1. INTRODUCTION
For all of us (foreign) locals. in Beijing, we are seeing a huge increase in restaurants owned by foreigners over the past few years. Not only are such institutions popular (and very profitable), they add to the international cuisine and worldview of the nation. In this article, we outline the various procedures needed to create a restaurant. (There are alternatives when creating a management office first, and then a restaurant as a branch office, however we will discuss this in later articles.)
2. BUSINESS COMPLEX
To create a restaurant, the owner must decide which type of person will own and manage the establishment. In China, this is much more difficult than in other markets, such as the United States, where individuals can own and operate a business. Fortunately, the restaurant industry is fairly open, and the operating company can either be a wholly foreign enterprise (WFOE) (owned by a company or an individual), or a joint venture (if a partnership with a Chinese citizen), although it cannot be for a foreigner to own a restaurant business directly as an individual entrepreneur. In addition, to open a restaurant, there are additional licenses and permits that are necessary in addition to the traditional requirements of a limited liability company. However, once a company is established with a proper business area and registered capital, it can be used to open additional branches, although, of course, each branch will require certain permissions for this particular location (see Below “Health and Hygiene”, “Impact on the environment, ”etc.)
If there are no other reasons, for example, to find and trust a suitable Chinese partner, WFOE, a limited liability company, wholly owned by an investor, is a likely choice for foreigners because it offers the most autonomy. Despite the fact that it was previously quite common and, unfortunately, still common, for simplicity, many foreigners prefer to allow Chinese partners to open a restaurant as a domestic (Chinese) company. In this case, the Chinese partner (s) will be the sole shareholder (s) of the company, leaving the foreign investor without ownership. (Considering often very large upfront personal investments, we caution investors against considering the appropriateness of such a ownership structure).
3. INITIAL PROCEDURES (UNIQUE RESTAURANTS)
In chronological order, before creating a business entity, the following procedures should be performed:
i) Apply for and receive notice of approval of the company name at the Beijing Industrial and Commerce Administration (BAIC)
The name (in Chinese) will be composed in the following order:
Part 1 - City WFOE: In this case, it will be: Beijing; Part 2 - Company Name (i.e. BBQ BB); Part 3 - Type of business (i.e. Restaurant); Part 4 - Form of organization (for example, Limited Liability Company).
All together, the registered Chinese name will read: Beijing Bill & Restaurant BBQ Restaurant Co., Ltd.
It is desirable that the applicable select at least three names to check availability. The name of the company must correspond to the actual type of business and must not, explicitly or implicitly, go beyond the business.
ii) Choosing a place in a restaurant
The location of the restaurant is obviously important from a business point of view, but based on the provisions of the Beijing Municipal Council on Environmental Protection (BMEPB), if the restaurant is located close to residential areas (within a radius of 50 meters), residents will need to be approved. At the moment there are no rules that define “resident approval”, and now the BMEPB considers sufficient (depending on the circumstances): a survey or a completed questionnaire of residents, as well as a letter of confirmation from an association of local residents,
iii) Apply and obtain a license for food hygiene and hygiene at the Municipal Health Bureau
Various documentation should be provided, including, but not limited to, the location and site map of the restaurant and the internal health and safety of the restaurant. Within 10 days after submission of documents, the Health Bureau notifies this and organizes an on-site inspection. The main areas of inspection will include hygiene and safety; 1) raw food preparation area; 2) a kitchen; 3) change of working area; 4) the area of the tap and sink; and 5) waste disposal area. Inspectors should provide a list of non-compliance and recommendations for remedying the situation. For some minor issues, the presentation of the photograph as applied to the modified area should be sufficient so as not to require a second visit to the inspector. Notification of approval, provided that all inspection areas do not require repeat visits, must be within 20 days.
iv) Registration of permits for alcohol
Although the registration of the alcohol use permit will not be completed until after the issuance of the business license, the tax registration license and the food hygiene and food hygiene licenses, the applicant will need to reflect his intention to sell alcohol in the Health and Hygiene application. In the Statement on the license for food hygiene and food hygiene, it is necessary to include the approved word in the scope of the company's activity in order to note that it will sell alcohol.
v) Environmental Examination and Approval (EP) (district level)
Restaurant applications do not require a separate EP Impact report. These two forms include: 1) the application form for environmental impact - filled in by the applicant; and 2) The form of the environmental impact report is completed and stamped by an authorized environmental assessment authority.
