China’s New Food Legislative Framework

On 19^th October, the State Council released the revised draft of Implementation Rules of Food Safety Law (hereafter called Implementation Rules) for public consultation. The revised Implementation Rules is the major regulation of implementation and enforcement of the new Food Safety Law. The Implementation Rules further complement the Chinese food safety legislation system.

Current food safety legislative framework

Compared to the previous 2009 Food Safety Law, the 2015 Food Safety Law mainly focuses on reform of the following:

Clarification of responsibility and functions of the competent authorities at national, provincial and municipal levels;
Stringent supervision on food production and operation activities;
Registration of health food, infant formulas and food for special medical purposes (FSMP);
Restricting food traded online
Building a traceability and food recall system;
Strict penalty for illegal activities.

40 important administrative measures and regulations and their supplementary rules covering the above issues were issued during 2015 and 2016, which now form the framework of the new Chinese food safety legislation system. Key regulations and measures are listed in the Table 1.

Table 1. Key Regulations and Measures Form the Chinese Food Safety Regulation System

Supervision Scope	Regulation Name	Release Date	Competent Authority	Major Requirement
Fundamental Law	Food Safety Law [Presidential Decree No. 21]	20150424	GOV	The new Food Safety Law makes adjustments on infant formula, health food, GMO foods, on-line shopping, etc., which will exert huge influence on both domestic and overseas food enterprises.
General Implementation Rules	Implementation Rules of Food Safety Law (revised draft)	20161019	GOV	The implementation rules further stipulates supervision on special food raw material management, sale and advertisement, online food safety, food safety standards and the regulation of food additives in the catering sector.
Overseas Manufacturer Registration	Administrative Provisions on Registration of Overseas Manufacturers of Imported Foods [AQSIQ Order No.145]	20120322	AQSIQ	AQSIQ requires overseas manufacturers should fulfill registration prior to importation according to AQSIQ No.145.
Food Production & Operation	Administrative Measures for Food Operation License” & “Administrative Measures for Food Production License”	20150831	CFDA	The new Measures increase the stringency of inspections and regulation of food production and operating activities.
Food Recall	Administrative Measures for Food Recall	20150311	CFDA	Once unsafe foods are discovered in the market, they should be recalled by the manufacturers and traders strictly according to the recall time limits set by the government.
Health Food	Administrative Measures for Health Food Registration and Filing [CFDA Order No.22]	20160227	CFDA	Health food should apply for registration or filing before enter Chinese market.
Food for Special Medical Purpose	Administrative Measures for Registration of Foods for Special Medical Purpose [CFDA Order No.24]	20160310	CFDA	This regulation is formulated to intensify the registration management of foods for special medical purpose in China, and ensure the quality and safety of FSMPs
Infant Formula	Administrative Measures for Registration of Infant and Young Children Milk Powder Formula Recipes [CFDA Order No.26]	20160606	CFDA	These Measures apply to the registration of infant and young children milk powder formula recipes that are manufactured and sold within, or imported into, the territory of China.
Online Food	Measures for Illegal Activity Investigation for Online Food Safety	20160714	CFDA	The investigation rules are released to regulate online food trading activities, putting emphasis on the responsibilities of third party trading platform providers.
Food Safety Credit	Administrative Measures for Risk Classification Management for Food Production and Trading	20160909	CFDA	This regulation stipulates that inspection rate will be decided every year according to the evaluated risk level of enterprises, and will be adjusted annually according to their performance in the previous year.

Foundation of China’s new food safety legislation is the 2015 Food Safety Law, the Implementation Rules form an external lattice on which the rest of China’s administrative measures, regulations and national food safety standards are built. Different from other countries China’s national food safety standards are mandatory and act as fundamental product quality and production requirements. Another useful analogy is illustrated below. (Figure 1).

Figure 1. The Legislative Framework of Chinese Food Safety

Standards

Chinese authorities have also committed to streamlining the national standard system to remove overlap, repetition and conflicting content. Authorities have also drafted new standards and updated many others. Previously, there were about 1900 national food standards and 3000 mandatory food industry standards. By now, more than 700 revised and new standards have been released. Manufacturers and importers should pay close attention to the new standards as inspections will be conducted based on the stipulations of these new standards.

Food additives standards used by the catering industry are also being reformed. The catering industry in China, especially those in tier-1 and tier-2 cities, has grown to be more systematic and standardized than it in the past. Food additives are widely used in chained catering enterprises as well. However, currently, there is no standard for usage of food additives in the catering industry, which poses considerable risks to consumers. The authority has clarified that establishment of food additive application, usage scope and permitted concentrations will be developed.

