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www.khlaw.com
Washington, D.C. ● Brussels ● San Francisco ● Shanghai
Yin DAIAssociate
Keller and Heckman LLP, Shanghai
222 Yan'an Dong Rd., Suite 3604
Shanghai, China 200002
China's Growing (Health) Food Industry:
How can you enter the market and stay in it?
April 27, 2017
│ www.khlaw.com │ KELLER AND HECKMAN LLP Copyright © 20172
Five Offices Worldwide
Washington DC office founded in 1962
Brussels office opened in 1992
San Francisco office opened in 2001
Shanghai office opened in 2004
Paris office opened in 2015
Serve clients in 26 countries
A Global Law Firm with Scientific Advantage
Indianapolis
Washington DC
ShanghaiSan Francisco
Brussels
Paris
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Virtually all of our practice in China (and Asia generally) is regulatory in nature
• Product status check under all of the Asian regulatory
schemes;
• Food additive petitions, food-contact notifications,
technical dossiers, and other regulatory clearance
(novel foods and substances used in packaging materials
and processing equipment);
• Genetically Modified Organisms (GMOs) and their
derived products (experimental release, marketing, and
labeling of );
• Food labeling and advertising
• Compliance issues (GMP requirements, product recalls,
and record keeping and traceability requirements);
• Monitoring legislation and policies and providing
strategic analysis
K&H Shanghai Office
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Agenda
Part I- Doing Food Business
in China
Part II- Cross-Border E-
Commerce Trade Policies in
China
Part III- Chinese New
Management System for
Health Food
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Part I
Doing Food Business in China:
What does the business and regulatory landscape look like?
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What are they in line for?
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Cheese Topped Tea!
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Frank’s Food Empire in Shanghai
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Spotlight on Food Safety
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Hierarchy of Laws and Regulations
Laws- Food Safety Law (FSL)- Quality and Safety Law of Agricultural Products- Advertising Law…
Administrative Notices
- Announcements of AQSIQ, CFDA, etc.
- Directions, response letters from NHFPC…
Regulations and Rules
- Implementing Regulation of FSL
- Management Measures
Standards
- National food safety standards
- Regional standards
- Industrial standards
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Major Food Safety Government Organizations
State Council
NHFPC CFDA AQSIQ
• NHFPC: National Health and Family Planning Commission
• CFDA: China Food and Drug Administration
• AQSIQ: Administration of Quality Supervision, Inspection and
Quarantine
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Amended Food Safety Law
On October 1, 2015, the revised Food Safety
Law (FSL) of China took effective Based on 2009 Food Safety Law
2nd Draft Implementing Regulation: October 19,
2016
The most stringent Food Safety Law ever
passed in China
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Washington, DC ● Brussels ● San Francisco ● Shanghai ● Paris
Part II
Cross-Border E-Commerce Trade
Policies
How is the government promoting e-commerce while protecting food
safety?
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An Era of E-commerce
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Different CBEC Models
Bonded Warehouse Model: products are shipped in
bulk from the foreign country to bonded warehouses or Free
Trade Zone (FTZ) in China from where the products will
subsequently be sent to an individual consumer in China.
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Current CBEC Pilot Cities in China
New pilot cities
include
Chengdu,
Dalian, Qingdao,
Suzhou and
Hefei , making
15 pilot cities in
total.
*Image from HKTDC Research
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Different CBEC Models
Direct Shipping Model: products are shipped upon
orders on the CBEC platform from the foreign country
directly to an individual consumer in China.
• Regulated as personal mailing items
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Three Phases of CBEC Management
Risk-based management
Negative List+Positive List
New Supervision
Model?
Phase I Phase II Phase III
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Phase I: Risk-based Management
On May 14, 2015, AQSIQ published an announcement
indicating that a risk-based quality control system would
be used for consumer goods purchased on cross-border E-
commerce platforms
• Low risk products Format review of required documents
• High risk products Verification test by an accredited third-party lab
“Notification” required for both CBEC operators (e.g., online
platforms, logistic and storage companies, etc.) and products
“Risk surveillance” and “quality traceability”
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Implications in Practice
For a temporary period of time, many foreign
products can be sold to China via CBEC without
complying with all regulatory requirements and
procedures that are mandatory for products
imported via traditional trade channels (e.g.,
standard compliance, Chinese labeling, etc.)
