Beijing’s “First-Store Economy”: What Are the New Incentives?

Posted by Written by Qian Zhou Reading Time: 8 minutes

Beijing is optimizing its first-store economy support policies to streamline the procedures for companies that want to open their first store in the city. Financial support measures have also been clarified. Through the 2022 Measures, Beijing’s government expects that more than 3,000 first stores representing domestic and foreign brands will open here by 2025. Companies are advised to take full advantage of this pro-business policy if they have plans to enter the Chinese market.

Beijing’s “First-Store Economy"

On March 11, 2022, Beijing Municipal Commerce Bureau, together with nine other government bureaus of Beijing, released Several Measures on Boosting the High-quality Development of the First-Store and First-Launch Economies (Jing Shang Xiao Cu Zi [2022] No.14, hereinafter, 2022 Measures), to further support the development of the “first-store economy” and transform the capital into an international consumption center.

According to the 2022 Measures, companies who set up their first store in Beijing and companies who hold new product launch events of famous brands can get fiscal support of up to RMB 5 million (US$784,000) and RMB 2 million (US$313,600), respectively.

This is not the first time Beijing releasing first-store support policies:

The 2022 Measures, however, is the first such policy jointly released by multiple bureaus – the commerce bureau, Beijing Customs, Beijing Public Security Bureau, Beijing Administration for Market Regulation, etc. Moreover, the 2022 Measures provide more concrete standards for businesses to apply for the fiscal supports.

What is the so called “first-store economy”?

As per the official explanation of the Beijing Municipal Government, the so-called “first-store economy” is a type of real economy measured by the launch of leading industrial and fashion brands that open their first stores in specific areas.

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First stores refer to a brand’s initial brick-and-mortar shop. According to the regulation, the definition also includes the launch of traditional brands’ flagship or experiential stores that operate under an innovative model.

To be clearer, first stores include the below:

  • A brand’s first store in Asia;
  • A brand’s first store in mainland China;
  • A brand’s first store in Beijing;
  • A brand’s flagship store in Beijing; and
  • A brand’s innovative concept store in Beijing.

The first-store economy is to drive local consumer growth and will serve as a strategy to make Beijing an international consumption center.

What do Beijing’s 2022 first-store economy measures offer?

The 2022 Measures rolled out eight measures in four aspects, including building a service system for brands to set up first stores or debut products, supporting the development of first stores, building a platform for new product launch event of brands, and supporting the development of headquarters of brands.

Among others, the below measures may be highlighted:

Financial support for enterprises opening first stores in Beijing

Companies who open first stores of domestic and foreign brands in Beijing after November 1, 2020 can get a certain amount of financial support by satisfying the below conditions:

  • The companies are enterprises with independent legal personality in Beijing;
  • The sum of storefront decoration (including decoration design fee, equipment purchase, and supporting hardware construction) and rent paid (no more than 12 months) exceeds RMB 500,000 (US$78,400); and
  • The store has stable performance and good growth potential, which requires that the annual revenue from the main business exceeds RMB 2 million (US$313,600) for shops in retail and catering sector.

The maximum amount of financial support varies based on the type of the shop and the sector it is engaged in:

A) For retail enterprises, the financial support they can get is up to 50 percent of their actual investment amount and is subject to the below ceilings:

  • If the store is the brand’s first store in Asia, the ceiling of the financial support is up to RMB 5 million (US$784,000).
  • If the store is the brand’s first store in mainland China, the ceiling of the financial support is up to RMB 2 million (US$313,600).
  • If the store is the brand’s first store in Beijing, or its flagship store or experiential stores that operate under an innovative model, the ceiling of the financial support is up to RMB 1 million (US$156,800).

B) For catering enterprises, the financial support they can get is up to 20 percent of their actual investment amount, and is subject to a ceiling of RMB 500,000 (US$78,400).

