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New Measures on PRC Online Food Sales

On 13 July 2016, the China Food and Drug Administration (the "CFDA") issued the Measures for the Investigation and Punishment of Illegal Acts concerning Online Food Safety (the "Measures") for implementation on 1 October 2016.

The most significant section of the Measures will be the obligations of online food producers, traders and third-party online food trading platform providers as listed below: 

  1. Online food producers and traders must obtain a business licence according to the law in order to sell food and operate their business within the scope of the business licence, unless otherwise provided in relevant laws and regulations. In the latter case, there is no need to obtain a business licence for food production and operations.
  2. Food producers and traders trading through a third party platform shall display their food production licence in a visible place on the main business activities page of their website.
  3. Food and beverage service providers shall also publish their information on the quantitative classification administration, involved in food safety supervision in the catering industry, in a clear format which is easy to read.
  4. The Measures impose certain additional obligations on online food producers and traders engaged in food supplements, formula food for special medical purposes and infant formula milk powder, i.e. in areas which are regarded as particularly sensitive by the CFDA. Such online food producers and traders shall not only publish the information in accordance with the requirements in the preceding paragraphs, but they must also publish their product registration certificates or record credentials, and they must publish their advertising examination and approval numbers and hyperlink the number to the corresponding data search website page of food and drug supervision and administration authorities. Finally, food supplements must display the clear statement "This Type of Product Cannot Serve as Substitute for Drugs." Special full nutrition formula food for special medical purpose cannot be traded online at all.
  5. Online food producers and traders shall take measures to guarantee the safe storage and transportation for food traded online that requires special storage conditions such as fresh-keeping conditions, heat insulation or freezing, or entrust enterprises that possess the appropriate storage and transportation capacity.
  6. The platform service shall be stopped if food producers and traders:
    - are under investigation as part of a case accepted by the courts or are being publicly sued for an alleged food safety crime;
    - have had a criminal penalty imposed on them for food safety-related crime;
    - are detained or there have been other public security punishments imposed on them for illegal conduct concerning food safety; or
    - have been punished by the food and drug supervision and administration authorities.
  7. Food producers and traders shall not engage in the following activities:
    - publishing name of food, composition or list of ingredients, place of origin, shelf life, storage conditions, producer's name, address and other information on the internet which is incompatible with that on the food labelling or identification;
    - expressing or implying health care functions from non-health related food information sources published online; 
    - publishing information from the certificate of registration or registration records and other health food information published online which is incompatible with the information of the registration or records; or
    - not publishing special requirements for storage, transportation and consumption online.
  8. In addition, the Measures include provisions on the clarification of jurisdiction, the strengthening of investigative and handling responsibilities, details of the sampling procedures, penalties and conduct interviews on the responsibilities of platforms and food producers.

E-commerce involving consumer goods has been growing tremendously in China over the past years. This trend is expected to continue, offering a market worth several trillion RMB. Food is a particularly sensitive area and food consumers strongly need a solid legal regime to protect their rights and their health. This served as the call of duty for the CFDA to issue the Measures. They constitute an important piece of legislation and another step to further streamline business operators’ obligations in this market. Business operators in the PRC will have to check if their business models are fully in line with the Measures when they come into force on 1 October 2016, in particular with regard to the publication requirements.
One feature that is missing in the Measures is their application to cross-border E-commerce. According to Article 2 of the Measures, they apply to the online food producers and traders, which engage in online transactions within the PRC. Their provisions do not tackle the specific cross border implications of E-commerce at all. According to anonymous replies from officials at the CFDA, they do not intend to apply the Measures to cross-border online transactions. Given the growing popularity of cross-border E-commerce, in particular B-to-C business into the PRC, and the recent regulatory activities of Chinese authorities in this sector, it is to be expected that in the future similar measures will be released on cross-border online transactions. 

Authors

Lichtenstein
Dr. Falk Lichtenstein
Partner
Beijing