---
title: "Invest 500,000 to Become a Salt Wholesale Distributor?"
description: "A salt merchant in Yancheng, Yu Zhiyong (pseudonym), signed a contract with China Salt Haolong Salt Chemical Co., Ltd. (China Salt Haolong) to wholesale salt, paying 500,000 yuan. However, without a salt wholesale license, he was told he could only retail, not wholesale. He wanted a refund but was refused. The salt bureau and a lawyer explain the legal issues."
author: "陶展 现代快报"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-04-02"
language: "en"
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---

# Invest 500,000 to Become a Salt Wholesale Distributor?

> A salt merchant in Yancheng, Yu Zhiyong (pseudonym), signed a contract with China Salt Haolong Salt Chemical Co., Ltd. (China Salt Haolong) to wholesale salt, paying 500,000 yuan. However, without a salt wholesale license, he was told he could only retail, not wholesale. He wanted a refund but was refused. The salt bureau and a lawyer explain the legal issues.

Recently, Yu Zhiyong (pseudonym), an individual merchant in Yancheng, reported to Modern Express that last December, he heard that China Salt Haolong Salt Chemical Co., Ltd. (hereinafter referred to as China Salt Haolong) was recruiting agents in various counties of Yancheng for salt wholesale. He signed a contract and paid 500,000 yuan for salt. However, because he did not have a salt wholesale license, he received a notice from the local salt law enforcement department that he could only retail, not wholesale. "When will I ever sell more than 200 tons of salt?" Yu Zhiyong wanted to get his money back, but the answer was: the salt can be shipped, but the money will not be refunded.
"Salt industry reform does not mean abolishing the salt monopoly, but improving the monopoly system in the wholesale sector." A relevant person from Yancheng Salt Bureau said. A lawyer said that the party can claim the return of the 500,000 yuan payment from China Salt Haolong according to the relevant provisions of China's Contract Law.
Salt bureau officials inspect the salt market (Photo provided by Yancheng Salt Bureau)
**[Temptation]**
**Pay 500,000 to Become a China Salt Haolong Agent**
Yu Zhiyong, in his 50s, is a food wholesaler in Jianhu County. According to Yu, in early December 2016, a salesman claiming to be from Henan China Salt Haolong approached him, saying that the state was about to implement salt industry reform, and from January 1, 2017, salt would be opened for cross-province operation. China Salt Haolong happened to be recruiting one agent in each county (city, district) of Yancheng, which was a great opportunity to make big money.
Yu was skeptical at first, so he checked online for information about China Salt Haolong. "I found that China Salt Haolong is a large enterprise and one of the designated salt production enterprises." He also quickly checked the salt reform situation and found that after January 1, 2017, cross-province operation was indeed possible.
"Just as I was hesitating, a wholesaler from Binhai County called me, saying that he and several merchants from Yancheng counties had already arrived in Ye County, Henan, and were about to sign agency contracts with China Salt Haolong." After receiving this call, Yu had no more doubts. On December 20, 2016, he rushed to Ye County, Pingdingshan City, Henan Province. Under the guidance of the salesman, four people from Yancheng visited China Salt Haolong's company. "The factory was large and looked very formal," Yu recalled.
Subsequently, the salesman took Yu and the other three to a hotel in Ye County to sign contracts and pay money for the regional salt agency rights. "At that time, the scene was chaotic. There were two to three hundred people from all over the country queuing to pay, with a minimum of 500,000 yuan and no upper limit." Seeing that the amount was not small, Yu hesitated.
"If you don't pay now, you won't have the chance to get the regional agency rights from China Salt Haolong." Finally, under the salesman's urging, Yu and the others signed dozens of contracts first, then called their families to remit 500,000 yuan to the account of "Ye County Haolong Salt Sales Co., Ltd." provided by the salesman.
**[Turning Point]**
**Salt Bureau Tells Them They Cannot Wholesale Salt Arbitrarily**
Afterwards, Yu and the other three returned to Yancheng, waiting for the salt wholesale sales after January 1, 2017. "But we waited for nearly two months, until February 2017, and we still hadn't received the original contracts." By looking at photos on his phone, Yu found that he had signed many contracts, including a labor agreement with a term from January 1, 2017 to March 31, 2017, and a certificate of termination of labor contract dated January 2, 2017.
"What is going on? Could this be a scam?" Yu was puzzled. "There were too many people signing at the time, and I didn't have time to read the contract contents. I just took a few photos of the contracts with my phone." According to his recollection, after signing, the originals were collected, saying they would be stamped by the unit and mailed to each person. They were given a work permit stamped with the official seal of China Salt Haolong.
At the end of February, the Yancheng Salt Administration Bureau visited the counties to publicize salt laws and regulations, and Yu consulted in detail. "The salt bureau staff said we were deceived. To wholesale salt, you must have a 'Salt Wholesale License'. Without a license, even if you bring the salt back, you can only retail. Once you wholesale, it is illegal." This news was a heavy blow to Yu.
"The 500,000 yuan salt amounts to 228 tons. If we bring it back, we need to rent a large warehouse to store it. If we can only retail, when will we ever sell it all? We'll lose a lot!" Yu and the others were disheartened. They immediately contacted the salesman from China Salt Haolong to ask for a refund, but the answer was: the salt can be shipped, but the money will not be refunded. Whether you have a 'Salt Wholesale License' has nothing to do with China Salt Haolong.
