs service item catalogue and guidelines shall be published. The guidelines shall, inter alia, specify the handling conditions and procedures for each government affairs service item, the required materials, the handling procedures, the handling links and time limits, the charging standards, the contact information and the channels for complaints. This is intended to make it easier for the applicant to prepare for the registration procedure and gain an overview of the necessary steps and documents.

Besides the listed provisions as mentioned in Art. 180 “Company Law of the People's Republic of China” and Art. 20 “Administrative Regulations of the People's Republic of China on Registration of Enterprise Legal Persons” the Regulations state a new possibility to liquidate an enterprise. Pursuant to Art. 26 of the Regulations, the AMR shall cancel the registration of an enterprise, which fails to carry out production and business operations or has no creditor's rights or debts after obtaining the business license, if the enterprise has no objection to the announcement of the proposed cancellation on the National Enterprise Credit Information Publicity System for twenty days.

This means that newly established enterprises now have to be specifically careful to start doing business right after their registration, as otherwise there might be a risk that the enterprise will be liquidated by the AMR within a short period of time.

Noteworthy is also, although not new, that Art. 35 of the Regulations emphasizes that a unified big data management platform and information sharing mechanism for the whole city of Beijing shall be established to promote the sharing of government information. Relevant government departments shall collect government information to the big data management platform accurately, timely and completely according to their duties.

This goes hand in hand with the gradual transition to online registration systems and the acceptance of electronic signatures and electronic chops.

On the one hand, these measures are intended to facilitate and speed up various procedures, but on the other hand it cannot be denied that this means the central collection of a wide range of comprehensive data, which in turn can serve as a data source for the Social Credit System. How these measures will affect enterprises in detail must be analyzed from an individual point of view.