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Implications in Practice
Safety and hygienic requirements
in pertinent Chinese National
Standards would be relied upon
for monitoring purpose
Disjoined enforcement rules and
policies at the local level and
changes must be closely
monitored
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Phase II- Negative List + Positive List
Positive List published in 2 batches,
including tariff codes and product
names of permitted CBEC products
encompassing almost 1,300
commodity categories.
Check and balance added in the 2016 reform
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Phase II- Negative List + Positive List
A• Use Negative List to screen products that cannot
be traded via CBEC
B• Establish a Positive Listing System to clarify
products eligible for CBEC
C
• Customs Clearance Certificate (CCC) is a prerequisite to the clearance of CBEC goods traded in the “bonded warehouse model”
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Phase II- Negative List+ Positive List
A grace period to has been granted to
products on the Positive List to mandate CCC
until December 31, 2017• CCC is NOT a prerequisite to the distribution of CBEC products in
“direct shipping model” during the grace period in 10 pilot cities.
No import permits, registration or notification is required for baby formula or special
food products (including health food and food for special medical purposes) imported
for the first-time until 12/31/2017.
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Phase III- New CBEC Supervision Model
The Chinese Ministry of Commerce confirmed
on March 17th 2017 that a new CBEC
supervision model would be implemented
since January 1st, 2018, applying to 15 pilot
cities.
Recognition of the personal item nature of
CBEC products
! NOT recognized in any legislative or administrative
document
! NO further details have been disclosed
Implementation rules of the new model are
expected to become available later this year.
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Washington, DC ● Brussels ● San Francisco ● Shanghai ● Paris
Part III
Chinese New Management
System of Health Food
What are the opportunities and challenges to the health food industry?
│ www.khlaw.com │ KELLER AND HECKMAN LLP Copyright © 201729
How China defines “health food”?
“Health food” are foods which are claimed to have
certain specific health functions or can supplement
certain vitamins and/or minerals. In other words, the
foods are suitable for certain people to help them
improve body functions without the purpose of
therapy, and will bring no acute, sub-acute or
chronic harm to human body.
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Food Safety Law & Health Food
Catalog Management
• Raw Materials (active ingredients
and auxiliary materials)
• Function Claims
* Independent procedures to
expand the above catalogs
Notification and Registration
• Domestic Health Food
• Imported Health Food
Labeling and Advertising
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Health Food
Regulatory classification is completely claim oriented:
- If a “health claim” as defined is made, there is no alternative other than getting an administrative approval
- Currently, 27 claims are permitted, probably will be consolidated.
What if a claim does not appear on the label but appears online or in advertising, will it still be treated as a “health food?”
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Notification vs. Registration
Others
Using unlisted ingredient
Using listed nutritional
substances (e.g., vitamins& minerals)
Using listed ingredient(s)
Domestic
Health
Food
Health
Food
Imported
1st Time
No
tificatio
n
Reg
istra
tion
Lo
ca
l FD
AC
FD
A
• Imported health food must be already sold in the exporting country
• Application for notification/registration must be filed by a local agent
CF
DA
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Nutrient Supplements
The Catalogue of Health Food Ingredients (1st Batch)
lists vitamins and minerals that are allowed for use in
nutrient supplements.
Catalogue of Health Food Ingredients
Ingredient Name
Ingredient specifications
Dosage Forms with Use Levels
Standardized Language of Function Claims
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Health Food Other Than Nutrient Supplements
Approvals are granted on a product by
product basis
For each health function claim, the petitioned product must be tested in accordance with precise protocols
for both safety and effectiveness
If a new health food ingredient is used, safety data on the ingredient
must be submitted
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www.khlaw.com
Washington, D.C. ● Brussels ● San Francisco ● Shanghai
Yin DaiKeller and Heckman LLP
222 Yan’an Dong Rd.
Shanghai, China 200002
+86 (21) 6335-1000
Thank you!