---
title: "First in China: Local Government Revokes Salt Bureau's Decision to Penalize Cross-Province Salt Sales"
description: "On July 7, 2017, a food distribution company in Linzi District, Shandong Province, received a reconsideration decision from the local government, which revoked the salt bureau's penalty for cross-province salt distribution. The case, involving cooperation with Sichuan Salt Industry Corporation, highlights the conflict between national salt reform and local protectionism."
author: "杰夫"
publisher: "New Distribution"
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published: "2017-07-09"
language: "en"
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# First in China: Local Government Revokes Salt Bureau's Decision to Penalize Cross-Province Salt Sales

> On July 7, 2017, a food distribution company in Linzi District, Shandong Province, received a reconsideration decision from the local government, which revoked the salt bureau's penalty for cross-province salt distribution. The case, involving cooperation with Sichuan Salt Industry Corporation, highlights the conflict between national salt reform and local protectionism.

Click on the image for details
Click on the image for details
On July 7, 2017, Mr. Ma, owner of the Qidu Yanqun Food Distribution Department in Linzi District, Shandong Province, received the "Administrative Reconsideration Decision" issued by the People's Government of Linzi District. Looking at the bright national emblem on the decision, he couldn't help but feel emotional. Since deciding to join the salt distribution team this year, his salt products were registered and preserved by the Linzi District Salt Bureau on February 28, and on April 14, 31.395 tons of salt were confiscated by the local salt bureau. It wasn't until July 7, when the Linzi District People's Government notified him to collect the reconsideration decision, that his rights protection had lasted exactly 4 months and 9 days! Every day was torment, and he couldn't understand why his logistics cooperation with the largest state-owned salt monopoly enterprise in the southwest, Sichuan Salt Industry Corporation (hereinafter referred to as "Chuan Yan General Company"), which delivered to terminals, was illegally seized and confiscated by the local salt bureau. Let's restore the truth of the incident together.
On May 15, 2016, the State Council published the "Salt Industry System Reform Plan," which stipulated that from January 1, 2017, all salt product prices would be liberalized, the salt transit permit would be abolished, existing salt production enterprises would be allowed to enter the circulation and sales field, and salt wholesale enterprises could carry out cross-regional operations.
To further regulate cross-province operations, the Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) issued documents No. 585, 211, and 604, which detailed provisions such as "provincial salt wholesale enterprises can stock goods across provinces," "salt wholesale enterprises can carry out cross-province salt sales through four methods," and "salt wholesale enterprises can conduct e-commerce."
Further understanding revealed that as of June 10, salt production enterprises in Sichuan had 3,605 tons of salt sealed, seized, and confiscated by foreign provincial salt administration agencies—a shocking figure! Since the reform implementation, Chuan Yan General Company has strictly followed the spirit of MIIT and NDRC documents, using e-commerce platforms for "online ordering, offline distribution," seeking cooperation with third-party logistics enterprises, and implementing "one-invoice operations" to promote Sichuan salt going out of the province. However, recently, county-level salt administration departments in Shandong, Yunnan, and other places arbitrarily sealed and seized 686 tons of state-owned enterprise salt, seriously obstructing cross-province operations. Some counties even used criminal investigations by public security to severely suppress foreign salt, leading to returns and refunds, causing huge losses to state-owned enterprises. The company is actively coordinating with government and judicial departments to legally use legal weapons to protect its legitimate rights against actions that seriously violate the central salt reform spirit, deviate from the national salt reform direction, and damage the legitimate rights and interests of enterprises.
Mr. Ma believed that the local salt bureau hindered the normal cross-province sales of salt wholesale enterprises and designated production enterprises, infringing on the legitimate rights and interests of Chuan Yan General Company and himself. Therefore, on April 26, he filed an administrative reconsideration application with the Linzi District People's Government, with the following reasons:
First, Chuan Yan General Company was lawfully engaged in salt wholesale in Linzi District, Shandong Province. **Chuan Yan General Company is a provincial salt company holding a salt production enterprise certificate and a salt wholesale license. Its salt wholesale sales in Shandong are not "illegal sales of salt products," and comply with Article 10 of the "Salt Monopoly Measures" and the State Council's "Salt Industry System Reform Plan" which allows production enterprises to enter the circulation and sales field and provincial salt wholesale enterprises to operate across provinces.**
Second, as a distributor, he had the qualifications to provide distribution and services for Chuan Yan General Company. The distributor has qualifications for ordinary freight, freight forwarding, and warehousing services. As a distribution partner of Chuan Yan General Company, it provides offline logistics distribution, warehousing, storage, delivery, and additional collection services for Chuan Yan General Company's online wholesale salt sales in Linzi District. After salt retailers and other terminal customers place orders online and obtain sales orders from Chuan Yan General Company, the applicant delivers to the point. The operations of Chuan Yan General Company wholesaling salt in Linzi District and the applicant's entrusted distribution comply with the provisions of Article 1(1) of the "Notice on Strengthening Salt Monopoly Management during the Reform Transition Period" (MIIT Office Lian Xiao Fei [2016] No. 211), which states that salt wholesale enterprises, including designated salt production enterprises with salt wholesale licenses, can carry out salt sales activities by "signing distribution contracts with third-party logistics enterprises to entrust them to distribute salt to supermarkets, sales outlets, and salt end users such as food processing and catering service units."
