After nearly two years of drafting and comment, on 24 April 2015 China’s top legislative body has formally enacted the newly revised Food Safety Law, which will come into effect on 1 October 2015.
This new Food Safety Law ("FSL 2015") has substantially revised the existing law including in relation to: tightened scrutiny of additives and raw food materials; packaging and labelling; importation; sourcing and sale tracking requirements; detailed recall procedures; third party liabilities; and the obligations of catering service providers. In this brief article, we consider the amendments which appear most relevant to foreign food related businesses with interests in China.
Food Safety Review
Using or importing any new raw food material or additive in China, shall be subject to a safety assessment approved by the competent governmental agency under the Chinese Health Ministry. This requirement has actually been enforced since May 2013 by an administrative rule issued by the Health Ministry but is now for the first time set down in law.
Packaging and Labelling
Further to restating the requirements for complying with the mandatory standards of food, additives and food packaging for pre-packed food, FSL 2015 also requires and clarifies in more detail what shall be marked on non-prepacked food.
FSL 2015 also requires a prominent mark on the package for any transgenic food and confirms the penalty for non-compliance as being a fine 5-10 times the total value of the goods and/or revocation of the business permit.
Third Party Liabilities
In recent years, online trade in food items has grown tremendously in China but this has led to raised concerns as to food safety in the supply and delivery chains. This seems to be one of the main reasons why FSL 2015 expressly emphasises the obligations of online marketplace providers. According to FSL 2015, online marketplace providers are obliged to check the standing (i.e. legal incorporation, holding of necessary licenses or permits, etc.) of food traders who will use their online marketplace and to make a record of the traders' legal names. Marketplace providers are also obliged to report any non-compliant traders. Failure to perform any of these obligations will result in the online marketplace provider being held jointly and severally liable in tort in respect of any aggrieved customers and at risk of being fined up to RMB 200,000.
FSL 2015 also imposes similar obligations and potential liabilities for non-compliance by conventional marketplace providers, store landlords and trade fair organisers.
In addition, hospitals, clinics and any other medical organisations are obliged to report diseases caused by food. In such a case, the food safety administration should be informed and investigate the relevant food producers and traders.
Foreign traders who intend to import any food (including raw food materials) into China shall respectively register or file with China's Administration of Import and Export Inspection and Quarantine ("CIQ"). Non-compliance with these rules and/or where there are safety issues with the imported food may cause a registered trader to be blacklisted by CIQ.
Labels and user instructions are required to be at least in Chinese language with certain statutory content, otherwise the food shall be prohibited from importation into China. Accordingly, importers will be obliged to inspect such labels and instructions before import.
Special Purpose Food
Infant formula and nutritional additives are the two most highly regulated categories. In particular, due to the baby food scandal in 2008, since June 2013, the regulations in relation to infant formula have been much stricter so that outsourced manufacturing was banned along with re-packaging of infant food. FSL 2015 still prohibits re-packaging but does not expressly prevent manufacture of infant food being outsourced. The actual intent of the law still needs to be clarified by the legislator or the government but it has been interpreted by many commentators to mean that outsourcing of manufacture will no longer be banned.
Food producers and traders are not only required to act in accordance with the food regulations particularly as regards licensing requirements and food safety management, but must also pay much greater attention to compliance with competition law and anti-corruption rules, since these areas are now under much higher scrutiny from the Chinese government.
The above highlights some of the most noteworthy revisions to the law under FSL 2015. Together with the other food safety rules, China now has its strictest and most comprehensive regime in this area yet. The international community may speculate as to how strictly the new law will be enforced. However, the last three years has shown that the Chinese government is likely to take enforcement (particularly in areas such as compliance, unfair-competition, pharmaceuticals, etc.) seriously.
Food safety falls within one of such focused areas. Accordingly, it is recommended that businesses in the food sector also take the new law seriously and aim to comply over and above the new food safety rules as far as it is possible to do so, not only to ensure their place on the right side of the law but also boost confidence in their brand.