|1.||The joint venture's need for foreign exchange must be temporary in nature, occurring in the initial period of operations;|
|2.||The joint venture's products must be made with most materials obtained inside China, that is, with Chinese inputs;|
|3.||The joint venture's products must be regarded as products that would otherwise have to be imported;|
|4.||The product specifications, performance, delivery time, technical service, and training must meet the requirements of the Chinese inspectors. A quality inspection and testing center in China must certify that the venture's product meets the same quality standards as the import product;|
|5.||The price for these products cannot be higher than the prevailing price in international markets; and|
|6.||Approval for such a venture may be required from the central government.|
The regulations on import-substitution projects have paved the way for many foreign investors to form joint ventures in China and have been a major step in resolving the foreign exchange problems of foreign investors. Before making a firm investment commitment, however, foreign investors should first determine whether or not the potential project will receive import-substitution project status.