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Economics Indices

Technology-Import System of China

OBJECTS OF TECHNOLOGY-IMPORT

The object of technology-import is technology, including
(1) intellectual property
(2) know-how
(3) other technology services. Import of complete sets of equipment, manufacturing lines and essential equipment in each item of (1)(2)(3) is also included in the technology-import. Only import of complete sets of equipment, manufacturing lines and essential equipment belongs to the category of goods purchase instead of technology-import.

FORM, MAIN CONTENT AND TERM OF A TECHNOLOGY-IMPORT CONTRACT

Forms

It is formulated by the Chinese laws that a technology-import contract should be signed in written form.

Main content

The content below should be stated clearly when signing a technology-import contract:

name of the contract;
content, scope of and requirement to the technology imported;
standards of examination of the technology imported, term, measures and assumption of risks;
confidentiality, ownership and sharing of improved technology;
prices or payment in one lump or in each item and the conditions of payment;
method of calculation of indemnity against violation of the contract;
resolution of disputes;
explanation of terms.
Furthermore, materials related to the performance of contract can be attached as appendices of the contract.

Term

The term of a technology-import contract shall not be longer than ten years, except for the one granted.

CONTROLS OF RESTRICTIVE CONDUCTS IN THE TECHNOLOGY TRANSFER

According to the Chinese laws, these restrictive terms are prohibited:

attached requirement with no connection with the technology transfer, including unnecessary technology, technology services, raw materials, equipment and products;
restrictions of autonomous choices of raw materials, spares or equipment from different sources;
restrictions of development and improvement of technology imported;
restrictions of similar technology from other sources;
unequal terms for exchange of improved technology;
restrictions of amounts, kinds and prices of products manufactured through the use of technology imported;
unreasonable restrictions of the selling channels, excluding the circumstances below:
the countries and areas with whom the supplier has already signed monopolizing contracts;
the countries and areas with whom the supplier has already signed single-deputy contracts.
prohibition of the use of technology imported after the termination of the contract;
requirement of the fulfillment of duties for invalid patent .
the applicant will be asked to revise the contract which contain the restrictive terms above. The application will be refuse if the revision are not satisfactory to the authority.¡¡

PROCEDURE OF APPROVAL

In China, technology-transfer contracts shall be applied for approval.

1.ratifying organs

The ratifying organs of technology-transfer contracts are MOFTEC and local foreign trade authorities authorized by MOFTEC.

2.principles of ratification

the contract in any of below circumstances will be rejected unless the revision meets the requirement of the ratifying organs:

violate the current laws in China and harm the public interest;
do harm to the sovereignty of China;
the content of the contract and the feasibility report does not coincide each other;
incomplete terms and content of the contract;
no precise stipulations concerning the solution of property right disputes caused by transferred technology and responsibilities during the performance;
no reasonable stipulations concerning technological level and economic benefit including the quality warranty of the products manufactured according to the technology that should be reached by technology transferred and ratified;
unreasonable price and way of payment;
unreasonable statement of the rights, responsibilities and obligations;
promises of favored tax terms without the consent of the national tax authorities.

3.term of ratification

The ratifying organs will decide whether to approve the application or not within sixty days from the date of receipt of the application. The contract will be regarded as approved if the ratifying organs fail to make answers in time.

This information is designed to provide a summary of aspects of subject matter covered herein and it doesn¡¯t purport to be elaborate or to render legal opinion. Please inquire local lawyers if you need further information. Chinese Lawyers¡¯ advice should also be obtained before applying any contents hereof due to the rapidly variation of Chinese law.