22 October 2012 ~ 0 Comments

Morgan Cars China moves at a SAFE Pace

SAFE Identity Card

It is our one year anniversary of being appointed a Morgan Motor Company dealer in China. It has been an interesting learning process with some patience required, but overall tremendously exciting and potentially rewarding.

On Friday we took part in our first planning process for the next year's cars. I ordered 30 cars as stock. This is nearly double our 18 units in my business plan. This rash of confidence is due to the early sales we've made (2 x Plus 8, 2 x Roadsters, 2 x Plus 4 and a forward booking for an Aero). We now have partners in Guangzhou, Chengdu and Qingdao and took the Plus 8 and Aero on roadshows to those cities. Our Weibo following has reached 830 and unique visitors to the Morgan-cars.com.cn site rapidly approaches 10,000 since it's launch in February.

All the marketing excitement can't mask the need for simple bureaucracy. Therefore I was pleased to see that we received our State Administration for Foreign Exchange Identity Card today. Once the Bank of China has opened our bank account, the inspector visited our offices last week to ensure that we really are a company, which should be this week, I can use this new SAFE IC card to apply for an account which will enable Morgan to convert RMB to Sterling.

The process is part of the way the Government manages foreign invested companies, and to ensure currency monitoring. The documentation required is well structured and transparent, if a little like a financial obstacle course:

According to Shang Zi Han [2011] No.1078 of the Beijing Government Bulletin who explained this clearly:

'Foreign-funded investment companies may, with the approval of local foreign exchange bureau, directly use RMB profits, RMB obtained in China by way of early recovery of investment gains, liquidation, equity transfer and capital reduction for domestic investment. Foreign investors may also carry out domestic investment with the said legitimate income after register capital (investment increment) to investment companies. Foreign-funded investment companies shall provide the foreign exchange administration authorities with the following materials when applying for domestic investment approval:

(A) Written application;

(B) IC card for foreign exchange registration of foreign-funded companies

(C) Documents from commerce authorities approving domestic investment of foreign-funded investment companies

(D) Evidence of RMB funding sources and documents submitted for domestic reinvestment of profits, early recovery of investment gains, liquidation, equity transfer and capital reduction (increment) of legitimate RMB income of foreign-funded investment companies.

(E) The latest capital verification report and financial audit report (with the audit report of foreign exchange income and expenditure).

Foreign-funded investment companies may transfer RMB funds directly to the invested enterprises, or transfer to a foreign-funded investment company,before transferring to the invested enterprise after the materials are reviewed and approved by the local foreign exchange bureau.

The local foreign exchange bureau shall process capital verification with the working letter of accounting form, the application (for inflow) for capital verification, letter of inquiry for capital placement of foreign investor, and copies of the said documents for domestic investment from local foreign exchange bureau. The amount and date of verification should be marked on the original copy.'

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