Export Performance. Export turnover Remuneration Exclusive of tax Exclusive of tax -------------------------------- ------------------------ Up to 76,000,000 euros inclusive 2.25% of the export turnover exclusive of tax More than 76,000,000 euros 2.00% of the export turnover exclusive of tax
Export Performance. Performance requirements are stipulations to which foreign investors must agree in order to gain approval for establishment. Like most developing countries, China has used them over the reform period. One of the most common performance requirements pertains to exports. While the TRIMs Agreement made progress in proscribing some investment performance requirements, it did not take on the questions of export performance. However, the MAI offered a model for progress by prohibiting preestablishment performance requirements. Chinese regulations stipulate that wholly foreign-owned enterprises must undertake to export more than 50% of the output value of their products;62 this is known as the “export ratio”. In the 1980s, firms negotiating such ventures often committed to export considerably more than 50% of production in order to secure sole control. However, this conditionality attached to wholly foreign-owned status has softened in practice. Regulations provide official leeway as well. Wholly foreign- owned enterprises producing import-substituting goods, as well those using or producing high-technology goods, may be exempted from export performance requirements.63 Sino-foreign joint ventures and Sino-foreign cooperative ventures, on the other hand, are bound by no statutory authority to export, but they often face informal pressure to include export performance targets in the contract. Such pressure can be applied during the examination period of the approval process, when negotiations go back and forth among foreign investor, Chinese joint venture partner, and approval authorities. Sometimes the target is implicit; for instance, the contract may state that the venture will “balance foreign exchange and receipts on its own.” In practice, however, failure to meet export targets has often not been treated as a punishable offence, such as withholding the rights to purchase foreign exchange. Chinese officials still examine export performance when reviewing annual certifications. These certifications are necessary for FIEs to obtain foreign exchange at China’s banks. 62 Rules for the Implementation of the Law of the People’s Republic of China on Foreign Capital Enterprises, Article 3.