           Financial Support for Enterprises Opening “First Stores” in Beijing
Sector Maximum financial support standard
Retail enterprises Up to 50 percent of their actual investment amount RMB 5 million if the store is the brand’s first store in Asia
RMB 2 million if the store is the brand’s first store in mainland China
RMB 1 million if the store is the brand’s first store in Beijing, its flagship store, or its innovative concept store
Catering enterprises Up to 20 percent of their actual investment amount RMB 500,000
Conditions to enjoy the financial support:

1.   The enterprise has independent legal personality in Beijing.

2.   The enterprise opened first stores of domestic and foreign brands in Beijing after November 1, 2020.

3.   The sum of storefront decoration and rent paid (no more than 12 months) exceeds RMB 500,000 (US$78,400).

4.   The store has stable performance and good growth potential: the annual revenue from the main business exceeds RMB 2 million for shops in retail and catering sector.

Shopping malls who bring in qualified first stores after November 1, 2020, will also get financial support of up to RMB 100,000 (US$15,680) for every qualified first store introduced, by satisfying below conditions:

  • The shopping mall are enterprises with independent legal personality in Beijing;
  • The enterprise setting up and operating the first stores are “enterprises being included in statistics in Beijing”—for retail and catering businesses, it refers to those whose annual sales from main businesses exceed RMB 2 million (US$313,600); and
  • The term of the contract between the shopping mall and the store is no shorter than two years.

Supportive measures to encourage enterprises holding new product launch event in Beijing

Enterprises who hold new product launch events of foreign and domestic famous brands in Beijing after November 1, 2021, can get financial support from government for 50 percent of their total expenses for venue leasing, exhibition booth construction, and event promotion, subjecting to the below ceilings:

  • RMB 2 million (US$313,600) for new product launch events of fashion consumer products such as cosmetics, watches, bags, gold and silver jewelry, and others; and
  • RMB 1 million (US$156,800) for other consumer brands.

It is yet to be clarified what kind of brands shall be regarded as foreign and domestic famous brands.

           Financial Support for Enterprises Holding New Product Launch Event in Beijing
Maximum financial support standard
Enterprises with independent legal personality in Beijing 50 percent of their total expenses for venue leasing, exhibition booth construction, and event promotion RMB 2 million for new product launch events of fashion consumer products such as cosmetics, watches, bags, gold and silver jewelry, and others.

 
RMB 1 million for other consumer brands
Conditions to enjoy the financial support:

1.   The enterprise has independent legal personality in Beijing.

2.   The enterprise holds the new product launch event after November 1, 2021.

3.   The brand should be well-known brand home and abroad.

Other measures to support the first-store economy

In addition to the financial support, the 2022 Measures also proposed other supportive measures.

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To cut the administrative red tape and optimize the service to support first-store economy, the 2022 Measures propose to develop green channels for site selection, fire prevention certificate application, advertising plaque setting, and trademark registration. Moreover, first stores may enjoy the privilege of holding promotions without pre-approval from authorities in charge.

The 2022 Measures also proposed to speed up customs clearance of new fashion brands by establishing a third-party credit system for new garment products.

Moreover, to encourage brands to hold their new product launch event in Beijing, the 2022 Measures propose to plan and organize a Beijing Launch Festival and build an all-media promotion platform to promote first stores newly settled in Beijing.

How to apply for the financial support?

Together with the 2022 Measures, the Beijing Municipal Commerce Bureau has released a detailed guideline, which stipulates a list of application materials required, the application procedures, and the application deadline.

Who can apply?

Enterprises, institutions, and economic organizations registered in Beijing with independent legal personality, engaged in the operation, service and management of the circulation of commerce and trade can apply to the authority in charge where:

  • The project applicant is in good business condition and has a sound financial management system.
  • The declared projects can be implemented as planned.
  • The project hasn’t been supported by central financial funds or other municipal financial funds.
  • The applicant does not have the following circumstances: Being included in the prohibited and restricted categories of the Catalogue of Prohibited and Restricted New Industries in Beijing; Being included in the “blacklist” of Beijing Municipal Joint Punishment; Being included in the list of Bad Credit Records in the Commercial Field of Beijing and receiving “unsupported” credit punishment, etc.

