The Interim Provisions on the Administration of Recalls of Consumer Goods (the "Provisions"), issued by the State Administration for Market Regulation ("SAMR"), became effective on January 1, 2020.
The Provisions state that producers of consumer goods and other operators engaged in the sale, leasing, repair or other relevant activities with respect to consumers goods, shall establish a system of collecting, verifying, analyzing, and processing information on defects in consumer goods. Where a producer or operator finds that (i) the consumer goods have caused or are likely to cause death, serious personal injury, or significant property loss; or (ii) the consumer goods have been recalled outside of China, it shall report to the local market regulatory authority within two business days. Furthermore, the Provisions stress that where a producer discovers that its consumer goods may have defects, it shall immediately organize an investigation and conduct analysis, upon which, if the consumer goods are identified as being defective, the producer shall immediately recall the goods and shall not conceal the defects.
On December 28, 2020, almost one year after the implementation of the Provisions, the SAMR issued the Circular on Strengthening the Regulation of Recalls of Consumer Goods Sold Online (the "Circular"), in order to further strengthen the regulation of recalls of consumer goods sold online.
The Circular requires producers and operators to establish and improve systems for collection and analysis of information regarding defective consumer goods sold online. Where it is found that death, serious personal injury or significant property loss has been caused or is likely to be caused, or a recall is implemented outside of China, producers and operators shall report to the local market regulatory authority.
In addition, where it is found that consumer goods sold online are defective, the producer shall immediately stop producing, selling, and importing such goods; inform other operators of the stop in such operations; and immediately recall the goods as per the Provisions. It is prohibited to conceal the defects. Where other operators receive the notification from the producer, they shall immediately stop their activities related to the defective goods and assist the producer to conduct recalls. Consumer goods in which defects fail to be eliminated cannot be sold again.
Meanwhile, the Circular requires e-commerce platform operators to monitor for defective consumer goods and establish effective procedures for preventing the online sale of defective consumer goods, especially where the defects are published by the authority.
The Circular also encourages producers and other operators engaged in the online sale of consumer goods to establish an internal tracking mechanism for the safety and recalls of consumer goods, and to perfect records of product identification, sales and warranty claims.
With the ever-increasing amount of consumer goods sold online year by year, there are more and more complaints from consumers about defective and even dangerous products. The issuance of the Circular is timely and a clear signal for producers and operators that the authority's regulation of online markets will definitely be stricter in the future.
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