Published by ChinaMNC · Poyang

China's SAMR Cracks Down on Fake Testing Reports in Traditional Crafts: What Foreign Founders Need to Know

China's State Administration for Market Regulation (SAMR) has launched a campaign to combat counterfeit testing reports and certificates in the traditional crafts market. The initiative targets fake workshops, fraudulent producers, unqualified testing agencies, and online platforms. Foreign founders in jewelry, precious metals, redwood, and ceramics must ensure compliance with Chinese testing and certification rules. This article outlines the scope of the crackdown and practical steps for company registration and operation in China.

What This Means for Your China Company Registration

Foreign founders planning to enter China's traditional crafts market—including jewelry, precious metals, redwood products, and ceramics—should take note of a new enforcement campaign by the State Administration for Market Regulation (SAMR). The initiative, titled "Crack Down on Fakes and Clear the Source" (打假清源), targets fraudulent testing reports and certificates. While the campaign focuses on market integrity, it has direct implications for how you register and operate a company in China. Ensuring compliance with testing and certification requirements is essential to avoid penalties and build trust with customers and partners.

Scope of the Crackdown: What Is Targeted

SAMR's campaign covers four main areas of illicit activity:

• Fake testing workshops and brokers: "Black workshops," "black dens," and "black intermediaries" that forge test reports or inspection certificates for traditional crafts.
• Fraudulent producers and sellers: Businesses that fabricate, alter, impersonate, or trade test reports or certificates, use fake reports to pass off inferior goods as superior, or engage in deceptive marketing.
• Unqualified testing agencies: Inspection bodies that operate beyond their accredited scope or issue false or grossly inaccurate reports.
• Online platforms and e-commerce: Websites, livestreaming channels, and social media accounts that create fake sites, links, or accounts to offer false testing services or certificates; or that misuse keywords such as "inspection," "CMA," "CNAS," "guaranteed pass," "no sample needed," "exempt from inspection," or "certificate issued directly" without verifying qualifications.

Why This Matters for Foreign Founders

If you are setting up a company in China that deals in jewelry, precious metals, redwood, or ceramics, you must ensure that any testing reports or certificates you use are genuine and issued by qualified agencies. The crackdown signals stricter oversight and penalties for non-compliance. Foreign founders should:

• Choose legitimate testing partners: Verify that any Chinese testing laboratory you engage holds valid CMA (China Metrology Accreditation) or CNAS (China National Accreditation Service) credentials for the specific product category.
• Understand certification requirements: For certain products, mandatory certification (such as CCC) may apply. Ensure your products meet Chinese standards and obtain necessary approvals before sale.
• Avoid misleading marketing: Do not use terms like "guaranteed pass" or "no sample needed" in your advertising unless you can substantiate them with valid documentation.

How to Register a Compliant Company in China

Foreign founders looking to establish a business in China should follow these key steps to ensure compliance with market regulations:

1. Choose the Right Entity Structure

Common options include a Wholly Foreign-Owned Enterprise (WFOE), a Joint Venture (JV), or a Representative Office (RO). For trading and manufacturing in traditional crafts, a WFOE is often preferred for full control. Consider a JV if you need local partnerships for distribution or licensing.

2. Reserve a Company Name

Submit a name reservation through the local Administration for Market Regulation (AMR) online system. Ensure the name complies with Chinese naming rules and does not infringe on existing trademarks.

3. Prepare Registration Documents

Required documents typically include: articles of association, identification of legal representative and shareholders, proof of registered address (lease agreement), and capital contribution plan. For foreign investors, documents may need notarization and authentication by a Chinese embassy or consulate.

4. Determine Registered Capital

China has largely moved to a subscription system for registered capital, but certain industries may have minimum capital requirements. Ensure your capital plan aligns with business needs and regulatory thresholds.

5. Obtain Business License

Submit the application to the local AMR. Upon approval, you will receive a business license, which is the primary document for legal operation.

6. Post-Registration Formalities

After obtaining the license, complete tax registration, open a bank account, and register with the social security and housing fund authorities if hiring employees. Also, if your business involves import/export, obtain the necessary customs and foreign trade operator registrations.

7. Sector-Specific Licenses

For traditional crafts, additional permits may be required. For example, if you operate a testing laboratory, you must obtain CMA accreditation. If you sell jewelry, ensure compliance with product quality and labeling standards. Check with local authorities for any specific requirements related to your product category.

Compliance Checklist for Traditional Crafts

• Testing and certification: Use only accredited labs for product testing. Keep records of all test reports and certificates.
• Labeling and marketing: Ensure product labels and advertising comply with Chinese advertising and consumer protection laws. Avoid exaggerated or false claims.
• Online sales: If selling through e-commerce or livestreaming, verify platform requirements and maintain accurate product descriptions.
• Record-keeping: Maintain thorough records of suppliers, tests, and sales for at least the legally required period (often 3 years).

Reporting Violations

SAMR encourages the reporting of illegal activities related to fake testing reports. Foreign founders who encounter fraudulent practices can report them via email at [email protected] or by phone at 010-88651775 (weekdays 9:00-11:30, 14:00-17:00). Reports can also be made through the 12315 platform or hotline to local market regulation departments. Whistleblowers are encouraged to provide real names and fill out the "Traditional Crafts Market 'Crack Down on Fakes and Clear the Source' Report Information Collection Form" to facilitate investigation. Confidentiality is assured.

Key Takeaways for Foreign Founders

• The crackdown reinforces the importance of using genuine testing reports and certificates for traditional crafts.
• When registering a company in China, ensure your business scope and operations comply with testing and certification rules.
• Work with accredited labs and maintain proper documentation to avoid penalties.
• Stay informed about regulatory updates from SAMR and local authorities.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with company registration and compliance in China, contact ChinaMNC on WhatsApp/WeChat at +86 153 1898 8535.