(Note: The document is for reference purpose only.) 

Legal Services

Under Annex 4 to CEPA, Hong Kong solicitors and barristers may be employed by Mainland law firms as Hong Kong legal consultants. The Ministry of Justice issued the Measures for the Management of Hong Kong Legal Practitioners and Macao Practising Lawyers Employed by Mainland Law Firms as Legal Consultants at the end of November 2003 to implement such arrangement. Under the Measures, Hong Kong legal practitioners who are employed by Mainland law firms as legal consultants must obtain a Hong Kong legal consultant permit. Under the further liberalization of trade in services under CEPA, with effect from 1 January 2005 Hong Kong legal practitioners providing professional assistance on an individual case basis (instead of on a retainer basis) at the request of Mainland law firms will not be required to apply for a Hong Kong legal consultant permit.

Construction Services

To assist Hong Kong service suppliers to establish construction enterprises in the Mainland, which have not yet obtained construction enterprise qualifications, the Ministry of Construction will continue to process their applications for permits for undertaking single construction project before 1 July 2005. As one of the previous CEPA commitments, Hong Kong service suppliers' performance in Hong Kong is taken into account in assessing the qualifications of the construction enterprises in the Mainland. This commitment will be extended to cover their performance in the overseas. For construction enterprises in the Mainland established by Hong Kong services suppliers, the residency requirements for Hong Kong permanent residents employed as engineering technical staff and financial managerial staff will be waived. The restriction on the proportion of Hong Kong permanent residents employed as qualified project managers will also be removed.

Distribution Services

The preferential treatments for the distribution of most types of products have already been covered in the initial phase of CEPA. However, the wholesaling or retailing of a few specified products remain subject to the Mainland's commitments to the WTO. That means Hong Kong service suppliers will only be permitted to engage in the wholesaling or retailing of these "restricted" products at a later stage in accordance with the WTO timetable. Under CEPA II, preferential treatments will be given to Hong Kong service suppliers in respect of the distribution of some of these "restricted products".

• Under CEPA II, the Mainland has agreed to permit Hong Kong service suppliers to set up wholly-owned enterprises to engage in the wholesaling and retailing of books, newspapers, magazines, pharmaceutical products, pesticides and mulching film and the retailing of processed oil, with effect from 28 August 2004. These are additional benefits to Hong Kong service suppliers, some months ahead of the WTO timetable. 
  
  
• The Mainland has also agreed under CEPA II to remove the market entry threshold requirements (in terms of sales volume, asset value and registered capital) for automobile retail business with effect from 1 January 2005. Starting from June 2004, the Ministry of Commerce has implemented the new "Administrative Measures for Commercial Enterprises with Foreign Investment" governing foreign investment in distribution services. According to the "Administrative Measures". The Mainland's market entry thresholds for most distribution enterprises with foreign investment have been relaxed. The requirements on sales volume and asset value have been removed, and the requirement on registered capital has been lowered substantially. However, it is stipulated in the "Administrative Measures" that Hong Kong service suppliers in the automobile retail business would still have to fulfil the specified entry threshold requirements. The CEPA II concession removes these threshold requirements, and facilitates Hong Kong automobile retailers to expand their business in the Mainland.

Individually Owned Stores

In the initial phase of CEPA, Hong Kong permanent residents with Chinese citizenship are allowed to set up, in accordance with the relevant laws, regulations and administrative regulations, individually owned stores in Guangdong to provide retailing services excluding franchising operation, without being subject to the approval procedures applicable to foreign investments. Under CEPA II, with effect from 1 January 2005, the geographic scope will be expanded to all regions of the Mainland, and the types of businesses permitted will also be extended from retailing services to food and beverage services, hairdressing, beauty treatment and health care services, bathing services, and repair services of home electrical appliances and other goods for daily uses. Franchising is excluded. No more than 8 persons should be engaged in the operation of the individually owned stores, and the business area of such stores should not exceed 300 square meters.

The provision in respect of individually owned stores is not included in China's WTO accession protocol. Foreign investors other than Hong Kong service suppliers will not enjoy the same preferential treatment under CEPA.

