MORE Biz Q&A October 2013

1.  Dear Rosario, I am the owner of a chain of ice-cream shop in Italy, and I am looking to expand into China. I’ve heard many people have a hard time coping with regulatory issues while establishing their food and beverage business in China. I would like to know what licenses and special requirements are needed to open an ice-cream shop, and what is the estimated time necessary to start operating?    

Dear Sir,
The process for establishing a food and beverage business in China is similar to the process for establishing a regular Foreign Invested Commercial Enterprise (FICE), with some additional licenses and requirements that vary depending on the type of products you wish to sell.

If you intend to prepare and sell food in your location, you will need to apply for a catering license before receiving the business license. The catering license is obtained from the district representative of the State Food and Drug Administration. The restaurant is required to employ Chinese staff, trained and qualified by government authorities, as well as to pass the Environmental Assessment and the Fire Protection Acceptance Check. Bear in mind, these procedures can be quite difficult to pass and may delay the time until you receive the license. If your establishment is located in Shanghai and your company has already been granted the catering license, then you won’t need to apply for the Food Circulation License, which is necessary to sell pre-made and pre-packed food. This whole process might take around 6 to 7 months. In case you wish to sell alcoholic beverages, an additional license will be needed: this can take a couple of months to obtain.

2. I manage a HK company. We have three Rep. Offices in mainland China, but in an attempt to restructure our company, we want to close down our Guangzhou office. What is the necessary procedure for this, and how long would it take us?   

Under PRC law and practices, the whole de-registration procedure for a Rep. Office includes two parts: tax de-registration and legal de-registration. Tax de-registration represents the first step of the process, and legal de-registration can only be undertaken after the tax de-registration is completed.

The process of tax de-registration begins with a tax audit by a locally licensed CPA firm. The firm will have to provide the tax audit and tax clearance reports to support the tax-deregistration application. Furthermore, the cancellation of tax registration certificates from the State Administration of Tax and the local Tax Bureau are needed, as well as the collection of the tax de-registration confirmation are required to proceed with the legal deregistration. Legal deregistration includes: the cancellation of the Registration Certificate, the cancellation of the Organization Code Certificate, the cancellation of the Financial chop, the Rep. Office chop and the closure of the company’s bank account.

The timeframe for the whole process is about 3-4 months, depending on the individual case.

Dezan Shira