laws and regulations change on an almost daily basis in the middle kingdom. take a gander below and discover some top tips for restructuring your business in china.
As the world’s largest beer market, China offers a lot of opportunities for beer aficionados and the seasoned brewer alike. Beer consumption has been steadily increasing in the country, with per-capita consumption rising at an annual rate of 5.1 percent from 2008 to 2013. As the Chinese middle class develops tastes for heavy lagers and IPAs, there has been a significant increase in demand for foreign imports, with U.S. beer imports to China more than doubling between March 2013 and 2014.
These trends have prompted many investors to consider tapping into China’s beer market, whether it be importing or opening up a bar or microbrewery. The process for opening a bar, entertainment venue, or microbrewery is in many ways quite similar to the process for opening a restaurant or café. However, there are additional licensing procedures and considerations that investors need to know.
Step 1: Find the right location
Like finding a location for a café or restaurant, finding the right location for your bar or microbrewery can be a tricky task. In order to avoid renting out a location that will be denied business registration, investors should take extra precautions to find a business location that can pass inspections. It is encouraged that investors first ask for consultations from the Environmental Protection Bureau, Hygiene Bureau, and local department of the Ministry of Commerce and the Administration of Industry and Commerce (AIC) to verify that the location will pass regulations. For bars, it can be particularly important to make sure they can pass stringent regulations regarding fire safety.
Step 2: Licensing and Registration
For bars and microbreweries, this step will be very similar to the requirements for licensing and registering a food and beverage business. Essentially, the owner will need to obtain the following permits:
1. A “Notice of Company Name Reservation” from the Administration of Industry and Commerce (AIC)
2. Relevant health and food hygiene licenses. Bars will be required to obtain a Catering License (餐饮服务许可证), but other licenses may be required depending on the nature and scope of the business operation. Microbreweries will need to obtain a Food Production License (食品生产许可证).
3. Environmental Protections Approval
4. Approval from the local fire department
Step 3: Unique to bars, microbreweries, and entertainment venues
Alcohol Permit Registration
A permit to sell alcohol must be obtained from the Alcoholic Drink Circulation Administration Office.
Registration of Entertainment Venue
Depending on the nature of the entertainment services provided by the bar, it may be necessary for investors to set up their business operation as an entertainment venue at the local Bureau of Culture. According to the Ministry of Culture, an “entertainment venue” is a place that is: open to the public, makes profits, and either allows customers to participate in performance and singing activities, provides a space for dancing, or provides game-playing devices for game play.
In addition, an entertainment venue may use performances as a means of profit-making, or sell tickets for entrance. Venues providing these services cannot be registered as a bar and must be registered as an entertainment venue. In addition, the city of Changsha, Hunan has a special policy that requires all bars to register as an entertainment venue. It should be noted that entertainment venues are not able to be registered as wholly foreign-owned enterprise (WFOE) and can only be registered as a joint venture (JV) or as a Chinese-owned company.
Opening up a Microbrewery
Microbrewing is legal under Chinese law, but there are some restrictions that owners need to be aware of before opening and operating a microbrewery, the most important one being that microbrews are legally only allowed to be sold in kegs within the owner’s venue.
In addition, there are certain restrictions on bottling and canning of alcoholic drinks. Breweries need approval from the State Council of China and the National Development and Reform Commission. To acquire approval, breweries must produce at least 12,000 bottles/cans per hour, and there are limits placed on breweries with production lines that produce less than 18,000 per hour. Furthermore, bottled and canned beer is restricted from containing yeast or other microbiological agents often used in ales.
Since its establishment in 1992, DezanShira& Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.
For inquiries, please email us at email@example.com. Further information about our firm can be found at: www.dezshira.com.