7 October, 2015
China wants to improve food safety and intends to come down hard on violations. These changes have been introduced under amendments to the Food Safety Law, which came into effect on 1 October 2015.
The amendments are in response to a series of food safety scandals, such as "toxic bean sprouts" and the use of expired meat products. Many of the amendments consolidate earlier legislation, though significant changes have also been introduced. A large number of implementation rules at both national and local levels have been or will be issued to supplement the amended Food Safety Law. Not all of the implementing rules are bad news for business. For instance, recent regulations ease licensing procedures for food manufacturers and traders.
We summarise below key Food Safety Law amendments and recent implementation rules.
Supervision
The amended Food Safety Law increases the supervision of food production and trade. Food manufacturers and traders will be required to establish a traceability system for food safety purposes. For example, in Shanghai, statutory information in relation to the types of food that fall within the traceability system (e.g., infant formula milk powder and certain aquatic products) must be submitted to a centralised platform operated by the food authority within 24 hours from the date of production or the date of delivery.
The amended law also requires that companies establish self-inspection systems and regularly review operations. If potential safety risks are identified, companies must cease production immediately and report to the food authority. In addition, the existing food record system has been improved and the scope of recall extended to false labelling. Food products with false labelling cannot be resold to the market unless remedial measures are taken and the authority determines that there are no safety concerns.
Imported products
Safety standards applicable to imported food are streamlined. According to the amended law, imported food must comply with China's national food safety standards. If there is no applicable standard, the overseas exporter, manufacturer or its entrusted importer, may submit to China's health authority for review the standards of the foreign country or international standards applicable to the products. The health authority may decide to tentatively apply the foreign standards until the relevant China national standards become available.
These new rules should ease the difficult situation encountered by many overseas exporters where their products are refused for importation into China due to the lack of applicable Chinese standards. Previously, companies under a similar situation were required to prove the safety of their products without reference to any particular standard, a process which could be extremely burdensome and time-consuming.
Special foods
The amended law significantly changes the regulatory regime for certain special foods. For instance:
Health-food products will be subject to different types of pre-sale government processes, depending on the nature of the products and ingredients used. Specifically, registration with the national food authority will be required if the products use ingredients not included in the statutory ingredient catalogue or the products (other than nutritional substances such as vitamins and mineral supplements) are being imported into China for the first time. For other types of products, a much simpler filing system will be adopted.
Product formulations for infant formula must be registered with the national food authority. Among other things, this requires scientific proof of the safety of the formula. Whether the registration requirements will be applicable to imported infant formula products, and, if so, how the registration will be carried out in practice, remains to be seen. Implementation rules are expected.
Licensing
As under the previous law, manufacturers and traders of both food and food additives are subject to administrative licensing. The licensing requirements are stringent, and will require manufacturers and traders to meet the higher standards introduced under the amended law. However, the good news is that obtaining the required licence is no longer a pre-requisite for the application of a company's business licence. Also, once obtained, the licence will be valid for 5 years (previously 3 years only) and renewal of the licence will no longer require an on-site inspection by the food authority if there is no change to operational conditions. These changes were introduced under recently-issued implementing rules.
Penalties
Companies and individuals not complying with the amended law can expect harsh economic and personal penalties:
Administrative fines of up to 30 times of the product value may be imposed for certain serious violations.
The "responsible personnel" (typically the production manager or the legal representative of the company) may be subject to administrative detention of up to 15 days for certain serious violations.
Extremely serious violations may trigger criminal responsibility.
Action
With the amended Food Safety Law now in effect, companies in the food industry can expect heightened supervision.
Companies should, therefore, systematically review and assess their existing manufacturing and trading practices and take proactive measures to control the key stages of their operations. In particular, to meet the new regulatory requirements, proper licences, registration and/or filing should be obtained or updated for different types of food products.
It is also strongly recommended that companies remain alert for the various implementation rules that are likely to be rolled out in the coming months. These rules will be critical in determining how the authorities enforce the amended Food Safety Law going forward.
For further information, please contact:
Nanda Lau, Partner, Herbert Smith Freehills
nanda.lau@hsf.com
