Four years after introducing China's first commitment-based business licensing reform, Shanghai's Pudong New Area has cut the average licensing approval time from two to three weeks to 8.5 minutes, reducing the rent and labor costs businesses incur while waiting to open.

Luckin Coffee opened more than 120 new outlets in Pudong New Area in 2025, including locations in office buildings, shopping malls, hospitals, and university campuses.

Opening an outlet even one week earlier can save tens of thousands of yuan in operating costs per store, said Sun Ming, a senior public affairs manager at Luckin Coffee.

The chain now operates more than 1,800 stores in Shanghai, with about a quarter of them in Pudong.

KFC China also used the system when adjusting its business premises, with existing permits canceled and new permits issued on the same day, ensuring uninterrupted operations.

The system retrieves company information and automatically generates application forms, allowing businesses to apply online without submitting supporting documents upfront. Documents such as test reports and staff qualification certificates may be submitted later.

Businesses with good credit standing may sign plain-language commitment letters instead of undergoing pre-approval site inspections and receive permits immediately.

Since 2022, 6,252 businesses have obtained 7,176 permits through the system. The documentation required before approval has been reduced by nearly 80 percent, while the average approval time has been cut by about 95 percent.

The reform covers 22 sectors, including food services, retail and leisure services. It also allows hybrid businesses, such as bookshops with cafes, to operate under a single permit.

Authorities screen applicants using both public and industry credit records, excluding entities with serious credit violations from using the system. All businesses licensed under the system undergo compliance checks within two months of receiving their permits. The approach creates an environment in which trustworthy businesses can operate smoothly while those with poor credit records face restrictions.

Source: Shanghai Observer