China’s Milk Rush: There’s Gold in Them, Thar….Cows.

"The caveat is simple, meet the regulatory compliance standards or be left behind."

China’s unquenchable thirst for high quality imported dairy produce particularly baby and infant formula has triggered an extraordinary furor amongst the established dairy industry and shrewd prospectors seeking lucrative potential investments. Standing between these would be investors and relatively exclusive access to the rich and untapped seam that is China’s market, is China’s regulatory and legislative iron curtain. The caveat is simple, meet the regulatory compliance standards or be left behind. As large and developed a market as China is, it paradoxically lacks established communication channels linking government and foreign enterprise to disseminate regulatory information, practical compliance protocols and quality compliance advice. The reasons for this disconnect are multifaceted but can essentially be summed up by the inherent language and cultural differences between east and west.Since the passing of the May 1st sunset date for dairy formula manufacturers to undergo CNCA audit major questions remain unanswered. The CNCA optimistically set the May 1st deadline however feedback from our clients which include OEM’s and manufacturers has clearly highlighted the uncertainty in the industry on how to proceed after this date. CNCA capacity issues and massive demand by manufacturers set the CNCA a task that was virtually impossible to complete by the May 1st deadline. The following questions represent a selection of the most important issues and concerns expressed by our clients.

Industry FAQ’s: Chemlinked Food and Food Compliance Team Expert Predictions

*To start this section it’s necessary to issue a short disclaimer. The following questions and answers are merely our technical departments expert opinion of likely outcomes to the issues mentioned below. For a definitive answer you are welcome to join us during our upcoming webinar to be held at 22 May 2014 where we will be provided answers from government representatives from China’s AQSIQ, CNCA and some local CIQs: 

• Will manufacturers audited by CNCA after the deadline be allowed to export to China or will there be another round of audits in the future?

It seems highly likely with the large number of prestigious formula manufacturers unregistered that there will be another round of audits held by the CNCA. It remains to be seen whether or not these cases will be done on an individual basis or the CNCA will start another large scale audit campaign.

• Are CNCA capacity issues to blame for manufacturers not being audited?

Blame is the wrong choice of words here, it’s likely the CNCA underestimated the sheer demand for manufacturer registration and auditing. 

• Is there any official channel for preliminary label compliance check prior to shipping products for inspection and quarantine check by CIQ?

Officially there is no preliminary label review service offered by the government. However the vast majority of our clients need their labels to be comprehensively checked and guaranteed compliant with Chinese regulations prior to shipping products to China.At REACH24H and Chemlinked Food we have an extremely good working relationship with both national and provincial government which has afforded us exclusive access and the ability to conduct a governmentally validated label review and compliance check.

• Does a testing report need to be supplied during this preliminary label review and compliance check?  

There are provincial disparities in standard operating procedures, certain officials require submission of a testing report and others don’t, also these guidelines are subject to change. For this reason we advocate adoption of a precautionary approach in this area and urge our clients to undertake sample testing at the earliest possible juncture. Ideally a testing report can be submitted at the same time as we conduct our label review. In any case performing a testing report can expedite label review and compliance checking at port and save time and tariffs while your goods sit at port.

• Is it wise to send a small sample size prior to bulk shipping?

Running the compliance gauntlet and associated CIQ sample testing at port is a mandatory step. It makes perfect sense to ship a smaller sample for label review, testing and compliance check prior to shipping large batches. With the financial stakes set so high and AQSIQ’s agenda to strictly enforce standards minor deviations from regulatory requirements can result in catastrophic financial losses.

• If the formula of an OEM enterprise is not in the application form of the manufacturer which has got registered what can be done in order for its product to be exported into China?

With the major hurdle of manufacturer audit and registration complete it is again likely that manufacturers will be able to add additional brands to their brand portfolio after the deadline.

• Will OEM manufacturing be forbidden in the future?

Chinese government officials have no intention to ban overseas OEM manufacturing but will impose very strict auditing of manufacturers. The major dairy countries such as New Zealand and Holland are also very carefully selecting their representative manufacturers to protect the reputation of their national dairy exports. . The vast majority of our clients have acted as middle men between Chinese dairy enterprise and European registered manufacturers. If the laws were changed it would have a devastating impact on this category of enterprise.

• Is it acceptable by the Chinese authority for a baby formula brand to be produced by different overseas registered manufacturers?

On one hand, from a quality assurance perspective the Chinese government is not likely to sanction such practices as different manufacturers may produce infant formula of differing qualities. It is also very difficult to ask manufacturers to list your brand under their brand portfolio. It would be highly recommended that OEM enterprises develop close and long-term relationship with their manufacturers. This situation is extremely difficult to predict, there are pros and cons for either ruling so I feel it is best to leave this question until our upcoming webinar.

ChemLinked Dairy Webinar

* These answers are unfortunately just a speculative effort at determining the government’s future direction and an attempt to predict the registration and compliance protocols yet to be standardized. To dispel the uncertainty Chemlinked Food will host a webinar attended by officials from CNCA and AQSIQ on formula registration procedures and hopefully put to bed many of the major ambiguities plaguing industry.

• Topic: Regulatory Interpretation and Compliance Strategies for Exporting Dairy Products to China

• Date: 22 May, Thursday (in English)

• Time: 18:00-19:00 (GMT+8) 

Chemlinked Food Portal ( A division of REACH24H)
At Chemlinked Food we can boast China’s top multilingual team of regulatory analysts and technical experts. In addition we can boast close connections with key government offices at both a national and provincial level (AQSIQ, provincial CIQs, CCIC, and CNCA etc.). You can compare Chemlinked to a world class interpreter. We analyse and present the most important information in a clear and understandable format in the language industry speaks.With our connections in government we are privy to breaking legislative and practical compliance advice straight from the horse’s mouth.

REACH24H Food Compliance Service
At Chemlinked we have gone one step further than mere interpretation and have integrated with REACH24H’s Food Compliance Services team. What this means is that we can provide you with quality compliance information to roadmap the steps required for compliance and going the extra mile we can actually undertake all practical registration requirements and quarterback your registration project from start to finish, all the time speaking a language you understand. This powerful one-two combination is a regulatory turnkey solution unmatched anywhere in China.