Application materials

The below materials are needed to apply for relevant financial support:

  • Application form.
  • Enterprise profile.
  • Legal documents that demonstrate the enterprises independent legal personality status, such as a copy of the business license, the unified social credit code certificate, and identity certificate of legal representative, etc.
  • Financial statements of the project unit in recent three years, including balance sheet, profit and loss statement, cash flow statement, etc.
  • Backing materials that can demonstrate the qualification of the Applicant, as below:
Backing Materials that Demonstrates the Qualification of the Applicant
Type Backing materials
To apply for financial support for setting up “first stores” Monthly performance statement, store business license, trademark registration certificate, description of store type issued by the trademark registrant (or the licensee with exclusive right to use the trademark in the area), photos of the store in operation, expenditure contract corresponding to the investment amount, list of expenses incurred in the project, and relevant expenditure vouchers, etc.
To apply for financial support for introducing “first stores” Agreement between the shopping mall and the introduced brands with a term of two years and above, monthly performance statement, store business license, trademark registration certificate, description of store type issued by the trademark registrant (or the licensee with exclusive right to use the trademark in the area), photos of the store in operation, and materials that can demonstrate the enterprise who set up and operate the “first stores” are “enterprises being included in statistics in Beijing”, etc.
To apply for financial support for holding new product launch events Project expense list, project expenditure voucher, new Project expense list, project expenditure voucher, new product release activity plan, activity summary report, etc.

Application procedures

Qualified applicants should prepare and submit application materials required to authorities in charge before deadlines:

Deadlines for Applying for Financial Support to “First Stores” and New Product Launch Events
Type Application deadline
For “first stores” opened/introduced in Beijing and new produce launch event hold in Beijing between November 1, 2020 and April 30, 2021 May 15, 2022

 
For “first stores” opened/introduced in Beijing and new produce launch event hold in Beijing after May 1, 2021 November 15, 2022

The authorities-in-charge that conduct the preliminary examination include district commercial bureaus, Commercial and Financial Bureau of Beijing Economic and Technological Development Zone, municipal state-owned enterprise groups, and headquarter enterprises. They shall conduct the preliminary examination of the applied projects, fill in the Summary Form of Preliminary Examination of Commercial Circulation Development Projects, and submit it to the Beijing Municipal Commerce Bureau within 30 days after receiving the application materials of enterprises. The Beijing Municipal Commerce Bureau shall then review the project and make decisions.

The applicant shall make a commitment that they shall operate for no less than one year from the date of obtaining financial funds. If the projects supported by financial funds are demolished, suspended, or get their business licenses revoked within one year, the corresponding financial funds shall be returned.

Beijing’s first-store economy sees robust growth in 2021

In 2021, Beijing’s newly opened first stores are almost five times of that in 2020 –  a total of 901 first stores were opened in Beijing, according to data released by the Beijing Municipal Commerce Bureau.

901 first stores opened in 2021 in Beijing. Among them, 134 were from international brands from 23 countries and regions. These include 29 American brands, 21 Italian brands, 18 French brands, and 18 Japanese brands. A few examples are – Italian sportswear brand FILA, the Manchester United Theater of Dreams, French jewelers SATELLITE PARIS, and German optical tech giant Leica. – Beijing Municipal Commerce Bureau

In terms of services provided, first stores in the catering industry rank first, with a total of 468, accounting for 52 percent. There are 276 first stores in the retail industry. And there are 75, 52, and 24 first stores that deal in leisure and entertainment, personal care and services, and children-related business, respectively.

With Beijing further optimizing its first store support policies and streamlining procedures for companies that want to open their first store, it is expected that more than 3,000 first stores representing domestic and foreign brands will open in Beijing by 2025.

Investors engaging in commercial circulation sectors are suggested to take full advantage of this pro-business policy if they have plans to expand their brands to China.

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