China Business Solutions

Yes, arbitration in Hong Kong for a dipute arising between a foreign company and Chinese company can be enforced in mainland China.

Any dispute arising from or in connection with this Contract shall be submitted to [arbitration institution name] for arbitration (which shall be conducted in accordance with the [arbitration institution name]'s arbitration rules in effect at the time of applying for arbitration).  The arbitral award is final and binding upon both parties.

Usually import customs duty and import value-added tax apply to goods imported to China. For some goods like wine, consumption tax also applies.

DAIRY PRODUCTS. EXCEPT INFANT FORMULA

PRODUCERS FROM EU AUTHORIZED TO EXPORT TO CHINA- DECEMBER 2015

[1] DOCUMENT WILL BE UPDATED QUARTERLY. [ENGLISH]. CONTAINS: SERIAL NUMBER, APPROVAL CODE, APPROVAL NUMBER, MANUFACTURER’S NAME, ADDRESS, TYPE (PROCESSING PLANT, OTHER), PRODUCTS APPROVED, REMARKS IF ANY.

China International Economic and Trade Arbitration Commission (CIETAC), Shanghai International Economic and Trade Arbitration Commission also called Shanghai International Arbitration Centre, South China International Economic and Trade Arbitration Commission also called Shenzhen Court of International Arbitration, and arbitration commissions in different cities such as Beijing Arbitration Commission. 

When private companies get involved in large infrastructure projects such as power plants in China, Build-operate-transfer (BOT) is commonly used for project financing and maintenance. Under this model, the private company usually sets up a project company which receives a concession from the public sector to finance, design, construct and operate a facility for a period of time (usually no longer than 30 years), after which ownership is transferred to the government – or an enterprise designated by the government – with little or no compensation. During the agreed period, the project company is entitled to retain all revenues generated by the project to recover investment, operating and maintenance expenses and achieve an appropriate profit.

A sound legal basis is a prerequisite for this kind of public-private partnership as the project company is assuming a lot of risk. The contract between the host government and the concessionaire needs to define clearly the services to be provided by the private company, taking all legal, financial and regulatory aspects into account. From the time the plant goes on-line, the public partner usually remits a regular fee to the project company while guaranteeing a minimum level of utilisation. The minimum utilisation fee must be paid under all circumstances (take-or-pay-principle) and, due to the long-term nature of these projects, the fee scale is usually subject to regular reassessment under a price escalation clause.

If you would like to know more about private investment in China’s public sector, please see our guideline Understanding China’s procurement processes. If you have any questions concerning China’s energy sector and opportunities for European SMEs, please contact our business development experts.

Example of an actual enquiry received at EUSME Centre:

We do manufacture an innovative system of pivot door hinges. We plan to export them to China. How to find the normative pertinent in China regarding pivot door hinges?

INTRO TO CHINESE STANDARDS

Chinese Standards have the prefix GB, where GB stands for GuoBiao (Chinese for National Standard). If with a suffix T, as GB/T, means the Standard is recommended, while only GB means mandatory.

STEP I

Go to The International Classification for Standards (ICS)

http://www.iso.org/iso/international_classification_for_standards.pdf

Search the ICS code for the product

E.g. Pivot Door Hinges

91.190 Building accessories *Including locks, buzzers, bells, bolts, door and window hardware, etc.

STEP II

Go to the [China] National Standards Query webpage http://www.sac.gov.cn/SACSearch/outlinetemplet/gjbzcx.jsp

Type the ICS value, at the ICS box, push submit.

The result obtained is

Click on GB/T 32223-2015

STEP III

Chinese consumer's demand for imported organic products is increasing daily, however it has not been easy for European SMEs to take advantage of these market opportunities. The primary obstacle is that China does not recognise foreign organic certifications, and instead requires the importers of foreign organic products to get certified by one of 23 China-certifying institutes prior to selling. Otherwise, you may not use the word “organic” anywhere on the product. Moreover, the Chinese organic label is still only voluntary. Despite these discouraging procedures, there are creative ways to promote your organic products before getting the certificates. 

1. Modify the label to read “no preservatives, no additives, no chemicals used”.  Organic products with labels like these are often seen in stores. Consumers seem to understand what it means and are willing to pay premium prices for these products. It is quite common for organic fresh vegetables to be priced four to five times higher than conventional ones at supermarkets.

