In order to establish a restaurant, the owner must decide what type of entity will own and operate the establishment. In China, this is much more difficult than in other markets such as the US, where individuals can own and operate businesses. Fortunately, the restaurant industry is quite open and the operating entity may be either a Wholly Foreign Owned Enterprise (WFOE) (owned by a company or individual) or a Joint Venture (JV) (if partnering up with a Chinese national), though it is not possible for a foreigner to own the restaurant business directly as a sole proprietorship. Further, to open a restaurant, there are additional licenses and approvals that are necessary in addition to the traditional requirements of a limited liability company. However, once the company is set up with the proper business scope and registered capital, it can be used to open additional branches, though, of course, each branch will require certain approvals for that specific location.
Initial Procedures (Unique to Restaurants)
In chronological order, the following procedures must take place prior to establishment of the business entity, itself:
i) Apply and obtain company name approval notification with the Beijing Administration of Industry and Commerce (BAIC)
ii) Selecting a Restaurant Location
iii) Apply and Obtain Health and Food Hygiene License with the Municipal Health Bureau
iv) Alcohol Permit Registration
v) Environmental Protections (EP) Examination and Approval (District Level)
(Extremely abridged overview)
i) Apply for Approval Certificate
Once all the above approvals are obtained, they shall be submitted with the articles of incorporation, and feasibility report (along with supporting documentation) in order to obtain the Letter of Approval with the Beijing Municipal Bureau of Commerce.
ii) Registered Capital
The registered capital is the stated amount of capital that will be invested in the business. (30,000rmb minimum)
iii) Capital Contribution
Capital contribution may be made through a lump sum payment or by installments.
iv) Apply and Obtain Temporary Business License with Beijing Administration for Industry and Commerce
v) Additional Certificates to obtain Permanent business License
o Tax Registration Certificate;
o Statistics Registration Certificate;
o Foreign Exchange Registration Certificate;
o Open RMB bank account
o Capital injection
o Other certificates
vi) Obtain Permanent Business License with the BAIC
i) Logo / Trademark Registration
ii) Carve Company Chop (seal), and other related chops
iii) Other Applications and Registration
All foreign investors setting up a business in China will be presented with many obstacles. Establishing a restaurant will add many other variables to the issues involved. Proper planning, professional advice and set-up can reduce and avoid unnecessary delays and risks, so that the business can begin to operate and generate income.