**[Explanation]**
**China Salt Haolong Salesman Claims the Form Is Legal**
On March 28, Modern Express reporter contacted Manager Han, the salesman from China Salt Haolong who dealt with Yu and others. "China Salt Haolong is a subsidiary of China Salt, a legitimate enterprise, and its products are qualified." Manager Han believed that the Yancheng Salt Bureau's statement that the four merchants in Yancheng could not wholesale without a 'Salt Wholesale License' was not in line with the facts. "Our company has all three certificates: business license, production license, and salt wholesale license. We operate according to the spirit of the superior documents."
"We use a third form of sales with Yu and the others, that is, self-built sales outlets to directly carry out salt sales business, conducting cross-province operations. We have work permits, warehouse lease contracts, product inspection reports, delivery orders, and other documents." Manager Han repeatedly explained that their sales form is legal. "The salt bureau is making things difficult for customers for various reasons, seriously affecting the image of China Salt Haolong and harming customer interests."
However, when the reporter asked why they had signed a labor agreement with a term from January 1, 2017 to March 31, 2017, and also signed a certificate of termination of labor contract dated January 2, 2017, Manager Han became vague and hesitant. He said that the four people from Yancheng were indeed company employees. As for how the contracts were signed at that time, he was not present. They were not dismissed; they are still company employees.
If they are employees of China Salt Haolong, did the four people receive wages and social insurance? The reporter continued to ask, but Manager Han did not answer directly, saying, "Isn't there a probation period?" Just as the reporter was about to ask another question, Manager Han said the phone had no signal and hung up. He then sent a text message to the reporter: "Sorry, I'm in a meeting. Let's talk in a few days."
**[Lawyer]**
**Fabricating Employee Identity Suspected of Contract Fraud**
Can out-of-province salt wholesale enterprises sell across provinces? Modern Express reporter checked the "Notice on Strengthening the Management of Salt Monopoly during the Reform Transition Period." The document stipulates that during the transition period from January 1, 2017 to December 31, 2018, salt wholesale enterprises (including designated salt production enterprises with salt wholesale licenses, hereinafter the same) can carry out salt sales activities through the following four methods: (1) Through self-built logistics systems or by signing distribution contracts with third-party logistics companies to distribute salt to supermarkets, sales outlets, and units engaged in food processing, catering services, and other end users of salt; (2) Through self-built branch companies for salt sales business, and self-built branch companies must not entrust units or individuals without salt wholesale licenses to carry out business activities; (3) Through self-built sales outlets to directly carry out salt sales business; (4) Through existing channels to carry out salt sales business.
"According to the explanation of the China Salt Haolong salesman, their sales in Yancheng adopted the third method, that is, self-built sales outlets to directly carry out salt sales business. However, they developed local sales agents in Yancheng, not real employees." Jiang Haisheng, a lawyer at Jiangsu Heyi Law Firm, believed that based on the above situation, the purpose of signing labor contracts with China Salt Haolong was to create the identity of unit employees, forming the fact of 'self-built', but then quickly terminating the contracts. This is to avoid establishing a legal labor relationship, completing the legal relationship of commercial agency actually implemented by the company. This is a typical contract fraud that uses a legal form to cover up an illegal purpose.
Jiang Haisheng said that in this incident, the party can claim the return of the 500,000 yuan payment and the resulting losses from China Salt Haolong according to the relevant provisions of China's Contract Law.
"Self-built sales outlets for salt sales must have their own business premises, warehouses, and must register with the local industrial and commercial department." A relevant person in charge of the Yancheng Salt Administration Bureau believed that China Salt Haolong's behavior is exploiting loopholes in the national salt reform policy, using false labor contracts to find salt distribution agents. The enterprise having complete certificates does not mean that the distribution agents have wholesale qualifications.
"The salt industry system reform is centered on ensuring the quality and safety of salt and the safety of supply. On the basis of adhering to the salt monopoly system, it promotes supply-side structural reform. Based on the existing designated salt production enterprises and salt wholesale enterprises, no new salt wholesale enterprises will be approved. Other types of commodity circulation enterprises must not engage in salt wholesale." The relevant person in charge of the Yancheng Salt Administration Bureau introduced that there is a misunderstanding in society about the salt reform, believing that after the reform, the salt market is open and anyone can wholesale salt. This is largely related to individual unscrupulous manufacturers exploiting loopholes in the salt reform policy and misleading operators.
For details, please see the April 1 issue of Modern Express.
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