Transport Services

Road Passenger Transportation Services

• Under CEPA I, Hong Kong service suppliers can set up wholly-owned enterprises in the Western Region* of the Mainland to provide road passenger transport services.
  
  
• According to the liberalization measures under CEPA II:

1. Starting from 1 January 2005, passenger transport companies operating franchised bus services in Hong Kong are allowed to set up wholly-owned or joint venture enterprises in Mainland cities at the municipal level to provide passenger public transport and hire car services at those cities.
   
   
2. Starting from 1 January 2005, passenger transport companies operating franchised bus services and non-franchised bus companies operating Guangdong - Hong Kong cross-boundary coach services in Hong Kong are allowed to set up joint venture enterprises in Guangdong, Guangxi, Hunan, Hainan, Fujian, Jiangxi, Yunnan, Guizhou and Sichuan to operate cross-boundary coach services between Hong Kong and these nine provinces.
   

* Western Region refers to 12 provinces/autonomous regions/municipality including Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Inner Mongolia and Guangxi; and Xianxi Tugia-Miao Autonomous Prefecture of Hunan Province, Enshi Tugia-Miao Autonomous Prefecture of Hubei Province and Yanbian Korean Autonomous Prefecture of Jilin Province.

Maritime Transportation Services

• There are four new offers in maritime transportation service. Effective from 1 January 2005, Hong Kong service suppliers will be allowed to set up wholly-owned enterprises in the Mainland to provide:

1. supplies services other than fuel and water (e.g. components and parts or food) for vessels owned or managed by the Hong Kong service suppliers themselves.
   
   
2. shipping agency services for vessels owned or operated by the Hong Kong service suppliers themselves, including customs declaration and inspection; using commercial bills of lading or multimodal transport documents to conduct multimodal transport services.
   
   
3. port cargo loading and unloading services.
   
   
4. regular business services for feeders that they operate between Hong Kong and the ports opened to foreign vessels in the Mainland, such as shipping undertaking, issuance of bills of lading, settlement of freight rates, signing of service contracts, etc.

Freight Forwarding Agency Services

• Offer for further liberation has been made in freight forwarding agency service sector. With effect from 1 January 2005, freight forwarding enterprises established by Hong Kong service suppliers (HKSS) in the Mainland may apply for setting up branch offices even before they have formally established business in the Mainland for one year, provided that they have fully paid up the registered capital. HKSS may apply to set up branch offices either in accordance with this CEPA offer, or in accordance with the existing provisions in the relevant Mainland regulation, namely
  .

Medical and Dental Services

Comparison of Mainland's commitments under CEPA I and CEPA II:

Audiovisual Services

Television

1. Currently, television programmes broadcast by Mainland television stations during prime time (i.e. between 7 pm and 10 pm) are primarily Mainland domestically-produced programmes. Only few imported productions and co-productions approved by the State Administration of Radio, Film and Television (SARFT) can be broadcast during prime time.
2. Under CEPA II, approved Mainland-Hong Kong co-produced television programmes are permitted to be broadcast and distributed in the same way as Mainland domestically-produced television programmes with effect from 1 January 2005. These co-produced programmes will no longer be subject to scheduling restrictions during prime time. 
3. All the design and engineering works of cable television networks in the Mainland must be carried out by licensed Mainland operators. Under CEPA II, approved Hong Kong cable operators are permitted to provide professional technical services related to the operation of cable television networks in pilot areas of Guangdong Province with effect from 1 January 2005.
4. These are the first batch of liberalization measures granted to the broadcasting sector. Such measures will provide broadcasting professionals in Hong Kong with more opportunities to leverage their production and technical expertise in the Mainland television market.

Film

5. Currently, Hong Kong service suppliers are permitted to construct, renovate and operate cinema theatres on an equity joint venture or contractual joint venture basis with majority Hong Kong ownership. Under CEPA II, HONG KONG SERVICE SUPPLIERS are also permitted to engage in the above businesses on a wholly Hong Kong-owned basis with effect from 1 January 2005.
   
