This article was written by Mark Schaub(partner) and Chen Bing(partner)
New PRC regulations have just been issued that will have a substantive impact on infant formula manufacturers – both international and domestic.
The Administration Measures for the Registration of Formulas of Infant Formula Milk Powder (“Registration Measures”) was officially published on June 6, 2016 by China Food and Drug Administration (“CFDA”) some eight months after the CFDA released its draft for public comment (“Draft”). The Registration Measures will become effective on October 1, 2016 and their genesis can be found in the PRC Food Safety Law of 2015.
According to Registration Measures and new Food Safety Law effective since last year, the formulas for all infant formula products manufactured and/or sold in China must be registered with CFDA, otherwise such products may not manufactured or sold. Formula registration is a new approach of PRC government aiming to improve the safety of infant formula products. The Registration Measures have specified the application scope, process, and other related issues. It will have substantial impact on various domestic and foreign diary companies, regardless of their reliance on traditional trade model or cross-border e-commerce.
Same registration requirements for both domestic and international infant formula
The Registration Measures requires infant formula products to be subject to formula registration whether produced in or imported into the PRC. It is important to note that the Draft regulations would only require products manufactured within China to comply with formula registration provisions. Accordingly the change in the published Registration Measures implies that the CFDA no longer intends to have different registration rules for domestically manufactured and imported infant milk powder.
“3 series and 9 formulas”
The Registration Measures definitively shows that the PRC authorities have adopted the “3 series and 9 formulas” policy. Accordingly any single company can only apply at most for nine formula products within three series.
This policy is much stricter than the two planspreviously proposed in the Draft, and is consistent with another important draft rule, i.e., draft Regulation on the Implementation of the Food Safety Law which is expected to be officially issued later this year.
In addition the Registration Measures also provide that a wholly-owned subsidiary is permitted to use the formula already registered by another wholly-owned subsidiary which is subordinate to the same group for production purposes. In other words, although the principle is that a single company can only register up to nine formula products there is no upper limit on the quantity of formula products manufactured by a company provided three conditions are satisfied namely: 1) formula has been registered already; 2) manufacturing must be by wholly-owned subsidiaries; and 3) wholly-owned subsidiaries shall be subordinated within same group.
Complicated Registration Process and Vague Timeline for Imported Formula Products
The registration procedures for infant formula outlined by the Registration Measures were based upon the PRC drug management system and accordingly the registration procedures for infant formula are complicated and time-consuming.
The registration procedure for infant formula has several stages, namely acceptance, review and evaluation, on-site verification, sampling inspection, determination and issuance of decision.
In addition it should be noted that each stage has a time limit and these time limits can be complicated to determine. At most the procedure will take 170 working days to finish registration commencing from acceptance until issuance. This period does not include collection of supplementary documents required by the CFDA.
However, it should be noted that the Registration Measures do not provide clear guidance as to how to proceed with on-site verification and sampling inspections for imported formula products and verification periods.
Beware of False Advertising or Labelling
The Registration Measures provide detailed provisions aimed at avoiding false advertising and causing confusion amongst consumers in respect of the products including:
- Prohibited to use ambiguous terms such as “imported milk source”, “ecologic pasture”, “imported raw materials”. The applicant is required to clearly identify the source of the product;
- Prohibited from explicitly or implicitly expressing that there is a health care function;
- Prohibited from including functional expressions, implicitly or explicitly, that the products may increase intelligence, build up resistance, increase immunity or protect the intestine;
- Prohibited from using misleading or negative expression(s) (i.e. “no additives”);
Proceed with Registration ASAP
As the Registration Measures would become effective on October 1, 2016, as such, unless the laws stipulated otherwise, the infant formula milk powder manufactured in and imported to China via the trade in goods would subject to this Registration Measures sooner.
It is important to note the complexity and time limits in respect of registration it is recommended that both domestic or foreign manufacturing enterprises engaging in production of infant formula milk powder to start preparing for and initiating registration procedures as quickly as possible.
Time is ticking – it should be noted that PRC Ministry of Finance regulations require that registration requirements for infant formula will come into force on January 1, 2018. Accordingly, although there is still time for companies to register but the clock is ticking. Brands relying strongly upon the cross-border ecommerce channel should start registration preparations immediately. It is likely that supervisory requirements and procedures for formula products which have not been imported to China via general trade will become more complex and subject to more scrutiny.
Editor’s note: This article was simultaneously published on Chinalawinsight.com
The Draft proposed two options. One option is the optional ingredients stipulated by national food safety standards should differ by at least 6 ingredients and it should be confirmed by scientific basis. The second option is there are at most 5 series 15 kinds of formulas for one company.
For details, see our another article with link below http://www.kwm.com/en/cn/knowledge/insights/china-changing-rules-cross-border-ecommerce-trade-20160510