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Regulations for the Implementation of the Law of t
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    Article  40.  The general manager and deputy general managers
shall be engaged by the board of directors of the joint venture. These
positions may be held either by Chinese citizens or foreign citizens.
  At  the invitation of the board of directors, the chairman,
vice-chairman or other  directors  of the board may concurrently
be  the  general  manager,  deputy  general  managers  or other
high-ranking management personnel of the joint venture.
 In  handling major issues, the general manager shall consult with the
deputy general managers.
 The general manager or deputy general managers shall not hold
posts concurrently as general manager or deputy general managers
of  other economic  organizations.  They  shall  not  have  any
connections  with  other  economic  organizations  in  commercial
competition with their own joint venture.
    Article  41. In case of graft or serious dereliction of duty on
the part of  the  general  manager,  deputy general managers or
other high-ranking management  personnel,  the board of directors
shall have the power to dismiss them at any time.
    Article  42.  Establishment of branch offices (including sales
offices) outside  of  China or in Hongkong or Macao is subject to
approval by the Ministry of Foreign Economic Relations and Trade.
CHAPTER VI ACQUISITION OF TECHNOLOGY
    Article  43. The acquisition of technology mentioned in this
chapter refers  to  the  necessary technology obtained by the joint
venture  by means of technology transfer from a third party or
participants.
    Article  44.  The technology acquired by the joint venture
shall be appropriate  and  advanced  and  enable  the  venture's
products  to  display  conspicuous  social  economic  results
domestically or to be competitive on the international market.
    Article  45. The right of the joint venture to do business
independently  shall   be  maintained  when  making  technology
transfer  agreements,  and relevant documentation shall be provided
by the technology exporting party in accordance with the provisions of
Article 29 of the regulations.
   Article 46. The technology transfer agreements signed by a
joint venture  shall  be examined and agreed to by the department in
charge of the joint venture and then submitted for approval to
the examination and approval authority.
  Technology transfer agreements shall comply with the following
stipulations:
 (1)  Expenses  for  the  use  of  technology shall be fair and
reasonable. Payments  are generally made in royalties, and the royalty
rate shall not be higher than the standard international rate, which
shall be calculated on the basis of net sales of the products
turned  out with the relevant technology or other reasonable means
agreed upon by both parties.
 (2)  Unless  otherwise agreed upon by both parties, the technology
exporting party  shall  not  put  any restrictions on the quantity,
price or region of sale of the products that are to be exported by
the technology importing party.
 (3)  The term for a technology transfer agreement is generally no
longer than ten years.
 (4)  After the expiration of a technology transfer agreement, the
technology importing party shall have the right to use the technology
continuously.
  (5)  Conditions  for  mutual  exchange  of information on the
improvement  of technology  by  both  parties  of the technology
transfer agreement shall be reciprocal.
 (6)  The  technology  importing party shall have the right to
buy the equipment, parts and raw materials needed from sources they
deem suitable.
 (7)  No  irrational  restrictive  clauses prohibited by Chinese
law and regulations shall be included.
CHAPTER VII RIGHT TO THE USE OF SITE AND ITS FEE
    Article  47. Joint ventures shall practise economy in the use
of land for their premises. Any joint venture requiring the use of
a site shall file an application with local departments of the
municipal (county) government in charge of land and obtain the right
to use a site only after securing approval and signing a contract.
The acreage, location, purpose and  contract period and fee for
the right to use a site (hereinafter referred to as site use fee),
rights and obligations of the parties to a joint venture and fines
for  breach  of contract should be stipulated in explicit terms in the
contract.
    Article  48. If the Chinese participant already has the right to
the use of  site for the joint venture, the Chinese participant may
use it as part of  its investment. The monetary equivalent of this
investment should be the same as the site use fee otherwise paid for

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