   
6. With effect from 1 January 2005, Hong Kong service suppliers can also be benefited from the following extended commitments under CEPA II:
   
   1. subject to the approval of relevant Mainland authority (i.e . SARFT), the films of Mainland-Hong Kong co-produced motion pictures are permitted to be processed outside the Mainland; and
      
      
   2. subject to the approval of relevant Mainland authorities (i.e. SARFT and the Ministry of Commerce), Hong Kong service suppliers are permitted to establish wholly Hong Kong-owned companies in pilot areas in the Mainland to distribute Mainland domestically-produced motion pictures, including Mainland-Hong Kong co-produced motion pictures.

Accounting services

The commitments under CEPA II, which will take effect from 1 January 2005, include -

1. To allow consultancy companies in the Mainland established by Hong Kong accountants that have satisfied the requirements of the Mainland's "Provisional Measures for the Administration of the Provision of Bookkeeping Services" to provide bookkeeping services. Hong Kong accountants providing bookkeeping services should have obtained the Mainland's accounting qualification certificate. In addition, the person in charge of the bookkeeping services should hold the relevant Mainland's professional qualification (professional title) of accountant or above.
   
2. When Hong Kong accountants apply for a practising licence in the Mainland, the length of auditing experience they acquired in Hong Kong is equivalent to the auditing experience acquired in the Mainland.
   
   
3. To allow eligible Hong Kong residents to take the qualification examinations for professionals and technicians in the Mainland in respect of accountant professional qualification (including accounting technician and assistant accountant) and certified tax accountant.

In addition, the Financial Services and the Treasury Bureau and the Mainland's Ministry of Finance have signed the Agreement on the Mutual Examination Paper Exemptions for Mainland and Hong Kong Accountants on 27 August 2004. The Agreement signified the consensus between the Hong Kong Institute of Certified Public Accountants (HKICPA) and the Mainland's Ministry of Finance as well as the Chinese Institute of Certified Public Accountants (CICPA) regarding the mutual exemption of papers under the professional examinations in the Mainland and Hong Kong. The relevant subjects are "Financial Management" and "Auditing". The mutual exemption of equivalent examination papers will facilitate accountants in the Mainland and Hong Kong to acquire the professional qualifications in both places as soon as possible, with a view to enhancing the cooperation of the accounting sectors in the Mainland and Hong Kong. 

Banking Services

CEPA II allows Mainland branches of Hong Kong banks to act as agents for insurance products after obtaining approval from relevant authorities. The above preferential treatment will become effective on 1 November 2004.

Currently, Mainland branches of all foreign banks are not allowed to act as agents for insurance products. CEPA II opens up this business to Mainland branches of Hong Kong incorporated banks. It will help increase the competitiveness of Hong Kong banks through widening their scope of business and the range of products offered to customers in the Mainland.

Mainland branches of Hong Kong banks should apply to the respective offices of China Banking Regulatory Commission for acting as agents for insurance products. The China Banking Regulatory Commission will provide necessary details relating to the application.

Securities and Futures Services

The Mainland has agreed to open its futures market to Hong Kong intermediaries by allowing licensees of the Securities and Futures Commission (SFC) of Hong Kong to set up joint venture futures brokerage companies in the Mainland.

The capital requirement for Mainland futures intermediaries is RMB 30 million, and the proportion of Hong Kong shareholding in joint venture futures brokerage companies shall not exceed 49% (including shareholding of related parties). The joint venture brokerage companies can conduct the same scope of business as their Mainland counterparts, e.g. futures brokerage services, consultancy, training-related business and other businesses approved by the CSRC. The SFC will continue to work with the China Securities Regulatory Commission (CSRC) to finalise the detailed implementation of the commitment.

The commitment under CEPA II allows Hong Kong intermediaries to become first-mover into the Mainland futures market which has a high potential for growth. We encourage the industry to fully grasp the opportunities CEPA brings us and create a win-win situation with the Mainland counterparts.

Airport Services

This is a new service sector under CEPA.

Under CEPA II, Hong Kong service suppliers can set up wholly-owned operations in the Mainland to provide certain specified airport services effective from 1 January 2005. In other words, they are not required to form joint-ventures with Mainland partners. 