2. Do not mention the word “organic” in either Chinese or English, but leave the organic logo on the package. Many Chinese consumers are able to recognise foreign organic certification logos from EU importers. 

These tips will help you enter China’s market quickly, but only offer a short-term solution. For your long-term success, you may want to work with your distributor to become certified in China.

For more information on labelling of F&B products in China, please refer to the following guidelines, all freely available for download on our website:

• Food and beverages technical requirements and labelling
• Voluntary labelling in China
• Food additives in China

For an overview of the importing processes for wine and olive oil, take a look at our interactive infographics. If you would like to learn more about China’s F&B market in general, see our sector report as well as recordings of webinars on market access and distribution channels.

If you have questions concerning organic products in China and would like to book a consultation with our expert, please contact us here.

Under general trade, some merchandise, like dairy products and meat, are subject to bilateral agreements, and manufacturers of such products are required to be registered with Certification and Accreditation Administration of the People’s Republic of China.

Although in Notice No. 486 [2018]requirements in licensing, registration or filing for first-time importsare exempted, it is still unclear how the customs handle this issue. According to the consultation with customs officials made in January 2019, there have not been enough cases for them to arrive at a definite conclusion on this issue. Some of the officials are inclined to hold the view that these requirements on presence of the treaty and registration of manufacturers are still mandatory. However, since CBEC Retail Import is a new business mode in development and many policies are formulated and construed while being implemented, the practice may change with time. Therefore, EU SMEs engaging in CBEC Retail Import are suggested to consult and to confirm with local competent customs for their opinion on a case-by-case basis in practice.  

Setting up a company in China is a complex matter. The complexity of the setting up process depends on

• type of the company - wholly foreign owned company or joint venture with Chinese partner,
• type of business - manufacturing, trading, consulting,
• whether the industry is encouraged, permitted or restricted for foreign investment, and also
• location and support of local government.

The time then can vary from 2 months for simple consulting wholly foreign owned company to 6 months or even one year or more for joint venture in restricted industry where special permits and approvals are required.

Smoothness of the application process also depends on how well your application documents are prepared. This requires drafting the documents with knowledge of law requirements but also with understanding local practice which can differ from place to place. Local advice is necessary and will help to avoid mistakes and delays.

When engaging local advisor to help with setting up process be careful what is included in the scope of the service. Some advisor understand setting up a company only as a obtaining business licence. In fact after issuing the business licence there are still number of actions which have to be taken such as arranging tax registrations, opening accounts, carving company seals etc.  in order your company can start to operate. 

Taobao (business-to-customer and customer-to-customer, 91% market share) and Tmall (B2C only, 51% market share) are undisputed leaders in the Chinese e-commerce market and therefore a good place to start for European SMEs looking to sell their products online. The popularity of these sites ensures that customers are able to find you, and the established and reliable payment methods available help build trust, which is essential in all e-commerce.

If your company is not registered in China you will not be able to set up a shop on Tmall. This leaves Taobao, where all individuals holding a Chinese ID card can register. Whereas a shop on Tmall can become quite expensive (depending on the type of shop the deposit can amount to RMB 150,000 and the technical service fee to RMB 60,000 a year), Taobao is free. Setting up your shop is fairly simple since both platforms are geared towards traders with little experience in web design, but it is recommended to make use of a service provider specialising in designing and maintaining them to make sure your products get the attention they deserve and operations run smoothly. Taobao Fuwu, a comprehensive database listing companies offering services from promotion to storage and logistics, is a good place to start.

It is essential to understand the importance of the ranking systems of these sites from the outset. Every transaction is being ranked by the customer and this ranking is made public and noted by every subsequent visitor to your store. Furthermore, online shopping experiences are discussed widely online and can contribute to the rise and fall of individual sellers. It is therefore essential to watch these rankings closely.

To learn more about setting up an online store in China including considerations regarding different modes of online-selling as well as regional markets and logistics, please download our report on selling online in China.

The Centre receives quite a few enquiries related to ‘employment’ of local individuals by foreign companies not (yet)  registered in China. The reply to these questions is relatively straightforward.  According to Chinese labour law a foreign company (a company registered abroad) cannot conclude labour contracts with Chinese citizens if the place of work performance is in China (there are different regulations in place for cases in which the place of work is outside China).