Online food platform

Catering and buying food from online platforms has become very popular in recent years with the changing purchasing behaviors of Chinese consumers and the development of O2O (online to offline). Food safety concerns due to the lack of supervision have arisen in this sector. Under the new food safety environment, online platform owners will shoulder primary responsibility to ensure the safety and quality of food. Food manufacturers and operators are required to have an approval license granted by Chinese authorities. It is the first time China has directly regulated food sold online. More intensive supervision over online food safety will increase compliance costs for traders who are now forced to develop assurance systems.

Special food

Previously the infant formula and health food market in China were both very chaotic. Brands using exaggerated function claims were commonplace. To combat these problems the new Food Safety Law requires registration of infant formula and health food. One enterprise cannot register or file one formulation for more than one brand, and products with different formulations should not use the same product name. In addition, FSMPs which used to be regulated as pharmaceuticals are now reclassified as a type of special food which also requires registration.

Effective date of formula registration requirements:

Jan. 1, 2018 for Infant Formula;
Jan. 1,2018 for FSMP;
Jul. 1, 2016 for Health Food.

Interpreting the schedule listed above we can see that products exported to China before the effective date, can be sold until the production expiration dates. While, those exported to China after the effective date will require a CFDA approval certificate prior to market entry. The inspection authority will check the registration certificate at the entry port after these regulations become effective.

Infant formula

The requirement to register product formulation will see almost 3,000 infant formula brands currently circulating on the Chinese market whittled down between 300-400 brands.

Although the final version of the recipe registration regulation has not been released, preparation for registration should be prioritized as there is limited time left. Reviewing a formula registration application dossier and sample testing is expected to take 6 to 9 months on average (excluding dossier preparation and onsite audit which can take over a year).

The registration policy is expected to disrupt supply in the early part of 2018 and may provide opportunities for market ready manufacturers/brand owners to expand and consolidate market share in the wake of the supply vacuum created by the new policy.

In addition to the recipe registration, implementation and enforcement will be central to the next stage of industry development. The Chinese Inspection and Quarantine will inspect all imported infant formula batch by batch against all relevant national safety standards. The CFDA and provincial and municipal FDAs should conduct monthly inspection on products circulating in market. The average inspection rate has increased from 200 batches in 2015 to 500 batches in 2016.

Health food

Thanks to increasing health awareness, China is a huge market for health food. False advertising and exaggerated claims have given rise to a credibility crisis for domestic health food brands. The new health food measures provide a new two-track administrative system to optimize the registration process and shorten the period to meet regulatory compliance requirements. The authority has released the raw material, auxiliary material and function directory, but it is not finalized yet. The new regulation stipulates the requirements for health food manufacturers and the requirements for premix manufactures manufacturing ingredients used as raw materials. Relevant enterprise should obtain a health food production license before manufacture.

Food for special medical purpose

The reclassification of FSMPs, combined with China’s large senescent demographic and China’s cultural appreciation for the role of nutrition in health, provides fertile ground for future growth in this industry. To provide a scientifically solid foundation for future growth in the market, China is the first country that officially implemented clinical trial requirements as a prerequisite for registration of specific nutritionally complete food. This has significantly increased the market access criteria of FSMPs.

Food recall

The first food recall regulation was released in 2007 and was regulated under the auspices of the AQSIQ. Under the new regulation system, CFDA is responsible for the enforcement of food recall. Recall process should be conducted within limited time depending on the severity and hazards posed by the problem. Responsibilities of both manufacturers and operators have been further detailed. Food operators should recall food items if they find the foods unsafe or the producer of an unsafe food cannot be identified or the producer has become insolvent.

CBEC

CBEC has been very hot topic in 2015 and 2016. A grace period has been granted for CBEC importation until April 2017. AQSIQ has not specified final policies for CBEC. In the future we can expect a detailed law governing CBEC, which will stipulate the registration policy for special foods sold via CBEC platforms. There are mainly two models of CBEC trade in China:

Bonded warehouse;
Direct shipping model.

On the whole, policies for offline and CBEC bonded warehouse traded products will be the same. For example, Infant formula traded through CBEC should comply with the requirements like manufacturer registration, product recipe registration, bearing Chinese label etc.

Horizon Scanning: Traceability as a Key Requirement

In the next few years the implementation of food traceability systems is a key goal of Chinese authorities. The problems posed by regional disparities in supervisory, inspection and technical capacities can be greatly ameliorated by implementation of an effective national digital traceability system. The development of this field coincides with industry movement towards digital retail and digitalization of China’s supply chains making regulated traceability requirements an obvious next step.

Presently, there are provincial traceability platforms, third-party traceability system, and individual traceability systems used by some large companies. Gradually, e-traceability will integrate with Chinese authorities existing standardized data collection, logistics, coding rules, and data exchange between organizations and will make effective regulated far easier.

We can also expect traceability to integrate with the food safety credit management system. The credit management system has been used in the import food process already. AQSIQ publishes a monthly imported food blacklist to the public and implements incrementally more stringent inspections based on importers/manufacturers with low credit scores. In the future, credit management will be expanded to domestic food producers and connect with other credit systems.