From the year 2009 on, when participating in the annual inspection of foreign exchange, enterprises with foreign investment should submit an electronic version of the Information Registration Form of Joint Annual Inspection on Enterprises with Foreign Investment (Foreign Exchange) to the Information System of Foreign Exchange Administration for Direct Investment (hereinafter referred to as the System) in addition to submitting all the materials in the checklist demanded by the State Administration of Foreign Exchange in the paper form. Hereafter is the operation process:

I. Preparatory Work for Enterprises

1.1 Preparation of Software

Enterprises should download the software of On-line Submission of Electronic Data of Annual Inspection of Foreign Exchange on Enterprises with Foreign Investment on the on-line service platform of the State Administration of Foreign Exchange (WWW.SAFESVC.GOV.CN). After entering the page with the characters of “Enterprise Terminal” on the website, enterprises click the icon of “Enterprise Terminal” on the left of the page and continue to click “Enterprise Terminal Download” to get the file of “wgjinvsetup.zip”, then install the software and create a shortcut on the desktop.

Double clicking the shortcut icon, and if it cannot be opened, enterprises should download another software “Microsoft. NETFranework 2.0” and install it.

1.2 Administration of Enterprise Terminal

By double clicking the above-mentioned icon and entering the following screen, enterprises can conduct the authorization of customer terminal.

First of all, enterprises should log in as enterprise system administrator (the enterprise must have been in the System), with 200950110 as the nine digit code of enterprise, admin as the user code and 000000 as the password (default).

With successful logging in, the following screen appears:

By clicking “Enterprise Users Administration”, enterprises can (1) perform the function of “adding users” by keying in User Code: 2009501101 (ten digits), User Name: User 1, User Status: selecting “Normal” from the list, and clicking “Submit”; (2) perform the function of “modifying users”, which only “User Name” and “User Status” can be modified; (3) change the password by clicking the “Changing Password” on the upper right corner. Special Tips: enterprises should select the system administrator, change the password timely, and guard the password lest there be any leakage of enterprise information. If the password is forgotten, enterprises should contact the Administration of Foreign Exchange as soon as possible.

The screen of “Changing Password” is as follows: Key in the old password, the new one, confirm it, submit it and the new password is valid.

II. Process of Annual Inspection

After the enterprise user submits the annual inspection data via enterprise terminal, the Administration of Foreign Exchange shall examine and verify what the enterprise has submitted. In case where the information is not approved, it can be sent back to the enterprise and be submitted again after revision.   Approved verification means the enterprise passing the annual inspection of foreign exchange.

2.1 Operation of Enterprise Terminal

2.1.1 Operation of Annual Inspection

Enterprise terminal shall conduct the annual inspection operation by logging into the enterprise user set by the enterprise system administrator. Double click the  icon:

Key in Enterprise Code: 200950110, User Code: 2009501101, and Password: 000000 (default) (Enterprises should change the password timely to guard the leakage of enterprise information).

On the left side are the two functions that enterprise terminal can use, which are “Registration Administration” and “Business Query”. The annual inspection shall be done with “Registration Administration”. Click “Registration Administration” –“Registration of Information of Enterprises with Foreign Investment for Annual Inspection” and enter the main page of annual inspection operation, with 2008 the default year.

The System provides the enterprise terminal with two methods of filling in the annual inspection form: one is keying in directly and the other is importing the data that have been filled up in the set EXCEL worksheet.

Method One: Keying in Directly

(1) Click the “Next” in the above picture for keying in all the blanks in “Basic Information of Enterprise” (Table 1) on page one. Continue to click into page tw “Statement of Foreign Exchange” (Table 2), page three: “Balance Sheet” (Table 3), page four: “Income Statement” (Table 4) and page five: “Profit Disposal of Foreign Investor” (Table 5) and fill in Tables 2, 3 and 4 according to the Audit Report and Audit Report of Statement of Foreign Exchange of the year 2008 issued by the accounting firm and fill in Table 5 with the actual business conducted in 2008. Under the form, there are explanations to the logic relationships between the data in each table; moreover, the System has certain control in the enterprise terminal. Any error will be highlighted and there are tips for correction. Only with correct keying in can the “Next” work and enter the next form.

Attention: A) The following items should be filled in: “Dividends Payable at End of Year” and “Paid-in Foreign Capital at End of Year” in Table 2, and “Ending Balance of Retained Profit Payable to Foreign Investor According to Shares or Agreed Proportion” in Note 2. B) The following items should be filled out in Table 3: “Retained Profit at End of Year”, “Dividends Payable at End of Year”, “Accumulated Capital at End of Year”, and “Accumulated Capital Surplus at End of Year”.