In order to be able to employ a Chinese citizen in China the foreign company must either establish a representative office and employ local individuals through agencies like CIIC or FESCO, or establish a foreign-invested enterprise – a company or partnership - with a registered seat in China. This arrangement allows foreign-invested companies or partnerships to employ local individuals in its own name. For those foreign companies which do not wish to have any permanent establishment in China but still need someone ‘on the ground’ there is only one solution: establishment of a commercial relationship between the company and a self-employed individual.

To learn more about different ways to enter the Chinese market, including rep offices and foreign-invested firms, please see the second report of our diagnostic kit, Ways to enter the Chinese market. For representative offices, please also see our report Establishment and Operation of a Representative Office in China, for foreign-invested enterprises see the guideline Establishment of a Foreign-invested Enterprise in China.

It depends on the HS code classified for the relevant product. Once an HS code is decided, the relevant tax rates can be found on the effective Customs Import and Export Tariff of the People's Republic of China.  Kindly note that competent Chinese customs has the final say on classification.

QUESTION

In order to certify under the China food and drug administration my cosmetics the Chinese authorities request a proof that the cosmetics is sold already in the country of origin and/or European union. What is this proof? Can you show to me an example of such a document? Who can issue this document?

ANSWER

The proof is a document. Usually this document (can vary depending on the EU country) is issued by central, or regional, government Agencies for medical and health products. In some countries can also be issued by chambers of commerce.

EXAMPLE of a real document [see below]

EU SMEs can get funding in both EU and China to finance their market access and growth in China.

In the EU, other than banks and traditional financing institutions in your home country, the European Small Business Portal offers a wide section dedicated to information on possible EU funding opportunities for SMEs. The European Commission does not make direct grants or loans to individual companies, but the Access2finance website can help you find a local financial intermediary which manages EU loans/guarantees.

In China, International and domestic banks are still the primary source of external sources of funding for European SMEs. In addition, many other financing institutions outside the banking system also offer funding solutions, including financial leasing companies, credit guarantee companies, and micro loan companies.  Although the financing cost could be much higher, it does provide alternative channels to fill the funding gap.

The Chinese venture capital and private equity market is relatively challenging for foreign SMEs, as local investors tend to prefer pre-IPO cases with fast growth prospects, while SMEs usually do not have the required market position, contact networks and market knowledge to expand fast enough. However, in some industries such as clean technology, energy, biotechnology and pharmaceuticals/medical equipment, where the Chinese government encourages technology transfer, opportunities are much wider and the investment scope can span into pre-revenue cases.

For European SMEs engaged in trading, major Chinese e-commerce platforms (for example Alibaba and JD.com) have started to offer micro-loans (typically a loan size between RMB1000 to 10million) to their existing merchandisers to finance their operation needs.

If you need further advice on issues relating to access to finance for China, contact our Business Development team and check the Centre’s online Service Provider Database to find a list of companies in relevant sectors.

Although one of the main effective regulations related to CBEC Retail Import the Notice No. 486 [2018] (http://www.gov.cn/xinwen/2018-12/01/content_5345041.htm) only mentions CBEC Retail Import mode through domestically registered third-party e-commerce platforms, the Retail Import through foreign platforms was and it is still allowed to enjoy the preferential policies in the aspects of tax treatment and customs clearance, as long as it meets the data transmission requirement. Considering that the Chinese government intends to promote the development of CBEC Retail Import, there is no reason to exclude foreign platforms.

To Check the governing law and dispute settlement clauses in the contract, and check the written evidence you have at hand first.

MEAT PRODUCTS. OTHER FACILITIES AUTHORIZED

[OTHER] AUTHORIZED EU PRODUCERS BY CHINA- DECEMBER 2015

[1] DOCUMENT WILL BE UPDATED QUARTERLY. [ENGLISH]. CONTAINS: SERIAL NUMBER, APPROVAL CODE, APPROVAL NUMBER, MANUFACTURER’S NAME, ADDRESS, TYPE (PROCESSING PLANT, OTHER), PRODUCTS APPROVED, REMARKS IF ANY.