The categories of airport services covered under CEPA II are : 

1. Airport management services: contract management services for small and medium airports. 
   
   
2. Airport management training and consultation services.
   
   
3. Ground services: 
   1. agency services;
   2. loading and unloading control, communication, and departure control system;
   3. unit load devices management;
   4. passenger and baggage services ;
   5. cargo and mail services;
   6. ramp services;
   7. aircraft services.
      

The qualifying criteria for "Hong Kong service suppliers" for (C) above, as far as the "nature and scope of business" and the "years of operation required" are concerned, means Hong Kong service suppliers who have obtained the relevant licences in Hong Kong and are dedicated to the provision of the relevant air transport ground services and have engaged in substantive business operations for five years or more.

Patent Agency Services

To qualify as a patent agent in the Mainland, a person must, as a pre-condition, pass the National Qualification Examination for Patent Agents. Previously, the examination was only open to Chinese nationals in the Mainland.

As an initiative under CEPA and following discussions between the HKSAR Intellectual Property Department (IPD) and the State Intellectual Property Office (SIPO) this year, SIPO agreed in April 2004 to open the examination to eligible Hong Kong residents, starting from this year. The examination will be held once every two years. We announced the details of the examination by way of a press release on 26 April 2004.

A candidate who passes the examination will obtain a Patent Agent Qualification Certificate. Before practising in the Mainland as a patent agent, he has to complete one full year of apprenticeship in a patent agency authorised to be set up in the Mainland (or the Hong Kong or Macao office of such agency). Thereafter, if he continues to practise in a Mainland patent agency, he will obtain a Patent Agent Work Permit which allows him to practise as a patent agent.

Any Hong Kong resident who is permitted to practise as a patent agent in the Mainland may, subject to complying with certain prescribed conditions, become a partner or shareholder of a Mainland patent agency.

Job Referral Agency and Job intermediary Services

• At present, foreign companies are not allowed to set up wholly-owned "Job Referral Agencies"   or "Job Intermediaries"   in the Mainland. There are also requirements for foreign companies to set up joint-venture "Job Referral Agencies" or "Job Intermediaries" in the Mainland.
  
  
• Under CEPA, the Mainland has agreed on the following:
  

1. Hong Kong service suppliers will be allowed to set up, with effect from 1 January 2005, wholly-owned "Job Referral Agencies" in the Mainland. The minimum registered capital for opening a "Job Referral Agency" will be reduced from US$300,000 to US$125,000; and

2. While Hong Kong service suppliers still have to form a joint-venture "Job Intermediary" in the Mainland, the minimum registered capital will be reduced, with effect from 1 January 2005, from US$300,000 to US$125,000. Effective from the date same as above, Hong Kong service suppliers can own up to 70% (instead of not more than 49% at present) of the share capital of the joint-venture company and the operating experience requirement of the Mainland partner intermediary will be reduced from three years to one year.

Information Technology Services

Under CEPA II, Hong Kong service suppliers (companies registered in Hong Kong) are allowed to apply for the Computer Information System Integration Qualification Certification in accordance with the provisions of the relevant regulations and rules of the Mainland from 1 January 2005. The arrangement not only facilitates Hong Kong IT industry's access to the Mainland market, but also provides third-party accreditation of the system integration capability of Hong Kong IT service suppliers. In consideration of the differences in the mode of operation and business environment between Hong Kong and the Mainland, the Ministry of Information Industry has agreed on the setting up of a transitional period. During the transitional period from 1 January 2005 to 31 December 2006, a series of special arrangements on certain assessment criteria were instituted for Hong Kong IT service suppliers. In consideration of the implementation of the two-year transitional period, the Ministry of Information Industry agreed to institute arrangements on four assessment criteria in the areas of professional title, business turnover, personnel involved in system integration, and quality management system for Hong Kong IT service suppliers after the transitional period. Relevant arrangements have come into effect since 1 January 2007.

Procedures for applying qualification certification could be found in the web-site of Office of the Government Chief Information Officer. Please refer to the Office of the Government Chief Information Officer Notice to Local IT Service Suppliers No. 3/2006 & 4/2006 for more details.

