China Food Law: Year in Review 2014

In 2014, food safety continued to be a hot issue in China. The Chinese government adopted tougher measures and imposed harsher punishments on those who produce or sell food that endangers public health. Penalties can range from fines to, in the most severe cases, implementation of the death penalty. Moreover, foreign brand owners need to be particularly concerned about protecting their brands and reputation in China. The media is not shy about putting food safety stories on the front page. As discussed below, there can be severe consequences and interruption of business if product is found to be out of compliance with China's food laws and regulations.

Since the opening of Keller and Heckman's Shanghai office in 2004, we have advised hundreds of domestic and foreign companies regarding food and food-related laws in China and most other Asian countries. Over the past year, we have continued to counsel and advise brand and non-brand owners on a variety of high profile food law cases. This memorandum summarizes the regulatory food law developments that took place in China in 2014 and provides insight as to what industries should expect in 2015.

1. Health Foods

The Chinese authorities are currently revising the Food Safety Law (FSL).^[1] Management of health foods is among the most substantially revised areas of law. According to the latest FSL draft, separate registration and notification requirements will be imposed on different types of health food products.^[2] Specifically, if the health foods imported for the first time are nutritional substances such as vitamins and minerals, then only notification is required to be made to the China Food and Drug Administration (CFDA). Detailed management rules and material requirements for nutrient supplements were published for comments by CFDA in November 2014.^[3] In addition, the revised Food Safety National Standard - Health Food (GB 16740-2014) was recently promulgated by the National Health and Family Planning Commission (NHFPC) and will become effective in May 2015. We anticipate seeing more regulatory news on health foods in the coming months.

2. Genetically Modified Food

Under the latest FSL draft, producers and traders of genetically modified food must follow the labeling rules required by law.^[4] The current legal framework regulating GMO is the Administrative Regulations of Agricultural Genetically Modified Organisms Safety, which was promulgated in 2001 by the State Council. As Chinese consumers become more and more sensitive to whether GMO technology has been applied to the foods they eat, the newly added FSL provision could be just the beginning of more regulatory changes to come in this area.

3. Logistics Businesses

Another change in the latest FSL draft relates to logistics with respect to businesses providing storage, transportation, loading and unloading services for food. Such businesses would be required to comply with applicable requirements in FSL.^[5] Particularly, they must meet the general safety and hygienic requirements set out in Article 32.

4. E-Commerce

On May 28, 2014, CFDA promulgated the Administrative and Supervising Regulation on Trading Food and Drug over the Internet (Draft for Comments).^[6] This draft Regulation aims to consolidate existing regulations and provide a unified regulatory framework for e-commerce providers of food and drugs. We anticipate this Regulation to be finalized and more detailed implementation rules to be published later this year.

5. All Food Businesses

Food and Food Additive Standards

After the promulgation of the Food Safety Law in 2009, China began revising and consolidating hundreds of outdated Food Safety Standards. According to the NHFPC, 430 Standards have been consolidated or/and revised as of June 2014 and the project is expected to be completed by the end of 2015.^[7] All published food and food additive standards can be found at the official NHFPC website.^[8]

Notably, on December 31, 2014, NHFPC published 37 Food Safety National Standards, including Standards for Uses of Food Additives (GB 2760), which will take effect on May 24, 2015.^[9] In addition to incorporating announcements of new food additives and expanded uses of existing food additives published by NHFPC under the Management Rules for the Administrative Approval of New Varieties of Food Additives, the new GB 2760 also deletes and modifies the use standards for a number of food additives, such as several substances containing aluminum.

In addition, dozens of revised and new food and food additive specification standards have been released in the past year, for example, Chocolate, Cocoa Butter Substitute Chocolate and Their Products (GB 9678.2-2014), Puffed Foods (GB 17401-2014), Food Additive - Chewing Gum Bases and Ingredients (GB 29987-2014), etc. We recommend that all food businesses closely examine these new standards to ensure compliance.

Food Safety Law Revision

As noted above, the Chinese authorities are currently revising the Food Safety Law. The latest draft will be reviewed by China's National People's Congress (NPC) in March. We anticipate the final publication of the Food Safety Law to be in early to mid-2015. We will provide updates as that law develops.

Food Traceability System

The FSL draft requires food producers and traders to establish a food traceability system to guarantee traceability of foods.^[10] From our past experience, we believe a traceable system can be critical for a food business not only for purposes of legal compliance, but also for purposes of effectively monitoring the supply chain. As "traceability" has become a popular buzzword in food safety, we expect to see more implementation details from CFDA and the local authorities.

Food Safety Liability Insurance

On February 2, 2015, CFDA, China Insurance Regulatory Commission (CIRC) and the Office of Food Safety of the State Council jointly issued a Guidance Opinion regarding the Development of Food Safety Liability Insurance Pilot Project .^[11] We anticipate that liability insurance will start becoming popular among high-risk food businesses, such as those manufacturing meat, oil, health foods, infant formula and milk, as well as third party platforms engaging in food trade.^[12]

Management of Imported Food with Bad Records

China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) promulgated the Implementation Rules on Management of Imported Food with Bad Records, which took effect on July 1, 2014.^[13] As of December 31, 2014, 31 businesses have been included on the blacklist, which means their products will be subject to stricter monitoring and inspection requirements.^[14] We advise that all foreign food businesses intending to import food products into China pay close attention to this blacklist to ensure smooth importation and marketing in China.

Consumer Protection

Following dozens of food scandals in the past few years, the Chinese authorities have made progress toward consumer protection. In this regard, on August 6, 2014, CFDA promulgated the Supervision and Management Measures on Recalling and Ceasing the Trading of Food (Draft for Comments) , which set forth detailed requirements and procedures to be followed in cases where certain food products have to be recalled and their trading stopped.^[15] In addition, under the recently promulgated Administrative Measures on Reporting Food and Drug Problems (Draft for Comments) , agencies in charge of taking complaints are prohibited from revealing the identity of whistleblowers.^[16]

Labeling

Two important labeling standards will take effect in the upcoming months- Labeling of Foods for Special Dietary Uses (GB 13432-2013)^[17] and General Standard for Food Additive Labeling (GB 29924-2013)^[18], which will become effective on July 1, 2015 and June 1, 2015, respectively. Given the FSL revisions on infant and young children formula, which is also considered food for special dietary uses, GB 13432-2013 will be an important Standard. GB 29924-2013, which applies to food additives and also serves as a reference for the labeling of nutritional fortification substances, has introduced a number of new labeling requirements that will require careful attention from the food additive industry.

For assistance with China's Food Laws please contact David Ettinger at ettinger@khlaw.com or Jenny Li at li@khlaw.com or call +86 21.6335.1000. Additionally, if you already have a Keller and Heckman contact they will be able to assist you with China's Food Laws.

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^[1] See http://www.npc.gov.cn/npc/xinwen/lfgz/flca/2014-12/29/content_1891935.htm

^[2] See Article 71.

^[3] See http://www.cfda.com.cn/newsdetail.aspx?id=73432

^[4] See Article 64.

^[5] See Article 2.

^[6] See http://www.sda.gov.cn/WS01/CL0783/100534.html

^[7] See http://www.npc.gov.cn/npc/xinwen/lfgz/flca/2014-12/29/content_1891935.htm

^[8] See http://www.nhfpc.gov.cn/zwgkzt/pgkml/listxinxi.shtml?id=20201

^[9] See http://www.nhfpc.gov.cn/sps/s3593/201412/d9a9f04bc35f42ecac0600e0360f8c89.shtml

^[10] See Article 41.

^[11] See http://www.circ.gov.cn/web/site0/tab5225/info3949686.htm