- January 3, 2020
Doing Business Overseas
Are you considering do a bit of business overseas? Expanding in 2020 makes sense but you need to do it the right way. Read on to discover more about doing business in China.
In this post, we are going to take a look at some different pieces of advice about different business types and getting started in China. In fact, specialist help is needed every step of the way, from using the like of Altrua Financial for mortgage advice to seeking a local specialist for help navigating China.
Business Registration in China – Considerations for the Restaurant Industry
China’s food and beverage industry is the largest in the world, and as the country increasingly opens to foreign experiences – and investment – the opportunities are ripe for introducing a taste of the West to this vast and vibrant market. If you have already researched how to open a business in China to any degree, you will know that it is a venture fraught with bureaucracy and red tape. And you should bear in mind from the outset that, though by no means impossible, starting a restaurant in China is perhaps one of the more complex areas in which to gain a foothold. You may be surprised to know, for instance, that it is essential for the applicant to obtain a restaurant premises before being able to register the company to run it. This requires a great deal of forward-planning. If the planned location has not been used as a food and beverage operation before, it is advisable to be as certain as possible that the premises will pass the numerous inspections that are necessary. Even if the premises are already a food and drink establishment, permissions are required from the Ministry of Commerce (MOFCOM); the Environmental Protection Bureau; the local Administration of Industry and Commerce (AIC); and the Hygiene Bureau. These cover everything from approving a company name to obtaining neighbouring residents’ agreement to having a new restaurant in their locale (if the planned food outlet is within 50m of a residential area).
When Opening a Restaurant in China, Seek Consultancy Services
Remodelling an existing building to fulfil the requirements of a food and beverage establishment is likely to be a costly option. It is even more expensive if the remodel then fails the required inspections, or local residents complain about the disruption the new premises will create. If, as an alternative, you’re opening a restaurant in China in a building already used as a food establishment, then a transfer fee will be payable to the existing lessor – but this is still likely to be the cheaper, easier and quicker option. The next stage is to acquire the necessary licenses for health and food hygiene. Depending on the scope of the operation, these might consist of any combination of the following: a catering license; a food production license; and/ or a food distribution license. Additionally, an alcohol permit may be required if applicable. Finally, the approval of the local Environmental Protection Bureau must be sought, which involves an inspection of the interior and exterior of the premises. Only after all this has been successfully negotiated can you move onto open business in China, by applying for company registration. The two most common models for food and beverage operations are as a WFOE (Wholly Foreign-Owned Enterprise) or a JV (Joint Venture) with a Chinese national as a partner. In short, the entire process from start to finish is far more complex for foreigners than the usual administration required to open a company in China in other industries.
Chinese Import Regulations That You Need to Be Aware Of
Chinese import regulations govern the import of goods and subsequent sale on the domestic in China. China classifies imports into three categories, which are as follows: permitted, restricted, and prohibited. There are certain goods that are banned from being imported, for example, toxins and wastes. Goods that are in the ‘restricted’ category are subject to strict restrictions, meaning you will require a certain business license in China or quota. Luckily, the vast majority of goods fall into the permitted category. This means you can decide when and how much to purchase.
Most imports are subject to a tariff. The transaction value of the goods is assessed to determine the tariff. This includes insurance premiums, freight, parking charges, and any other service charges that have been incurred before the goods have been unloaded in China. Since the introduction of WFOE business registration China, a lot of these tariffs have been lowered. In 2016, the average tariff was 9.8 per cent, which represents a significant drop from the average in 2000, which was 15.3 per cent. It is also important to be aware of the special trade zones in China. China trade regulations differ here, allowing for preferential tax and tariff treatment, as well as special custom procedures.
After all, in recent years, more than 20,000 types of imported food have been introduced to China. This includes everything from meat and beverages to confectionary and snack foods. Imported food has grown yearly at a rate of 15 per cent, and so it is not hard to see why you would be interested in importing food to China. The first thing you must consider is whether China is the right market for your products. You will need to conduct a bit of research beforehand. But the good thing about China is that the rapidly growing middle class has a thirst for new experiences.
Another area that must be carefully considered is what route to market you are going to take. You will need to develop a dealer network, rather than having a single agent that covers the entire country. After all, various regions of China have their own identity and their own requirements. Getting your product in front of buyers is also critical if you want importing food into China to be a success. A good place to start is with food exhibitions, as there are such events in China every week. You will also need a website that enables you to engage with potential buyers, both on a B2B and B2C basis.
Compliance is also an area that needs to be taken seriously. Regulations are complicated and ever-changing, which is why having an expert company on hand to assist with all of these matters is highly recommended.
Prohibited and Restricted Imports
China import regulations are split into three categories: permitted, restricted, and prohibited. In this article, we will focus on the latter two categories. Firstly, let’s take a look at prohibited imports. These are items that you are not allowed to bring into China. It includes local currency, used garments, medicines and food from disease-stricken areas, disease-carrying plants and animals, illicit drugs, and lethal poisons. You are also not allowed to import photos, films, magnetic media, or printed matter that are deemed detrimental to the moral, cultural, economic, or political interests of China.
Other prohibited products include counterfeit negotiable securities, counterfeit currencies, as well as explosives, ammunition, and arms of all kinds. There are then China import restrictions. This relates to items that are allowed into the country, yet they are heavily governed. For example, you may only be allowed to bring in a certain quantity, you may be subject to more extensive checks, and you will require a license for these goods. It is important to take the necessary steps before you import to China to ensure you don’t get into further trouble. Restricted articles include national currencies, rare and endangered plants or animals, alcohol, tobacco, communication security machines, and radio transceivers.
So there you have it: some insight into setting up a business in China or, indeed, expanding your existing one. There is no denying that China is proving an extremely popular place for expansion. However, you need to go about the process in the right manner.