Many governmental departments are involved in the supervision policies, but all are implemented by the Chinese Customs, who maintains a supervision code system for customs declaration purpose. For example, “0110” means “general trade” and “0130” means barter trade. There are 102 codes in total. Different supervision code means different customs supervision policies. Three of them are newly added between 2014 and 2016 for cross-border e-commerce, namely, “9610”, “1210” and “1239”.

Under the CBEC Retail Import supervision system governing the products in the List of the Goods under CBEC Retail Import, two logistic patterns are distinguished: the direct import pattern supervised under the customs supervision code 9610, and the bonded warehouse import pattern. There are two types of bonded import which are supervised respectively under code 1210 (“bonded import in 37 pilot cities”) and 1239 (“bonded import in other cities”).

The 37 pilot cities include Beijing, Tianjin, Shanghai, Tangshan, Hohhot, Shenyang, Dalian, Changchun, Harbin, Nanjing, Suzhou, Wuxi, Hangzhou, Ningbo, Yiwu, Hefei, Fuzhou, Xiamen, Nanchang, Qingdao, Weihai, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Zhuhai, Dongguan, Nanning, Haikou, Chongqing, Chengdu, Guiyang, Kunming, Xi’an, Lanzhou, and  Pingtan

Please note that the preliminary online check in AIC system is only a very first step in verification of a company and also the person you/your member is in contact with shall be verified: Chinese name and also position in the company and whether he/she is authorized to act on behalf of the company. Please strongly suggest to your member to further investigate on legitimity of the company and the contact person. Here is the link to our publication which proved to be very useful to our clients: http://www.eusmecentre.org.cn/report/knowing-your-partners-china

You can check your potential Chinese partner with the official online database of National Enterprise Credit and Information Publicity System.  A person who can read and write Chinese is needed to do the check as the online database is available in Chinese alone.  We strongly recommend to do verification based on information from the business license of the Chinese company.

Key steps

1. Go to the website of the State Administration for Industry and Commerce at http://gsxt.saic.gov.cn/
2. Fill in the Chinese name of your potential Chinese partner (all characters must be as stated on business license) or its unified social credit code/ registration number, and press "查询"
3. A window will pop-up. Do the verification as required in the window, and press "查询" again
4. If no result shows up, it is possible that the company does not legally exist.
5. If this company exists and result shows up, you may click the result with the name of the company  and you will see the detailed information of this company such as

• unified social credit number,
• company name,
• type of enterprise,
• legal representative, registered capital, registered address, date of establishment, operation starting date and expiry date, business scope, registration authority, approval date, registration status, and shareholder information.

Kindly note that the information obtained through such online check may not always be up-to-date or complete, and cannot be used as full basis to tell if you should do business with a potential Chinese partner.  

It can serve the function that you may compare the information obtained this way with the information on the website of your potential Chinese partner or that indicated on the duplicate business licence provided by your potential Chinese partner to tell if what your potential Chinese partner claims is correct or not.

For more information on how to conduct verification link to Knowing your business partner. If you would like us to help with verification of the company please contact us on Ask-the-Expert. However this service is paid.

As long as the arbitration place in a member state of 1958 New York Convention, yes.

INFANT FORMULA

PRODUCERS FROM EU AUTHORIZED TO EXPORT TO CHINA - DECEMBER 2015

[1] DOCUMENT WILL BE UPDATED QUARTERLY. [ENGLISH]. CONTAINS: SERIAL NUMBER, APPROVAL CODE, APPROVAL NUMBER, MANUFACTURER’S NAME, ADDRESS, TYPE (PROCESSING PLANT, OTHER), PRODUCTS APPROVED, REMARKS IF ANY.

SEAFOOD PRODUCTS.

PRODUCERS FROM EU AUTHORIZED TO EXPORT TO CHINA- DECEMBER 2015

[1] DOCUMENT WILL BE UPDATED QUARTERLY. [ENGLISH]. CONTAINS: SERIAL NUMBER, APPROVAL CODE, APPROVAL NUMBER, MANUFACTURER’S NAME, ADDRESS, TYPE (PROCESSING PLANT, OTHER), PRODUCTS APPROVED, REMARKS IF ANY.