The Report Form should primarily examine, among others, the following: environmental assessment of the internal and external environment and near the building, environmental analysis of the site, potential and future environmental impact on the environment, and recommendations for environmental protection. The main focus of the application to environmental impact is the assessment of potential and actual noise and water pollution, fire protection and waste disposal at the site.
When choosing the location of the restaurant (see above), it is important to note that the exhaust fittings of the external chimney will be located not less than 20 meters from any place of residence or above any residential area.
vi) No Tobacco Permits
As of March 2007, laws prohibit foreign commercial enterprises from selling tobacco products. Those foreign enterprises that currently sell tobacco will not be allowed to sell these products after their licenses expire at the end of 2008.
4. CREATING A COMPANY: WFOE or SP
i) Apply for a certificate of approval
After receiving all the above statements, they must be submitted together with the constituent documents and the feasibility study (along with supporting documentation) in order to receive the Letter of Approval in Beijing.
ii) Registered Capital
Registered capital is the stated amount of capital that will be invested in a business. Registered capital will be reflected in the company's charter and registered with the relevant government agencies. Since the entire amount of registered capital must be invested (including cancellation), this is a very important legal and business decision.
Although the minimum amount of registered capital based on the Company Law can reach 30,000 yuan, it is definitely not applicable for restaurant companies.
Please note that the investor is allowed to contribute non-monetary share capital, including in the form of technology / intellectual property rights. The cash contribution to the share capital may be at least 30%.
iii) Capital Contribution
Capital contribution can be made by lump sum or installment payment. A lump sum payment is paid within 90 days from the date of issuance of a license for a temporary farm. When paying by installments at least 20% will be paid within 90 days. The total amount will be paid within 1 year from the day the company was founded.
iv) Apply for and obtain a temporary license for a business in Beijing for industry and commerce
If there is a certificate of approval, the applicant may apply for and obtain a license for temporary business activities. At the moment, the restaurant can not begin operations.
v) Additional certificates for obtaining a permanent commercial license
After issuing a license for a temporary case, an applicant can apply for obtaining various approval certificates and capital accruals. Before obtaining a permanent commercial license, an applicant must obtain the following certificates, reports and take care of the following banking issues:
· Certificate of registration of the organizational code in the Bureau of the Organizational Code;
· Certificate of tax accounting in the Bureau of Taxation;
· Certificate of registration of statistics in the Bureau of Statistics;
· Certificate of registration of foreign currency in the Bureau of Currency Supervision;
· Office of Registration of the Field Registration of the Public Security Bureau
· Open a RMB basic bank account with a designated bank;
· Open a bank account in a foreign currency using a designated bank;
· To enter capital after opening a bank account in a foreign currency; and
· Report on the verification of capital with the Chinese company CPA.
vi) Permanent Commercial License from BAIC
When issuing a permanent license for a business, the restaurant will be legally created and can fully operate in the business sphere.
5. OTHER ISSUES
i) Logo / Trademark Registration
Since China is a first-person jurisdiction, the general rule is to register any trademarks as soon as possible, which basically means that one of the files is first considered the owner of the trademark. The company logo and names in Chinese and English may be registered with the China Trademark Office.
ii) cut chop (print) and other related chops
After issuing a business license, and the company registered with the Bureau of the Bureau of Exit from the Bureau of Public Security, the applicant can apply for cuts of the company, legal representative and other related chops to the Bureau of Public Security. They will appoint an authorized cutting compactor to cut the chops.
iii) Other applications and registration
· Register a commercial license with the district administration for industry and commerce and with the district municipal commercial bureau
· Certificate of registration of funding in the Financial Bureau
· Certificate of registration at the customs office
6. CONCLUSION
All foreign investors creating businesses in China will be presented with many obstacles. Creating a restaurant will add many other variable issues. Proper planning, professional advice and set-up can reduce and avoid unnecessary delays and risks so that the business can start working and generate income.
