China’s Food Industry: Understanding the New Two-in-One Business License

By Jake Liddle

According to regulations on food production licenses and food business licenses published by the State Food and Drug Administration (SFDA), as of October 1, catering and food distribution industries will be covered by one license. 

Setting up a business in China requires a basic business license, but industry specific businesses such as food require a further license. Previously, there were three licenses: Food Production License, Catering License and Food Distribution License. Now, the Catering License and Food Distribution License have been combined following the State Food and Drug Administration’s system reformation last year, which unified the management system of food businesses. This makes for a more simple and accessible process for new food businesses to access the market.

The Food Safety Regulatory Branch of the Market Supervisory Bureau have stated that they have implemented relevant staff training, and as of next month will be issuing these new two-in-one catering and food distribution licenses to new food enterprises.

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Criteria for Investors

Though the licensing system has been streamlined, enterprises still need to be aware of the requirements there are in place for license application. The following is a brief of the basic criteria of a food business enterprise as stipulated in the Food Business License Regulations:

• Food business enterprises shall be equipped with food safety management personnel, and staff shall be trained and assessed accordingly;
• Maintain a strict food safety management system;
• Have sufficient food storage facilities, not located in an area susceptible to the contamination of cesspits, refuse centers or toilets, with the distance 25 meters or more;
• Be sufficiently equipped with facilities for disinfection, changing clothing, toilets, lighting, ventilation, corrosion, dust and pests, etc.;
• All equipment and facilities coming into direct contact with food shall: bear product quality certificates, be safe, non-toxic, odorless, anti-absorptive, corrosion-resistant and can withstand repeated cleaning and disinfection;
• Enterprises that operate via internet without a physical outlet shall have a physical place equipped with appropriate storage, equivalent to a physical outlet, and provide authorizing organizations with the means to log onto website of the applicant body for inspection.

The list of regulations also provide detailed criteria for special food enterprises (dealing with baby food, milk powder, medicinal food products, health foods and supplements), homemade food and drinks businesses, and frozen foods.

Food Production License

The Food Production License is not included in the State Food and Drug Administration’s license streamlining scheme, and has been expanded. The latest Food Business License Regulations has added clauses about food additives into the Food Production License Management Guide.

On August 30, the SFDA published a notice on implementing food production management, stipulating that use of the ‘QS’ license mark is to be discontinued. For products which still bear the QS license mark, sales are authorized to continue until the end date of October 1^st 2018. The QS license mark is to be replaced by the SC (stands for “Sheng Chan 生产” in Chinese) license mark and a 14 digit license number, which will enable customers to view detailed information about the product.

Along with the launch of the new mark, the SFDA implemented a detailed food classification system. For example, the number “1” stands for food, “2” stands for food additives, “27” stands for health food and “29” stands for infant formula.

Opportunities for Foreign Investment

After numerous food safety scandals and growing worries about the environment and pollution, Chinese consumers are increasingly concerned with eating healthy, traceable and organic produce. According to Euromonitor International, domestic organic food sales saw a 35 percent growth in 2014. There is therefore huge potential for investment in China’s food industry, and with the latest licensing system, the market is considerably easier to navigate. More opportunities for foreign investment in China’s health food industry can be found here.

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