Depending on the geographical region and the market segment, companies selling to China usually need to engage several different distributors and sales offices in China. Since SMEs typically do not have sufficient resources to build an extensive sales network, it is advisable to use a two-stringed sales and distribution model, relying on local distributors in combination with their own direct sales force. The local distributors provide geographical and market scale while the internal sales force’s focus should be on the direct access to existing and new customers and end-users.

Finding the right distributors and partners is critical. A very straightforward approach is to ask customers and industry contacts for recommendations. Chambers of commerce and other supporting trade organisations in China are also good contact points. They can usually provide you with a list of importers/distributors. The EU SME Centre also maintains a free service providers database where you will be able to find potential leads. Finally, trade shows offer the opportunity to meet both small and big distributors. Find the most important ones in our exhibitions database.

There are a number of state-owned and private importers which play a significant role in the import of food and beverages to China. These companies focus on volume. They look for products which are already accepted by the general population, like meat, wine, olive oil, dairy, seafood, etc. Price, brand and production capabilities are very important for them.

On the other hand, there are also a number of smaller companies, sometimes set up by foreigners, who understand European products and cater to five-star hotels, foreign restaurants or gourmet stores specialised in imported goods. These operate mainly in first-tier cities and are usually more flexible on volumes and more willing to accept new products. No matter which option is better suited for your business, it is not recommended to sign any exclusive agreement with one single distributor (unless it is linked to large volumes of sales), as this will limit efficiency and control, especially during expansion.

Exercising due diligence when working with any distributor or other business partner in China is highly advisable. For tips on how to do so, please see the fourth report of our Diagnostic Kit. For more information on distribution in China, please also see a recording of a recent webinar on the topic on our website. If you have any questions concerning this or any other topic, please feel free to contact our business development team.

It depends on whether the Chinese party has assets available for enforcement in your country, and if there is a bilateral treaty between your country and China on enforcement of judical judgment.  If the answers to both are no, then choosing litigation in your country will make the judgment made there unable to be enforced in practice. In such case we suggest not.

Quarantine requirements stay put. Inspection procedure is exempted for goods under supervision code 1210 but not for 1239 when crossing the first line of bonded areas. Under the supervision code 9610, no inspection is required but quarantine procedure is carried out in a random spot check fashion.

Under CBEC Retail Import, CBEC enterprises’ domestic agents or authorized postal/express delivery enterprises are allowed to apply for sales return. Returned goods should be qualified for second-time sale and should arrive, in original condition, at customs supervision area within 30 days from clearance. Relevant tax will not be levied. In practice, due to the complexity of returning goods back to bonded areas, some enterprises may stock the goods outside customs supervision areas. There are potential risks of violating relevant provisions such as being considered as reselling CBEC Retail Imports and/or failing to satisfy requirements regarding qualified consumers.

Giving your brand a good Chinese name is an essential step to ensuring your company’s future success in the Chinese market, especially for companies that sell products directly to Chinese customers. A good translation, which is a combination of both sound and meaning, boosts the chances of your products being remembered and recognised by more local Chinese customers. The following should help SMEs that have not yet decided on a Chinese brand name get on the right track from the start.

1. Translate your brand names into Chinese and register the relative trademarks.

In China, registration of a trade mark in roman characters does not automatically protect the trade mark against the use or registration of the same or similar trade mark written in Chinese. Therefore, it is highly advisable to register a Chinese version of a foreign trade mark to protect your business from the start. In addition, if there is no existing Chinese character name for a foreign brand, random translations by shop keepers, customers, suppliers and even competitors may occur, which sometimes carry negative connotations. To get further advice on registering trademarks in China, please contact the China IPR SME Helpdesk.

2. Choose a translation with both phonetic and semantic associations with the original and adjust the emphasis and visibility of the Western/Chinese name according to the targeted consumer categories and the relative marketing strategies.

An article from Harvard Business Review summarises four common translation strategies adopted by many multinationals operating in China: no adaption, sound adaption, meaning adaption, and dual adaption.  The best outcome would be to have a Chinese name with both phonetic and semantic associations with the original (dual adaptation), especially for those companies that aim at reaching the wealthier sections of Chinese consumers.

To ensure your translation is adequate, ask for advice from your local Chinese friends, colleagues or professional translation companies. If you are looking for professional translation companies, see our Service Providers Database. If you need additional marketing advice in China, please contact our business development team here.

