In December of 2015, the Chinese government released the New Food Safety Law in the wake of the past decade of food and product safety scandals. Consumers are so mistrustful of domestic products that more than half of the Chinese population list food safety as their biggest purchasing concern.  With the largest middle class in the world, most consumers are turning towards more expensive, imported products instead of entrusting their own health in domestic options.

To combat the loss of trust in domestic producers, the government is constantly releasing regulations meant to ensure product and food safety. 10 months after the Law’s initial 2015 release, a revised draft of the Implementation Rules of Food Safety Law was released containing 10 chapters and over 200 articles.

Knudsen&Co has evaluated the New Food Safety Law for relevant articles pertaining to our clients. The Implementation Rules contain significant regulation updates pertaining to the infant formula, health food, and food with special medical purposes (FSMP) categories in an effort to further regulate false claims and misinformation within these industries.

Inspection of all products in this area will be heavily regulated and available for public viewing.

Knudsen&Co discusses all relevant regulations and their consequences at the end of this article for our client’s convenience.

While the specifics of the Law are extremely important for regulatory compliance, the general implication centers around China’s increased focus on food safety.  Although most western countries see these regulations as inherent and essential (a recall system, national standards for technical safety control, functional claims backed by scientific evidence, etc.), they are completely new to China.  China’s food safety regulations are clearly in their infancy, but the New Food Safety Law is an indication of the government’s intention to catch up to food safety standards set by the West.

While the Law is certainly a step in the right direction, there is still a way to go before manufacturers will see the same requirements in the Chinese market that are commonly followed in Western markets.

Knudsen&Co discusses the relevant articles and their consequences below for our client’s convenience.

RELEVANT STANDARDS OF THE FOOD INDUSTRY

  1. Regulations for Special Food

For example: Administrative measures of Health Food registration and Filing, Administrative measures of Food for special medical purpose registration

Under the New Food Safety Law, foreign products claiming functional efficiency (such as infant formula, health food, and FSMP) must register their products with the CFDA before they begin importation. Manufactures now need to ensure their products meet testing certifications and provide the necessary documents in order to apply registration.

  1. National Standard for Food and Food Additives

For example: GB 14880-2012 Nutrition enhancer usage, GB 23347-2009 Olive oil and olive-pomace oil

All general food ingredients, health food, food additives, food contact products, novel food raw materials, labeling procedures, and testing methods must meet the national standard, and then formulated in the GB standards.

  1. Industrial Standard for General Food and Food Additives

For example: QB 2732 —— 2005 Collagen hydrolysate

If an industry lacks a technical safety control national standard, the relevant industry authority must design and manage an industrial standard to be reviewed by the administrative department of the State Council. When such a standard is approved by the State Council, it must be adopted nationwide.

  1. District Standard for General Food and Food Additives

For example: DBS23/ 002-2014 District standard for blueberry beverage issued by Hei Longjiang Province

If there is no national or industrial standard for a technical safety control, and it is not necessary to develop one, district standards can be managed by the local department. Such a standard should be transparent and open to the public.

  1. Emphasis on Traceability System for Food Safety

The Implementation Rules emphasize the necessity of developing a food safety traceability system. Previously, only general food manufacturers were subject to general food recording obligations. High-risk foods, such as health food, infant formula, FSMP, meat, dairy, etc., are now required to build a dedicated electronic traceability system.

Such a system requires food operators to implement a reliable food recall system that identifies ingredients with serious risk to the consumer. Recalls will be classified into three levels according to the extent of consumer risk and the level of emergency action required.

6. Food Operators Must Register When Using E-Commerce Platforms

Article 62 requires food operators to register their products before selling on an e-commerce platform in order to force manufacturers to take responsibility for the food safety of their products.

7.Label Requirements for Pre-Packaged Food

Pre-packaged food is required to feature a Chinese label listing:

1. Name, specification, net weight, production weight
2. Ingredient list (formula)
3. Name, address, and contact information of manufacturer
4. Storage length
5. Product standard code
6. Storage conditions, if necessary
7. General name of food additives according to GB
8. Approval code issued by relevant department
9. Other content if necessary

8. Functional Claim Requirements for Health Food

Article 75 requires health food to register with the CFDA, which requires the submission of a comprehensive report containing the product formula, production technology, safety and function evaluation report, label, product instructions, scientific reports, and relevant certificates.

The label and product instructions cannot be related to disease treatment or prevention and must be compliant with the proper registration materials.

The label must include the users suitable and not suitable for the product, as well as active components and the product’s correct function.

The label must declare “this product is not a substitution for prescription medication”

9. Advertisement Requirements for Special Food

In order to address consumer confusion surrounding the false claims often made in advertising within the health food industry in China, the provisional rules on the Examination of Health Food Advertisements stipulates that health food can only advertise functions evaluated by CFDA labs. No arbitrary expansion of functional scope is allowed. Advertising claims based on feudal superstition is not allowed.

Advertisers must first apply for provincial-level FDA approval before releasing any health food advertisements.

Find more information in Knudsen&Co’s presentation on the New Food Safety Law, given at a Citigroup educational business event held in Melbourne and Sydney, Australia.

IMPLICATIONS OF THE NEW HEALTH FOOD SAFETY lAW

Increased food safety regulation is part of an effort by the Chinese government to attract foreign companies who already enforce food safety requirements within their own practices to the Chinese market. Brands with offering these selling points can expect a better market place for their products and increased consumer awareness concerning food safety and quality.

As consumers become more accustomed to the new food safety regulations, companies will also begin to see improved communication between users and producers. Customers will start to regain their trust in the claims advertised by food in China.

The heavy regulation of the market translates to limited accessibility for producers. Only medium and large foreign companies will be able to comply with the expensive and time consuming regulatory requirements. This is especially true for heavily regulated industries like health food and infant formula.

As a result, activity in grey markets like daigou trade or smuggling will increase as the regulations are enforced in the coming year, until the government is able to crack down on illegal purchasing.

KNUDSEN&Co RECOMMENDATIONS

Even though the process can appear daunting, Knudsen&Co recommends full compliance with the New Food Safety Regulations. As one of the world’s largest consumer markets, China is much too important for western companies to ignore. Compliance with the new regulations will increase consumer trust, and therefore demand, in healthy products. The industry will only grow as a result, offering a multitude of opportunities for foreign companies.