Staying Compliant with China’s New Food Safety Law
Friday, September 22nd, 2017 | 297 Views
China’s amended Food Safety Law entered into force on 1 October 2015. Since the passage of the Law in late April, its severity and harshness has been the centerpiece of numerous media reports and news articles. But how exactly has the law changed and how can manufacturers involved in Chinese businesses ensure they adhere to it? By David J. Ettinger, Jenny Li, Mark Thompson and Yun Chen, Keller and Heckman LLP
There is no doubt that compliance with China’s new Food Safety Law (FSL) has become an important topic today and should be monitored intently by all food companies doing business in China. To this end, this article has been divided into three parts, which address the key issues of interest to industry members wishing to ensure compliance with the FSL.
First, we highlight several key changes to China's new Food Safety Law and the food safety regulatory framework impacting food companies. Second, we detail the increasingly stringent regulatory environment in China, including a snapshot of enforcement actions taken by the Chinese government against food businesses over the past year. Finally, we provide our general and practical guidance for those in the food industry for maintaining compliance with applicable food safety requirements in China.
Key Changes: China’s New Food Safety Law and the Chinese Food Safety Regulatory Framework
More Centralised Regulatory Regime
For many years, China maintained a very fragmented regulatory regime for food and food-related products. This was due in part to overlapping responsibilities among various government agencies, which often led to inefficiencies and conflicts. The establishment of the China Food and Drug Administration (CFDA) in 2013 marked a new era for the Chinese food regulatory regime. Largely derived from the State Food and Drug Administration (SFDA), CFDA was created to be the primary government agency in charge of food safety matters during the life of a food product – production, distribution and consumption.
The latest revision to the Food Safety Law confirms the central role assumed by CFDA and integrates the detailed restructuring of the regulatory agencies. For example, under Article 4 of the new law, CFDA assumes the supervisory responsibilities that used to belong to the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and the State Administration of Industry and Commerce (SAIC) regarding the production and trading of food products.
Traceability and Higher Penalties
As today’s food supply chain becomes more complex and – at times – less transparent, the new FSL has introduced the concept of 'traceability' which has already been implemented in many developed countries and regions. Under Article 42, food producers and traders are now required to establish a 'food safety traceability system' to ensure that all foods they produce are suitably traceable. The Administrative Measures on Food Safety Information Traceability for the City of Shanghai entered into force on 1 October 2015, the same day as the amended Food Safety Law. According to the new Measures, an information traceability system is now implemented in Shanghai for certain foods and edible agricultural products (e.g. grains, poultry products, fruits, vegetable, aquatic products, bean products, dairy products, edible oil, etc.).
The new Food Safety Law also boasts stiffer penalties on violators. For example, a food producer or trader may be fined as much as 15-30 times, increased from 5-10 times previously, the total value of the commodity for certain offenses (e.g. producing or selling foods containing unapproved food additives or made with non-food raw materials or recycled foods). Notably, the minimum fine for common food safety violations (e.g. selling expired foods) has been increased from 2,000 RMB (US$300) to 50,000 RMB (US$8,000).
The new Foods Safety Law introduces many changes and new requirements for health foods. Under Article 75, CFDA is now charged with compiling, revising and publishing separate catalogs of permitted health food ingredients and health function claims. The FSL also sets forth two regulatory paths for health foods, i.e. pre market registration and notification, which expands upon the current registration-only system for health foods. This represents significant progress, as it helps to ease the regulatory burden on industry without compromising the quality and safety of health food products. Many new rules and regulations will be published in the coming months and years to implement the new Food Safety Law, and substantially reshape the Chinese health food industry. As of now, CFDA has already promulgated three important draft regulations – the Regulation on Health Food Function Claim Catalog and Ingredient Catalog, the Regulation on the Registration and Notification for Health Foods, and the Regulation on Health Food Labeling.
Infant formula is another sector whose future has been heavily shaped by the ever-changing regulatory requirements in China. Under the new Food Safety Law, manufacturers are no longer permitted to re-package infant formula and may not produce different brands using the same product formulation. Most significantly, infant formula product formulations must now register with the CFDA, which will make approval determinations based on relevant scientific and safety considerations. In September, just a month before the new Food Safety Law took effect, CFDA released the Administration Measures for the Registration of Infant Formula Formulation (Draft for Comment), which sets forth the detailed registration requirements for infant formula made in China. Overseas dairy processing plants that export products to China are currently required to register with the Certification and Accreditation Administration of China (CNCA). Whether imported infant formula also needs to separately register the formulation is expected to be clarified by the authorities in the near future.
Foods Traded on Internet: Third-Party Platform Providers
Regulating e-commerce traders and platform providers is not an easy task. In response to numerous on-line food fraud complaints from Chinese consumers, the new Food Safety Law now officially imposes certain due diligence requirements on third-party internet platforms to ensure that all online food traders are duly registered and licensed. In addition, the platform provider is obligated to report food safety violations to the local CFDA office(s). In August 2015, CFDA also promulgated the Administrative Measures for the Supervision of Online Food Trading (Draft for Comments), which further specifies the responsibilities of the online food trading third-party platform providers.