Finding a trusthworthy business partner when exporting, importing or investing is a crucial point in any business plan and doing it succesfully is always a mix of good luck, common sense and a thorough investigation.

The EU SME Centre has been stressing the importance of asking to see the business licence of the potential partner. However, recently we have received several enquiries concerning business partners registered in Hong Kong but stating a mainland address in the contract. This is generally the case when the actual factory and the effective seat of the Chinese partner are in mainland China while registration of the company (for different reasons – administration and taxes mostly) took place in Hong Kong.  In the cases at hand, only a business licence from Hong Kong could be provided by the Chinese partner while the contract was stamped with a company chop showing a similar company name but an address in mainland China. In such cases it can be very difficult to track and decide the right jurisdiction.

The contract would very probably be considered as null when brought before Chinese jurisdiction and, when not properly executed according to Hong Kong regulations, it will be void according to Hong Kong law, too. We therefore strongly suggest to pay attention not only to the name of the company and registered seat on the first page when concluding a contract, but to the last page of the contract, too, which bears the signatures and company stamps, and investigate who is authorized to sign on behalf of the company.

Computer games are extremely popular among China’s youth, with about 150 million playing PC games and 192 mobile gamers today (some estimate the number of online game users to be as high as 265 million). This focus on PC and mobile games is a result of a general ban on consoles effective since 2000, ostensibly to address the public’s concern with gaming addiction and rumoured to be lifted in the near future.

Especially in online gaming, which makes up more than 90% of the market, growth has been impressive during the last five years – from RMB 20.78 billion (EUR 2.56 billion) in 2008 to RMB 60.28 billion (EUR 7.42 billion) in 2012. The China Game Industry Report forecasts growth of 12.35% per year through to 2017 in this sector.

Due to widespread piracy, the so-called freemium model (also known as games-as-service) has emerged as the economically most viable option for developers. In this model, the basic product is given away for free and the service provider then makes money by charging for add-on services or features. Advertising within games is also regarded as a reliable way to generate revenue within the industry.

To be able to enter the market, Western developers need to be aware of and strictly abide by the rules to protect minors from ‘unwholesome’ content, set and frequently adjusted by China’s Ministry of Culture and relating mostly to violent and sexual content. ‘Deep culturalisation’ is another prerequisite, as simply translating a game into Chinese will not suffice to attract highly demanding users. As many of the Western distribution and marketing platforms are blocked in China, expertise in the country’s online landscape will also be necessary.

If you would like to know more about the gaming industry in China, please contact our business development team.

Intro to CCC

The Chinese compulsory certification system - often called "CCC" or "3C" system - was first introduced in China in 2003 by the China National Certification and Accreditation Administration (CNCA). The CCC system unified the certification process for many products and ensured that the same rules apply both for imported and domestically manufactured products. 

Does my product require CCC?

Unlike Europe, market access for products and services to China is generally not free: For many product categories, government approval is required before goods can be imported for the Chinese market. These approvals come in various forms, such as licences, certifications, registrations, marks, and even individual approval of shipments. They are issued by the government itself or by appointed bodies acting on behalf of the government. All of these approvals have one thing in common: They will be regularly checked at the borders or, in case of China domestic production, by inspection authorities.

Where can I find the products that require CCC?

The product categories that require CCC certification are listed in the CCC catalogue. For products not listed in the catalogue, it is not possible to obtain CCC certification. The CCC system is not a self-declaration and is not comparable with Europe's export (CE) marking.

What are the different certification steps?

For all products within its scope, the scheme typically comprises the following six steps:
1. Application documentation
2. Sample submission and testing
3. Factory inspection
4. Evaluation by certification body
5. CCC mark
6. Annual follow-up factory inspection

How much does it cost my company?

The total cost of the certification process for the CCC depends on the product category, the components involved, and the specific product. The costs for CCC certification can be significant, especially for small series or for spare parts. The composition of the product, selection of models, variations in critical components, use of spare parts and consumables all affect the cost of certification. Addition costs include the annual and irregular costs for certification maintenance.

Reference

For more information please visit our website http://www.eusmecentre.org.cn/guideline/china-compulsory-certification-ccc or use the "ask-the-expert" button on the website.

