It may be soon time to regulate home-made food business

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Sale of home-made food is becoming increasingly common in China – at least in first tier cities.

More and more we see we-chat accounts, websites or even just…telephone numbers that can be contacted to purchase the widest variety of home-made products. This is being done not only by Chinese persons, but also by a lot of foreigners living in China and with passion for food: home-made cheese, yoghurt, sauces, grounds, drinks, etc..

Usually the pattern is as follows: it all start as a personal hobby of someone rather gifted in cooking, its friends start to appreciate and the cook starts to share with them and acquaintances its home-made delicacies.

A chat is created on we-chat and pictures are posted regularly on the new-cooked products.

Other times we have a chat whereby people can purchase imported products (cheese, meat, other delicacies), selected and scouted from the chat’s administrator.

However, from the moment when it evolves into a (even simply structured) business and the cook actually charges a price for this and arranges deliveries, it all becomes – legally – much more complicated…

Home-restaurants, home-cooks, home-food suppliers are still an unregulated industry, therefore they need to comply with general requirements for food industry of the corresponding category.

First of all, we have the rather complex e-commerce compliance: under the new 2018 E-Commerce Law, the administrator of the chat can be qualified as “e-commerce operator” (电子商务经营者) and – as such – it should comply with the registration obligations provided by the law (article 10) – only exception is for those who sell self-produced agricultural products, un-processed or with very basic processing (washing, slicing).

E-commerce law also requires from the e-commerce operator tax compliance as well as license compliance (i.e. the operator shall have all the licenses required to perform that activity).

This brings us to the second and even more sensitive issue: selling food and cooking to customers requires duly-issued food licenses, and no exceptions apply for informal/simply structured sales through we-chat groups of friends/acquaintances. We have been enquired several times from home-based cooks on how their business can become legitimate. Very simple: the correct food license shall be obtained. This requires a company, and this requires also the careful choice of license.

Example: online sales of steaks personally cut/sliced by the seller (usually the chat administrator) should and could be done under Food sales operator license/retailer (exclusively online)/bulk products (including bovine, swine, ovine); a person selling home-made-sauces should apply – for example – for a catering license/restaurant (exclusively online)/cooked food or catering license/onsite made-and-sold (including  online)/hot food.

For other products with more sensitive making process (such as fermented foods, etc..) authorities sometimes require that a production license shall be used, as this would guarantee a better equipped facility to prevent any possible safety hazard.

Of course this creates a cost issue, as getting any kind of food license involves securing a food processing location duly equipped and compliant with the specific provisions applicable to that kind of license.

It is not rare that – in order to reduce this issue – home-based cooks choose to cooperate with duly licensed companies by cooking in their facilities and thus enjoying coverage by their food license. The licensed company usually happens to be an online seller of fresh food (we see more and more of those in the market, and coopeating with home-based cooks can help them to differentiate from competitors), restaurants,  in some case (rarer) factories.

This may cause of course other issues: know-how sharing (both technical, as the food processing method and know-how will also be disclosed to the food licensed company, and commercial, as the cook will not be able to sell directly to its customers, and all sales will be done by the licensed company, which means that all its client database will be basically disclosed to the food-license company) as well as commitment on minimum volumes are the most typical ones.

Time would seem mature in cities like Shanghai for having platforms duly licensed and equipped to provide legal coverage/incubation to those “freelance” food business…. Certainly, if the volume of this business keeps growing, it will be soon time for the law-maker to provide regulation.

 

 

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