By Dan Shu, Eunice Ku, Matthew Zito and Kate Wang, Dezan Shira & Associates
Certain industries in China require that companies obtain special licenses. For example, the manufacturing, sales, storage and transportation of hazardous chemicals each requires a special license. Multiple licenses will be required if an enterprise deals in more than one of the above categories. Another example is food, for which companies need to apply for a Food Production License. This license helps ensure that the company meets the requirements pertaining to its manufacturing capabilities and environment. Meanwhile, a separate Food Distribution License is required for engaging in the sale of food.
According to Dan Shu, Manager of the Business Advisory Services Department of Dezan Shira & Associates’ (DSA) Shanghai office, application for special licenses usually takes place after the name pre-approval step but before a company establishment application is submitted to the Ministry of Commerce (MOFCOM). MOFCOM will check that the applicant has obtained the relevant license for engaging in the industry before granting a Certificate of Approval. DSA helps enterprises obtain special licenses and ensure that they meet the requisite qualifications. Below, we introduce China’s key licensing schemes pertaining to:
- Food production;
- Food catering; and
- Food distribution.
Food Production License
To engage in food production in China, enterprises must obtain a Food Production License. The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) is responsible for the nationwide administration of food production licensing, while local Quality and Technical Supervision Bureaus (QTSBs) are responsible for administrating the scheme within their respective administrative regions. Applicants should apply for a Food Production License after having obtained enterprise name pre-approval from the AIC (unless the applicant is an existing enterprise).
In terms of requirements, the enterprise must possess the means for processing the specified type and volume of food products and must maintain the cleanliness of facilities. All staff involved in food service must undergo China Food and Drug Administration (CFDA)-approved safety training and a system must be in place for ensuring food product safety, including the prevention of cross-contamination. These requirements also apply to the Food Distribution and Catering Licenses discussed below.
Applicants for a Food Production License should additionally set up a health inspection and inspection records system or other health management systems for their personnel, establish a goods purchasing and pre-delivery inspection records system, and other food safety management systems for basic food ingredient inspections and manufacturing processes. Among other application documents, applicants are required to submit:
- Layout plans for the food production and processing venue and the surroundings thereof, including each functional section;
- Checklist of all equipment and facilities for food production;
- Food production process workflow chart and equipment layout diagram;
- Food safety standards applying to the product(s) in question.
Site inspection by two to four inspectors will be conducted at the food production venue, and a product sample inspection will be required. Food Production Licenses are valid for three years and applications for renewal should be submitted six months prior to expiry. Enterprises receiving a Food Production License will be listed and searchable on the CFDA’s website.
Catering service providers (individuals or organizations) must obtain a Catering License prior to engaging in business operations. This applies to group meal delivery service providers but not food stall operators or providers of semi-finished food products. The licensing system is administered by CFDA and its local iterations. License application materials include:
- Business license (for those already engaged in other business operations) or evidence of name pre-approval;
- A diagram of the premises and the on-site service processes;
- A description of the food safety system.
An entity providing catering services at various locations must apply for separate licenses. The application process entails a site inspection conducted by the CFDA. The CFDA is charged with issuing a decision within 20 business days of accepting an application, but may extend this deadline by an additional 10 days if needed. The applicant should receive a License within 10 business days of approval. Following approval, Licenses must be displayed in a visible location on the business premises. Licenses are valid for three years; licenses for the provision of temporary catering services may not exceed six months’ validity. Reapplication should be made 30 days prior to expiry with the original issuing body.
Food Distribution License
Operators (individuals or organizations) engaged in food distribution (including retail and wholesale distribution of pre-packaged food or bulk food) are required to obtain a Food Distribution License. In certain cases, the requirement to obtain a Distribution License can be worked around, such as when a food producer who has obtained a Food Production License sells food products on their premises of production, or when a catering service provider who has obtained a relevant license sells food products at its venue.
Food Distribution licensing is administrated by the Administration of Industry and Commerce. The pre-requisites, application materials, validity period, and time frame for processing applications and renewals for food distribution operators are similar to those stipulated for catering service providers. If an entity has branches engaged in food distribution, each branch should apply for a separate Food Distribution License. Site inspection may be conducted if deemed necessary by the authorities.
This article is an excerpt from the May 2014 edition of China Briefing Magazine, titled “Industry Specific Licenses and Certifications in China.” In this issue of China Briefing, we provide an overview of the licensing schemes for industrial products; food production, distribution and catering services; and advertising. We also introduce two important types of certification in China: the CCC and the China Energy Label (CEL). This issue will provide you with an understanding of the requirements for selling your products or services 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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