The following disputes shall not be subject to arbitration:

(1) Disputes concerning marriage, adoption, custody, fostering and succession;

(2) Administrative disputes which shall, in accordance with the law, be dealt with by administrative bodies.

“Bonded import + offline pick up” mode means that certain e-commerce enterprises are allowed to open an experience store to exhibit and sell their products, usually within a customs special supervision area. Once consumers finish the whole series of online purchasing procedure, they are able to pick up the product on site or use domestic logistics service.

In practice, there used to be some experience stores outside customs special supervision area, located at Center Business District since it is closer to consumers. However, in this case, the customs are faced with big challenges as it is hard to prevent the CBEC enterprises or platforms to replace CBEC retail imports with goods imported through general trade, in order to evade tax. Therefore, it is now prohibited.

EU SMEs preparing to enter the catering service in China – opening a restaurant as an example – are suggested to become familiar with regulations on the qualification of food management staff in order to obtain a Catering Service Licence.

First of all, personnel engaging in catering services need to undergo a physical examination before entering the position, which needs to be renewed every year and is certified by the issuance of health certificates.

Additionally, catering service providers are required to establish and maintain a food safety management system staffed with full-time or part-time food safety management personnel. In principle, this personnel (legal representative or person in charge) needs to receive intensive trainings of no less than 40 hours per year and obtain valid certificates upon successful completion of these trainings. These certificates are required for applying for the Catering Service Licence.

Trainings for food safety management personnel cover topics such as food safety laws, regulations, rules, normative documents and standards related to catering services, basic knowledge of food safety, food safety management skills, and knowledge for handling food safety emergencies. Training institutions, training methods and assessment authorities are determined by a competent branch of the State Food and Drug Administration.

If you have further questions, feel free to contact the EU SME Centre and “ask the expert”.

Q: Our company has a foreign invested enterprise in China.  In a contract concluded between the foreign invested enterprise and a Chinese company, can we provide foreign law as the governing law of the contract?

A: If there is no other foreign related factor in the performance of this contract, such as the target of the contract is located in a foreign country, foreign law cannot be chosen as governing law. 

Three items are necessary for an valide arbitration agreement or clause:

(1) The expression of an application for arbitration;

(2) Items for arbitration;

(3) The chosen arbitration commission.

To manage risks and reduce administrative burdens many companies choose to use third party organisations to manage their HR needs. This is especially true in China, where complex labour regulations and a fast evolving regulatory environment can often baffle foreign companies in the market. China obliges employers to file their staff employment and dismissal with relevant government bureaus, maintain employees’ personnel files (a Chinese document that records employment and academic history of an employee), withhold and pay social benefits as well as individual income tax on behalf of their employees. Indeed, if you are operating as a representative office in China you will have no choice but to rely on the services of an authorised ‘labour dispatch agency’ to hire local employees.

The largest and most often used agencies in China are Fesco, CIIC and China Star Corp.

Outsourcing employee recruitment means that you can reduce costs, as you will avoid having to hire and manage an in-house HR team, and can concentrate on your core business activities. Common services commonly include:

First we suggest you find the real identity of your Chinese partner, and then report to the police at the place where your Chinese partner is located.

Importing wine to China is a fairly straightforward process – once you have either found a suitable importer or set up shop yourself in the country. The first thing you will have to do is translate and register the label you intend to use on the bottles. By law, each bottle has to carry both the original and the translated versions. The labels, as well as the wine itself, will have to comply with a number of standards, compliance to which will be checked by China Inspection and Quarantine (CIQ), which has offices at all points of entry into the country such as airports and ports. These checks might take some time, but with the help of a competent importer and the services of a well-connected agent, they should be done within a few months. If all customs documents are in order (make sure that all information given is correct and the same on all documents), customs clearance should not be a problem either. After the Chinese labels have been pasted to the bottles, they are ready for the market.

This process is explained in more detail in the very first EU SME Centre interactive infographic, fittingly entitled “Importing wine to China – A step-by-step guide to Chinese import regulations”. Besides an explanation of the individual steps necessary to import wine from the EU to China, you will find definitions of the main actors involved in the process, examples of necessary certificates and details about the applicable standards. Links connect this easy-to-use application to additional sources of information, most notably all relevant publications available in our online knowledge centre. Find more information on the Chinese wine market directly by downloading our wine sector report here, and learning from existing case studies in the market here, here and here.

