By Zhou Qian
In this article, we discuss the legal requirements for setting up a dental clinic in China. Earlier, we wrote about the opportunities for foreign companies in the dental health industry.
WFOE or Joint Venture
In accordance with “Regulations for the Administration of Medical Institutions,” dental clinics belong to the category of “medical institutions”. As such, dental clinics may not be wholly foreign-owned, but need to take the form of either an equity joint venture or cooperative joint venture with a Chinese partner.
Wholly foreign owned medical institutions, and therefore dental clinics, are however allowed in the Shanghai Free Trade Zone. In addition, citizens of Hong Kong and Macau may practice dentistry in Guangdong as a sole proprietor.
A pilot scheme was launched in 2014 to allow wholly foreign-owned hospitals in the provinces of Jiangsu, Fujian, Guangdong, Hainan and the province-level cities of Beijing, Shanghai and Tianjin. As the scheme only commenced recently, it is still unclear whether it extends to other medical institutions such as dental clinics.
Setting up a Dental Clinic as Joint Venture
The The total investment amount must be at least RMB 20 million, which in underdeveloped areas may be lessened upon approval. The Chinese party in the joint venture must hold at least 30 percent of the company’s equity. The maximum length of operations is 20 years.
RELATED: Setting Up a Wholly Foreign-Owned Enterprise in China
The following steps need to be taken:
Step 1: Obtain approval to establish a medical institution from the provincial-level Health Administrative Bureau
This will usually take 30 working days from the date of application.
Step 2: Obtain approval for establishing a foreign-invested dental clinic from the provincial Department of Commerce
Applications are collected at the provincial level but ultimately decided by the Ministry of Commerce (MOFCOM).
Step 3: Register with the Administration for Industry and Commerce (AIC)
Following the first two steps, the JV will need to be registered with the AIC, like all other new companies. The procedure can take up to one month.
Step 4: Apply for Medical Institution Practice License
Once the company is set up, it needs to apply for a Medical Institution License, which is the basic license for operating a hospital or other medical institution in China. This may take up to 45 days.
Setting up a Wholly Foreign-owned Dental Clinic in the Shanghai FTZ
The procedure for setting up a dental clinic as a Wholly Foreign-owned Enterprise (WFOE) is largely similar to that of the JV. This includes the minimum investment of RMB 20 million, and a maximum term of 20 years. These restrictions do not apply to Hong Kong and Macau investments into Guangdong.
Dentists intending to set up a practice in the Free Trade Zone as a sole proprietor need to have at least five years of experience in the health care industry. Also, steps 1 and 2 noted above are fully handled by the Free Trade Zone’s AIC, so applicants only need to make one visit to the office. For the moment, the Shanghai FTZ is still limited in size, but will soon expand to include large parts of the Pudong district. Whether wholly foreign owned medical institutions will be allowed in the other Free Trade Zones is as of yet unknown.
RELATED: China Announces Location of New Free Trade Zones, Expands Shanghai FTZ
Given the fact that wholly foreign owned medical institutions are restricted to the Free Trade Zone area, these companies are not allowed to establish branches outside the zone.
As a last caveat, investors should take note that foreign healthcare professionals need a special visa and work permit to practice in China.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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