GAC Reports 55 Overseas IF Manufacturers’ Registration Renewed and 9 Cancelled

On Dec. 29, 2018, China General Administration of Customs announced the results of inspections conducted on overseas infant formula manufacturers whose registration certificates became invalid at the end of 2018. It reported renewal of 55 manufacturers’ registration and cancellation of 9 manufacturers^[1].

According to GAC, those 9 manufacturers failed to submit registration renewal documentation. They are banned from exporting infant formula produced after Jan. 1st, 2019 or products produced before this date with less than 3 months shelf life (calculated from customs clearance approval date to product expiration).

Each has its own story: strategy change, food safety, too many factories…

The reasons for rescinding the accreditation of these manufacturers vary. Faced with the prospect of increasingly burdensome market entry barriers and an extremely competitive market, some of the manufacturers involved have decided to throw in the towel with regard to their pursuit of China’s infant formula market. For others, their qualification had already been suspended due to food safety issues and they decided not to submit materials to renew certificates.
nGerber: Retail channel selection and core business prioritization
Gerber’s complementary infant foods are highly accepted by Chinese consumers and perform well. In contrast, no infant milk powder of Gerber has completed recipe registration in China. Additionally its infant formula are primarily sold via cross-border ecommerce platforms, which is why they didn’t renew, according to Gerber’s parent company Nestle. In comparison to general trade channels, CBEC requires no registration certificates. Given that Gerber’s adopts a CBEC dominant retail strategy, manufacturer registration renewal is unnecessary.
n Arla: never exported liquid infant milk to China before
The registered Arla factory was previously qualified for the production of liquid infant formula, but had never manufactured liquid infant formula exported to China. Given the costs associated with ensuring facility compliance and the relatively small market for liquid infant milk in China, Arla has likely made a business decision not to renew.
n Lactalis & Agrana Stärke GmbH: Cancelled after suspension
Lactalis suffered from a salmonella contamination scandal in Dec. 12, 2017 and its facility has been suspended ever since. Its infant formula products include Celia, Ofmom, Stolle etc. will all not be sold in Chinese general trade channels in future
Agrana Stärke GmbH is an Austria-based factory, and was suspended due to excessive E. coli and non-compliant manganese concentration in 2016. Its infant formula brand Holle will also no longer be eligible for sale through general trade channels.

Töpfer GmbH: Back in the game

A notable inclusion in the list of manufacturers that obtained certification renewal is Töpfer GmbH. This company was suspended by the former CNCA in the middle of 2016 (see above figure). Topfer will still need to obtain infant formula recipe registration approval with SAMR before it can access China’s markets through general trade channels but its re-inclusion in the list of approved manufacturers is a huge step in the right direction.