According to the Notice No. 486 [2018], CBEC operators are included in the customs enterprise credit system. Corresponding customs clearance measures will be applied in accordance with different credit levels. For those enterprises that have lost credibility, stricter supervision measures will be taken. But so far, the influence of the credit records on the international level is still unknown. The Chinese customs will apply corresponding measures depending on the credit records. For instance, if the enterprise has a poor credit record at the Chinese customs, they may face stricter examination, more frequent spot check and consequently longer time for customs clearance.

MEAT PRODUCTS.

PRODUCERS FROM EU AUTHORIZED TO EXPORT TO CHINA- DECEMBER 2015

[1] DOCUMENT WILL BE UPDATED QUARTERLY. [ENGLISH]. CONTAINS: SERIAL NUMBER, APPROVAL CODE, APPROVAL NUMBER, MANUFACTURER’S NAME, ADDRESS, TYPE (PROCESSING PLANT, OTHER), PRODUCTS APPROVED, REMARKS IF ANY.

The EU SME Centre receives enquiries related to scams on a regular basis. One of the most common ones - we refer to them as the  ‘notary fee cases’ – is the subject of this week’s enquiry of the month.

The usual scenario looks like this: A foreign company based in Europe or a foreign-invested company based in China is about to sign a contract (usually a sales and purchase contract) with a local company in China, but is asked to pay a ‘notary fee’ or any other administration fee shortly before the actual signing. The fee is usually not paid directly to the notary itself but to the local company, which promises to ‘arrange everything necessary’.

However, according to Chinese law, there is no mandatory provision to notarise ordinary sales and purchase contracts. This requirement exists only for some contracts of special importance, as for example real estate transfers.  Moreover, even if both parties agree on the notarisation of a contract, the physical presence of both parties in the notary office is required. In no case is it possible to notarise a signature without the presence of the other party.

In a recent case we dealt with, the foreign company was smart enough to question the notarisation of a contract/signature without being present in the notary’s office themselves, as this was not common practice in their home country. Those justified doubts saved them about EUR 8,000 of ‘notary fees’ as well as more money and trouble in the future, as the likelihood of ‘repeat offences’ would have been very high. A comparatively naive attempt to cheat a prospective partner like this should serve as a warning and discourage any further engagement, as a formal due diligence procedure would likely expose many more risks, making sustainable business with them very unlikely.

If you have doubts about the trustworthiness of your prospective business partner as well, please don’t hesitate to contact our experts via the ‘ask the expert’ button on our homepage.

Please click here to download the PDF file. (updated on 2019.09.02)

Disclaimer

The list is only for your information; the only valid list is the published by Chinese authorities, in Chinese language. We do not hold any responsibility on the accuracy of the translated version, and recommend at all times verify the latest official updates. In case of doubt contact our experts

China is a huge consumer of vegetable oils; 24 million tons were consumed in 2009 and the market keeps growing. The top three varieties are soybean oil, rapeseed oil and peanut oil, but middle and high end edible oils (such as olive oil) are gaining market share rapidly.

There is a high awareness of olive oil’s health benefits among residents in large cities like Beijing, Shanghai or Shenzhen due to years of market education by olive oil companies and distributors. As a result, China has seen rapid growth of olive oil imports. Whereas in 2004 only about 3,000 tonnes were imported, the amount reached 21,000 tonnes in 2010.

There is a marked difference in price between regular oil, such as peanut oil, which costs about RMB 15 (EUR 1,85) per 500ml and high quality oil, such as olive oil, which sells at between RMB 50 (EUR 6,20) and RMB 100 (12,40) per 500ml. Since olive oil is considered a high-end product, higher prices are accepted – consumption is limited to upper middle to high income families, though. Olive oil is used sparingly (i.e., in salads and cold dishes), but due to the fact that many Chinese families tend to rotate their edible oil intake to keep a balanced diet, targeted promotion can influence the customers’ buying decisions at the point of purchase.

A number of regulations concerning labelling, quality control and food safety apply to the import of food products to China. It is advisable to make use of a local agent to ensure compliance. Please refer to our food & beverage report, food & beverage labelling guideline, food & beverage case studies (here, here and here) as well as the expert’s corner section in our newsletter.