China’s food service market is the largest in the world, offering many opportunities for foreigners interested to invest in a restaurant in China. It continues to be the largest consumer market for food and beverages in the world. Establishing a business in this sector in China is usually accompanied by a complex bureaucratic process. Careful research and consultations are highly advisable before attempting to open a restaurant in China. Our lawyers in China can assist you through the process of opening a restaurant in the food sector of the country.
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How to open a restaurant in China
Owing a restaurant in China can be a real challenge, beset with pitfalls at every turn. Here is a list of things to consider when engaging in this type of business:
• Finding a good location – an investor must rent/buy the restaurant premises before registering the business. This means that a location able to pass inspections is something to look for. Our lawyers in China can advise you what local authorities to consult prior to leasing a location for the restaurant;
• Licensing and registration of the restaurant – find a name for your restaurant in China and register it with the local AIC (Administration of Industry and Commerce). Once you receive the notice of company name registration, you can apply for any licenses and permits;
• Obtaining health and food hygiene licenses – after you obtain a business license for your restaurant, the food and beverage operation need to be inspected by investors of health and food safety. There are three types of food and beverage licenses available for restaurants in China: a catering license, a food production license and a food distribution license. If your restaurant in China will serve alcohol, an alcohol permit is also compulsory for operating it.
• Choosing the legal entity of your business – this depends on how the food business is registered. Foreign investors in China are not allowed to be the sole owners of a restaurant. They can open a restaurant in China as a wholly foreign owned enterprise (WFOE) or through a joint venture with a Chinese partner.
Challenges to opening a restaurant in China
If you want your restaurant in China to be a success, there are a few challenges to take into consideration. First of all, you need to assess the customer base and eating habits of your prospective clients. The Chinese are quite conservative when it comes to their food preferences and reluctant to expand their culinary horizons.
The cost factor is another challenge when it comes to opening a restaurant in China. The rent, the wages of the employees, the utility expenses and payments to suppliers have to be taken into consideration. Cultural challenges are inherent to managing a restaurant in China. The language barrier can be an overwhelming disadvantage for a foreigner starting a restaurant in China. Legal and business issues related to owing a restaurant can be addressed through the help of a law firm in China.
Please get in touch with us if you need professional advice for registering your restaurant or obtaining work permits or licenses.