Opening a retail store in China for foreigners

To set up a retail store in China, foreign investors must first, or concurrently, register a foreign-invested commercial enterprise (FICE). To do so, regulations require first that the applicant has a good reputation; has not committed any acts in violation of Chinese laws, administrative rules, or regulations; and meet the minimum capital requirements as stipulated by the Company Law. The new changes due to the entry into force of the new Company Law as of March 1st have not yet been implemented regarding FICEs, so we cannot give you precise capital requirements yet.

Pre-registration steps

First, the premise should be considered. As China does not allow investors to set up a physical shop on non-commercial premises, authorities will deny the registration of a shop if its premises are intended for non-commercial purposes.

Secondly, you have to register a name with the local Administration for Industry and Commerce (AIC). Note that only the Chinese name will be legally binding for Chinese authorities.
Then, you should apply for the approval certificate for FIEs to the Ministry of Commerce at the provincial level. To do this, you must provide a set of documents, including mainly, but not limited to : the contract and articles of association; audit reports for each investor; evaluation report for state-owned assets to be invested into a Sino-foreign joint-venture; list of import and export commodities of the FICE…

Finally, to get your business license, the investors need to complete registration formalities with the AIC within one month after receiving the approval certificate.

Post-registration options

The first option to set up a retail store is to establish a physical retail shop after setting up a FICE. This is possible only if your FICE has already received the permission to be established. In order to open a shop, “retail business” must be included in its business scope. In addition, the FICE must have undergone and passed an annual inspection, and have paid up all of its registered capital. The shop should be set up in the form of a branch to the FICE.

The second option is to establish a physical retail shop and a FICE concurrently. To do so, the proposed shop must be considered conform to the urban and commercial development plans of the city by the local government. Again, “retail business” must be included in its business scope.