The Ministry of Commerce (MOC) formulated and announced the Supplementary Regulation II of “Administrative Measures on Foreign Investment in Commercial Areas” (“Supplementary Regulation”) as of 13 Nov 2006, with a view to promoting closer economic partnership between Hong Kong and Mainland and between Macao and Mainland and encouraging service providers from Hong Kong and Macao to establish commercial enterprises in Mainland.

This Supplementary Regulation has been made based on the Supplementary Agreement III of “the Arrangement Between Mainland and Hong Kong on Establishing Closer Economic Partnership” and the Supplementary Agreement III of “the Arrangement Between Mainland and Macao on Establishing Closer Economic Partnership”. As provided for in the Supplementary Regulation, “for service providers from Hong Kong and Macao who have set more than 30 stores in mainland, if they are in business of books, newspapers, magazines, medicines, agriculture chemicals, agricultural film, fertilizers, food stuffs, vegetable oil, sugar and cotton etc, and if the aforesaid commodities are of different brands and from different suppliers, they are allowed to be controlling shareholder with a capital contribution proportion of no more than 65%.”

This Supplementary Regulation is enforced as of 1 Dec 2006. Other matters relating to service providers from Hong Kong and Macao investing in commercial areas shall still be governed by the Administrative Measures on Foreign Investment in Commercial Areas.