On 14 May 2014, the Chinese State Council submitted the draft
amendments to the Food Safety Law (the Amendments) to the National
People's Congress, the Chinese top legislature, for review and
deliberation. This is a sign of the Chinese government's
determination and commitment to further strengthen the regulation
of food safety in China, which has become a top concern for the
Chinese people, ranking even higher than corruption.
The Amendments were first published for public comment in
October 2013. If the Food Safety Law is amended as proposed, there
will be an overhaul of the existing food safety regulatory regime
in China, in particular in the following aspects:
Currently food production, food circulation and catering
services are subject to three different licenses. Under the
Amendments, they will be combined into one food production and
operation license, which will be administered by the China Food and
Drug Administration or its provincial counterparts. For the first
time, operation of food additives is also subject to government
Food producers and operators will shoulder more
responsibilities and liabilities under the Amendments. For example,
they must establish a food safety self-examination system to
examine the safety situation of their food product and a food
traceability management system to ensure that food is traceable.
They also must procure compulsory food safety liability insurance,
which is yet to be established, in accordance with the rules.
Online food traders not only need to obtain food production and
operation licenses for themselves, but also must carry out due
diligence on the food distributed on their platform. Otherwise,
they will have to bear joint and several liabilities if
consumers' rights are prejudiced and advance compensation to
Regulation of infant formula food will be even more
restrictive. For the production of infant formula food, food
producers must report the raw materials, product formula and labels
to food safety regulatory departments for record. In addition,
infant formula foods will no longer be allowed to be produced by
way of sub-contracting, OEM, or sub-packaging.
The Amendments grant more authority to the regulators. For
example, if food producers and operators are suspected to have
violated the law and may cause significant harm or major social
impacts, the regulators may carry out spot checks without prior
notice. Whistle-blowers will be awarded if the reported violation
is verified (amount of award will be determined following local
To curb the food safety incidents, the Amendments introduce
harsher penalties for those who violate the Food Safety Law. For
example, if illegal additives are used in food production and
processing, the perpetrator will be subject to a fine of RMB50,000
– 150,000 if the total value of the commodity is less than
RMB10,000 or a fine between 15 and 30 times (in contrast to five to
ten times under current law) the total value of the commodity if
the total value of the commodity exceeds RMB10,000. In addition, if
any person who has been sentenced to a fixed-term imprisonment or
more severe penalty due to food safety crimes, he/she will be
barred from food production and operation work for life.
The most striking aspect of the Amendments is probably the
introduction of punitive damages. According to the Amendment, if
any manufacturer produces any food not conforming to the food
safety standards or sells any food knowing its nonconformity with
the food safety standards, the customer can demand the manufacturer
or the seller to pay a penalty ten times of the paid amount or
three times of the loss, in addition to the compensation for the
loss thereof. It is worth noting that this is more than the
punitive damages set out in the Consumer Interest Protection Law,
also recently amended, which only provide for punitive damages one
to three times the value of the product/services.
For imported food products, more complex procedures will be
introduced. Importers shall establish an examination and
verification system for overseas exporter and overseas food
production businesses, to ensure that imported food complies with
the law and the requirements of national food safety standards.
Labels of prepackaged imported foods will have to bear more items
than what is currently required, including name, specification, net
content, production date, ingredients or composition sheet, shelf
life, storage conditions, applicable standards, etc.
Due to the wide range of food safety issues and endless list of
food safety scandals in China, Chinese consumers have a general
preference to foreign branded and imported food products. However,
multinational food manufacturers and operators are advised to be
more prudent and careful in managing their businesses in China,
which will for certain face a more challenging regulatory
environment after the Amendments become law later this year.
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