Food Packaging Materials
Under the new Food Safety Law, food packaging materials are regulated as 'food-related products.' 'High risk' food-related products are subject to food safety risk evaluation with regard to their biological, chemical and physical risks. It is possible that food packaging materials in direct contact with food will be deemed 'high risk' and thus subject to these evaluations. Food packaging has been a highly regulated area in the US and many EU countries since the 1950s. Even today, Chinese consumers may still not be aware that many chemicals contained in food packaging could potentially migrate to the food and impact the quality of the food.
China began regulating food-contact materials in the 1980’s, pursuant to the Food Hygiene Law, the FSL’s predecessor. The FSL requires that food packaging materials comply with applicable Food Safety Standards (often referred to as GB Standards). 2015 has been a critical year for food packaging regulations in China. Dozens of new Standards have been published in recent months, including the draft amendment to the Hygienic Standard for Uses of Additives in Food Containers and Packaging Materials (GB 9685-2008) –a critically important GB for the food packaging industry, as well as the newly consolidated GBs for food-contact plastics, paper, coatings, rubber, glass and metal.
Food Safety Enforcement
Food safety has been a hot issue in China over the past several years. Harsher punishments have been imposed on those who endanger public health and the death penalty is not unheard of for extreme violations. It is also important to note that – unlike in the past – the food industry, particularly foreign companies, is facing increased expectations from both consumers and government authorities.
Enforcement also remains a key consideration for food businesses operating in China. Below we provide a snapshot of the enforcement actions taken by the Chinese government against food businesses in the past year.
- In June 2015, the Chinese authorities seized nearly $500 million worth of smuggled frozen meat across China and arrested 20 suspected members of two gangs. Some of the smuggled frozen meat was more than 40 years old. The frozen beef, pork and chicken wings were discovered in a nationwide crackdown, which would have been repackaged as imported products (e.g. "made in U.S.”) and sold to Chinese retailers and restaurants through various channels (e.g. Taobao.com, the most popular e-commerce platform owned by Alibaba).
- In March 2015, the Supreme People’s Procuratorate of China announced the start of a campaign by the authorities to crack down on food and drug related crimes that will extend until the end of 2016.
- In January 2015, the corporate representative of a food company in Guizhou province was found to have sold 19,000 tons of tainted oil, made from the waste of slaughtered cattle between 2009 and 2013. The man was sentenced to death with reprieve and fined $56 million.
- In January 2015, more than 110 people were arrested in China for selling more than 1,000 tons of contaminated pork made from diseased pigs. The Chinese Public Security Ministry seized more than $16 million worth of product and prosecuted 75 suspects. After the new Food Safety Law took effect on October 1, local CFDA and market surveillance officials have been diligently implementing the new penalty provisions, as many news reports indicate.
- Oct. 8, a supermarket in Shangxi, Zhejiang was fined $8,000 for placing 25 expired yogurts on shelf, which was discovered during an inspection conducted by the Shangxi authorities.
- Oct. 13, a supermarket in Dushan, Guizhou was fined $8,000 for having $12 worth of expired food products on shelves. Upon learning of the situation through a Guizhou province public consumer complaint hotline, the Dushan authorities immediately inspected the supermarket.
- Oct. 20, a dried soy sauce workshop in Yangxin, Hubei was fined $8,000 for adding caramel to 600 kg of dried soy sauce worth about $1,100. Caramel is not a permitted food additive in bean products under Chinese Food Safety National Standard – Use Standards of Food Additives (GB 2760-2014).
While strict enforcement of the new FSL may create a more stringent regulatory environment for the food and food-related industry in China, in the long run, it will likely benefit consumers and enhance industry reputation as there is a greater focus to follow the new laws.
In addition to public enforcement, China has clearly also recognised that private monitoring can be an effective mechanism in revealing non-compliant products on the market. In 2014, the CFDA received more than half a million food complaints. Many current Chinese laws enhance consumer protection and, at the same time, increase obligations and liabilities for businesses. Under the new FSL, a consumer can seek compensation up to 10 times the purchase price from the food producer or trader where the food product fails to comply with a Food Safety Standard.
We provide some general and practical guidance below to assist the food industry in complying with Chinese requirements.
Paying Close Attention to the Chinese Legal Updates
Whether you already have in-house or external resources, we believe that being accurately informed of the legal and regulatory updates in China is crucial for your business success there.
Develop an Internal Food Safety Protocol
We recommend that food companies establish and record a Chinese food safety protocol as a useful reference for employees involved in various stages of handling a food safety problem, e.g. assessing a food safety complaint and investigating the issues. Ideally, the protocol should include investigation and response plans for common food problems that may occur.
Establish a Food Safety Committee That Report to Top Executives
The Food Safety Committee should be comprised of professionals from various corporate departments to ensure understanding of the complexity of these issues and take necessary action. Ideally, the Committee should include members from the legal department, food technology department, product stewardship and quality assurance departments, as well as the public relations department.
Keep Organised Written Records for All Activities
A sample investigation dossier should include written records for the following:
- Interview notes, correspondence, meeting minutes, testing reports, etc.
- Findings of the investigation
- Conclusions reached by the investigation team
- Corrective measures, if any, that have been taken
While the new Food Safety Law will keep unfolding over the course of time, there is no question that it marks another milestone in China’s regulation of food and food-related products. At the end of the day, we all have the same need and desire to consume safe food.
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