Third, the "Chuan Jing" brand 350g×60 iodized deep well crystal salt, 31.395 tons, confiscated by the Linzi District Salt Bureau's "Administrative Penalty Decision," was offline stock for Chuan Yan General Company's online wholesale salt sales in Linzi District, and also complies with the provisions of MIIT Office Lian Xiao Fei [2016] No. 211 Notice that "designated salt production enterprises can transport salt to sales locations for stocking, and provincial salt wholesale enterprises can stock across provinces." Based on this, he requested the revocation of the Linzi District Salt Bureau's penalty decision.
The Linzi District Salt Bureau argued: **First, MIIT documents are not the basis for administrative law enforcement.** Second, the Linzi District Salt Bureau has the qualification as the main body for salt administration law enforcement. Third, the food distribution department violated administrative regulations, and the facts of illegal salt purchase and sales were clear. Fourth, its penalty decision procedure was legal. Fifth, the applicable regulations were correct, **and MIIT documents are not the basis for administrative law enforcement, nor are they regulations; MIIT documents are irrelevant to the legality of this case.** It requested the rejection of the food distribution department's reconsideration request.
During the hearing, Chuan Yan General Company stated that the food distribution department signed a logistics distribution and service contract with Shandong Huiyuan Salt Gang Distribution Company in 2017, **stipulating matters such as after-sales service, warehousing and distribution, and collection and payment of funds for Chuan Yan General Company in the Shandong market. The food distribution department was engaged in market-oriented distribution services, not administrative-approved salt wholesale business. The operating entity was Chuan Yan General Company, which placed orders online through the electronic platform and distributed offline, with one-invoice to the terminal, fully compliant and legal.**
The Linzi District People's Government found after review: **The food distribution department provided sales receipts between Chuan Yan General Company and terminal retail stores, proving that it was only distributing and serving, thus the dispute arose from the penalty. The Linzi District Government believed that the food distribution department's business was to store salt on behalf of others and distribute salt to ordering customers through the e-commerce platform; there was no evidence that the food distribution department was engaged in salt sales. All evidence showed that the food distribution department was merely a contracted distribution unit of Chuan Yan General Company. Therefore, the Linzi District Salt Bureau's determination that the food distribution department operated salt without a license was unclear in facts and insufficient in evidence. According to the Administrative Reconsideration Law, the administrative penalty decision made by the Linzi District Salt Bureau was revoked.**
This case is just the tip of the iceberg for Chuan Yan General Company as a third party in litigation; the company's salt-related reconsideration lawsuits are being carried out in multiple places. Local governments are also actively using their legal departments to support cross-province operating enterprises in conducting business legally. This case also points the direction for cross-province operation cases occurring across the country. The outcome of this case shows that Chuan Yan's business model of using e-commerce platforms for "online ordering, offline distribution" has been actively recognized by local governments and complies with the cross-province operation model advocated by MIIT. At this year's MIIT industry seminar in Hangzhou, Chuan Yan General Company also introduced this cross-province operation model and received industry recognition.
On May 18, the National Development and Reform Commission held a press conference to release macroeconomic operation information and respond to hot issues. Spokesperson Meng Wei said that after the salt industry reform, local protectionism still exists. The NDRC has issued a notice with MIIT to ensure the cross-province circulation of salt.
According to Meng Wei, some local salt bureaus set up administrative barriers to prevent foreign salt from entering local markets, and some even publicly issued documents for local protection. The main obstacle to cross-regional salt operations is that some local salt bureaus and salt companies have not separated government functions from enterprise management, and salt companies set up administrative barriers for their own commercial interests. To this end, the state requires that the reform plans for the salt industry supervision system at the provincial, city, and county levels be completed by June 30 this year, and separation should be achieved by the end of the year.
Looking at the reconsideration decision in his hand, Mr. Ma of the food distribution department wondered whether the local salt bureau would implement the superior decision on Monday and return all the illegally confiscated salt to him. But the national salt reform has already started. The Linzi District Government's administrative reconsideration decision has shown the public the fairness and justice of the state and the dawn of the salt reform. Any behavior that goes against the trend and violates the national salt reform spirit will be ruthlessly crushed by the wheels of history. We will also continue to follow the progress of this case.
**Source: Salt Encyclopedia**
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