Trade mark Agency Services

Following discussions between the HKSAR Intellectual Property Department and the Trademark Office of the State Administration for Industry and Commerce (TMO), TMO has now agreed to allow, with effect from 1 January 2005, Hong Kong service suppliers to operate trade mark agency services in the Mainland after registering with the Administration for Commerce and Industry at the provincial level and acquiring the qualification of a statutory operating body.

The HKSAR Government is now having discussion with the relevant authorities of the Central People's Government on the substantive requirements and procedures that a Hong Kong service supplier needs to satisfy before they can register and establish as a statutory operating body in the Mainland.

Cultural Entertainment Services

Under Article 16 of Regulation on the Administration of Commercial Performances promulgated by the State Council, the State prohibits establishment of performing organisations, performing venues and performance agencies under Sino-foreign equity joint venture/contractual joint venture and foreign wholly-owned venture. Whilst the State allows alteration and establishment of performing venues with foreign capital, foreign investors are not allowed to undertake operation and management of such. Moreover, foreign investors are not allowed to undertake operation and management of art galleries/art shops and art exhibition centres.

With the implementation of CEPA II, with effect from 1 January 2005, Hong Kong service providers will be allowed to establish performing venues, art galleries/art shops and art exhibition centres under sole proprietorship, joint venture/co-operative venture, as well as performance agencies under joint venture/co-operative venture in the Mainland. Besides, Hong Kong service suppliers are allowed to set up Internet culture business unit and Internet online service business premises in the Mainland with the Mainland party holding majority shareholding. (Internet culture business units may import and host online games in the Mainland.) Under the framework of WTO, the Mainland has yet to open the related market to foreign companies. The privileges enjoyed by Hong Kong under CEPA II will add to the comparative advantage of Hong Kong companies over foreign companies.

Qualification Examinations for Professionals and Technicians

Under CEPA II, the Mainland allows eligible Hong Kong residents to take qualification examination concerning 38 categories of professionals and technicians, including: registered architect, registered structural engineer, registered civil engineer (geotechnical), registered civil engineer (harbour and waterway), registered public facility engineer, registered chemical engineer, registered electrical engineer, registered town planner, certified tax accountant, certified public valuer, construction supervising engineer, cost engineer, real estate appraiser, estate agent, constructor, pharmacist, auctioneer, cost evaluator, enterprise legal consultant, prosthetist and orthotist, cotton quality examiner, mining rights assessor, registered consulting engineer (investment), certified safety engineer, certified nuclear safety engineer, registered facility supervising engineer, land registration agent, international business personnel, environmental impact assessment engineer, gemstone quality examiner, as well as quality, translation, computing technology and software, health, economic, statistics, auditing and accountant professional qualifications. Candidates passing the qualification examination will be issued a certificate in the respective profession.

For the latest information on the participation of Hong Kong residents in the Mainland's qualification examinations for professionals and technicians, please consult the "Notice on Participation of Hong Kong and Macao Residents in Qualification Examinations for Professionals and Technicians" (Jan 2005) (in Chinese only) promulgated by the Ministry of Personnel, People's Republic of China. Interested parties may browse through the Ministry's websites (http://www.mop.gov.cn) (in Chinese only) and its website on personnel examination (http://www.cpta.com.cn) (in Chinese only), or the website of Qualification Examination for Professionals in Guangdong Province (http://www.gdkszx.com.cn) (in Chinese only). Hong Kong residents passing the professional qualification examination will need to comply with any statutory requirements concerning permission to practice in the relevant profession before they could practise in the Mainland.

According to information available to Trade and Industry Department, the relevant Mainland authorities have drawn up detailed implementation measures enabling Hong Kong residents to take the qualification examination for specific categories of professionals and technicians in the Mainland as follows:

• Accounting qualification examination: reference can be made to the Measures on the Administration of Accounting Qualification (Jan 2005) (in Chinese only) promulgated by the Ministry of Finance of the People's Republic of China.
• Certified tax accountant qualification examination: reference can be made to the Interim Measures on the Administration of Certified Tax Accountants (Dec 2005) (in Chinese only) promulgated by the State Administration of Taxation.

The HKSAR Government will liaise closely with the Mainland authorities with a view to ensuring the timely release of any updated information.