China: A Regulatory Update

July 7, 2016

In a move to promote their Cross-Border E-Commerce (CBEC) industry, China has expanded their pilot free-trade zones to 12 cities. Consequently, in April 2016, the Chinese government introduced tightened regulations surrounding CBEC imports. The new regulations are aimed to improve quality control, ensure consumer protection, and increase confidence in purchasing products online. Chinese authorities have also introduced changes to the tax policy in an attempt to standardise CBEC taxation with general imports.

With the introduction of these new regulations, a positive list has been released comprising products which are permitted for import into one of the 12 free-trade zones. Complementary Medicines (CMs) were included in the second batch along with products such as medical devices, fresh food, herbs, oils, and cosmetics. The list of CMs however is still uncertain and mainly includes vitamins, minerals and animal oil. Products which do not fall under the specified categories will require registration through the general trade system, i.e. will need to follow the “blue hat” registration process.

Under the “blue hat” registration system, product registration may take two to three years and is accompanied by high registration costs.

However, the Chinese government has only given companies a 12-month grace period, ending May 2017, to ensure their products comply with the new regulations. This will impact companies who haven’t yet registered their products with the Chinese Food and Drug Administration (CFDA).

There is however, an opportunity for companies to apply to the CFDA for a filing certificate under the new Notification system. Eligibility is determined based on whether the imported dietary supplement contains vitamins and/or minerals which meet the requirements laid out in the Health Food Raw Material Directory. The filing process would only take a few months as opposed to years and comes into effect from 1 July 2016.

In China the demand for foreign goods, including CM’s, is notably growing. E-commerce is becoming a way of life with a large proportion of sales occurring via online shopping platforms. In a move to ensure product quality and safety, and to ensure China’s economic growth, the Chinese government is in the process of revising their regulations surrounding CBEC imports. CM manufacturers and sponsors are still awaiting further information and clarification to determine the future sales of their products.

Timeline of China’s regulatory changes:

January 2016

China’s State Council expands CBEC pilot free-trade zones to 12 cities.

March 2016

CFDA publishes “Administrative Measures on Health Food Registration and Filing”, under the new Notification system. This will come into force 1 July 2016.

April 2016

First and second batch of the “List of Cross-Border E-Com-merce Retail Imports”, containing 1,142 product categories, is released.

June 2016

China announces a 12-month grace period for companies to comply with the new regulations. This is due to end May 2017.

July 2016

“Administrative Measures on Health Food Registration and Filing” for Notification system comes into force.

May 2017

End of 12-month grace period. CMs must be either registered or filed to comply with new regulations.

References:

  1. The Positive List on Cross-Border E-Commerce of Imported Commodities at Retail Has Been Released – News and Articles – Chemical Inspection and Regulation Service | Enabling Chemical Compliance for A Safer World | CIRS. [online] Available at: http://www.cirs-reach.com/news-and-arti-cles/the-posi-tive-list-on-cross-border-e-commerce-of-imported-commodities-at-retail-has-been-released.html
  2. Exporting to China: Import Tax Slashed in Cross-Border E-Commerce Zones – China Briefing News. [online] China Briefing News. Available at: http://www.china-briefing.com/news/2016/02/02/export-ing-china-import-tax-slashed-cross-border-e-commerce-zones.html
  3. Exporters granted one-year grace period before Chinese e-tax kicks in. [online] Available at: http://www.abc.net.au/news/2016-06-06/chinese-officials-delay-etax/7480340

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