(2) Methods of Filling in Table 5 “Profit Disposal of Foreign Investor”:

1) This table is created to collect the information about how the foreign investor dealt with the profit in the year prior to the annual inspection year; hence the year should be the previous one instead of the current one. For instance, when participating in 2009 Annual Inspection of Foreign Exchange, enterprises should fill in the title of the table as Year: 2008. The following equation shows the logic relations of the data in the table: “(foreign investor) actual disposal total profit in the year =total sum remitted outside China + total sum reinvested in China + total dividends payable + profits used in other means”. The concept and source of each data are explained in detail in Notes of the table.

2) This is the way of filling in this table. If the enterprise (foreign investor) does not deal with the profit in any means, all of the items of the table should be “Empty”; if the foreign investor handles the profit in some ways, place the mouse in the grey zone of the above picture and do a single right click to add the foreign investor.

Click the blue zone , select the foreign investor who does profit disposal and fill in each item. In the selection of the foreign investor, an investor code is needed, which can be acquired in “Business Query—Latest Status Query of Foreign Exchange Registration” in the enterprise terminal. (Enterprises can click “Save Draft” to save the filled items, leave to get the investor code, and come back to go on with the table by clicking “Next”, or enterprises can open a new window to get the investor code.)

After all the tables are finished, click “Submit” and “Confirm” to submit the data to the Administration of Foreign Exchange terminal.

Attention: After submitting the data for annual inspection, enterprises should check the verification result frequently. Enterprises cannot re-submit it before getting the result, for the System is in control. However, if the verification does not pass and the data are sent back by the State Administration of Foreign Exchange, the enterprise should revise the data and re-submit them.

Method Two: After filling up tables in set EXCEL worksheet, click “Importing EXCEL File of Annual Inspection” and import the finished file, as shown in the following picture. (The EXCEL table can be downloaded from the on-line service platform of the State Administration of Foreign Exchange.) (WWW.SAFESVC.GOV.CN).

After importation, click “Next”, and the System will check every table automatically. The enterprise can do the revision according to the tips offered by the System till the final submission.

2. Functions of “Save Draft” and “Delete” Buttons

On the main page of annual inspection, there is a button named “Save Draft”. By clicking “Save Draft”, the enterprise can save the filled but unfinished tables and continue to work next time. In case the file is saved with the click of “Save” but the enterprise does not want to save it, the button “Delete” can be used so that the enterprise can refill the table when logging in next time.

3. Business Query

By clicking “Business Query”, the enterprise will know its business information and print what it needs, including Foreign Exchange Registration, Registration of Foreign Exchange of Foreign Capital, Annual Inspection, Verification, Bank Record and so on. However, the business in procession cannot be printed and the enterprise cannot print the five tables for annual inspection without passing the verification.

The enterprise can check the verification result in “Business Query”. Click “Next” after entering “Annual Inspection Information Registration” on the main page. If the System shows “Annual Inspection of Foreign Exchange Passed”, it means the enterprise has passed the year’s examination and verification of the Administration of Foreign Exchange, and via Business Query of Enterprise Terminal—Annual Inspection Information Query, the enterprise can see that the “Verification Status” has changed to “Confirmed by Administration of Foreign Exchange”,

If the System shows “Annual Inspection Information Returned and to Be Re-submitted after Revision”, it means the enterprise has not passed the verification and should re-do it. The Administration of Foreign Exchange also sends the reasons of failure with the returned data. In this case, via Business Query of Enterprise Terminal—Annual Inspection Information Query, the enterprise can see that the “Verification Status” has changed to “Returned by Administration of Foreign Exchange”.

III. Other Matters to Explain

3.1 System Administration of Projects of Foreign Shareholder’s Rights and Interests

3.1.1 Project Names and Sources

(1) Dividends Payable: the “Dividends Payable at End of Year” in the Statement of Foreign Exchange after the annual inspection;

(2) Profit Disposable: in Note 2 of the Statement of Foreign Exchange after the annual inspection, that is, “Ending Balance of Retained Profit Payable to Foreign Investor According to Shares or Agreed Proportion”;

(3) Accumulated Capital Disposable: getting from the Accumulated Capital at End of Year in the Balance Sheet after the annual inspection * Profit Distribution Proportion for Foreign Investor / Exchange Rate;

(4) Accumulated Capital Surplus Disposable: getting from Accumulated Capital Surplus at End of Year in the Balance Sheet after the annual inspection * Profit Distribution Proportion for Foreign Investor / Exchange Rate.