Stricter Recall Obligations for Consumer Goods Starting from 2020

The State Administration for Market Regulation ("SAMR") has issued the Interim Provisions on the Administration of Recalls of Consumer Goods (the "Provisions") on 26 November 2019. The Provisions will come into effect from 1 January 2020.

This follows the draft Administrative Provisions on the Recall of Consumer Goods (Draft for Comment) on 2 February 2019. The Provisions provide a more comprehensive and forceful recall protection regime of consumer goods.

Compared to the previous Administrative Measures for Recall of Defective Consumer Goods (the "Measures"), which have been effective since 1 January 2016, the Provisions change the following:

Range of consumer products expanded  

The Measures adopted a catalogue management system for the supervision of consumer products safety. Only the product categories listed by the General Administration of Quality Supervision, Inspection and Quarantine (mainly electrical products and toys) are under the regulation of the Measures.

The Provisions repealed the catalogue management system. Article 3 of the Provisions stipulates that any "product that a consumer needs to buy and use for daily consumption" constitutes a "consumer product". This means that all kinds of products in daily life will be regulated by the Provisions. Article 2 of the Provisions also carves out some special products that follow other laws, administrative regulations and department regulations. These products include, amongst others, cigarettes, motor vehicles, civil aircraft, civil ships, food, drugs, cosmetics, medical equipment, pesticides, and other products are regulated by special regulations related to the recall of products.

Greater legal effect an penalties on violators

The Measures have a lower level of legal effect and do not have the authority to set administrative penalties. The Measures only have a guiding role in practice. In contrast, the Provisions are a department regulation, which legally rank higher than the Measures. According to the Law of the People's Republic of China on Administrative Penalties, a warning can be set or a fine can be imposed. According to Article 25 of the Provisions, the provincial market regulator can impose a fine from RMB 10,000 to RMB 30,000 if the violator does not correct the violation in a given time frame.

The Provisions granted the provincial market regulator necessary legal enforcement power, which is conducive to implementing the recall obligations and responsibilities of producers and operators, and strengthening and authority and effectiveness of the recall system.

Clearer reporting obligations

The Provisions extend the subject of recall obligations from producers to "other operators", including those engaged in the sale, lease, repair of consumer goods or other relevant activities. The reporting time limit strictly stipulates that the violator must file a report within two working days from the date of discovery of a situation above to the provincial market supervision and management department at the locality. It is also stipulated that if the reporting obligation is violated, the market regulator may impose a fine.

Wider net for companies to be identified as producers

In respect of imported consumer goods, the Measures consider the "enterprise companies that import consumer goods from outside China to sell in China, or authorized institutions established by overseas companies in China" as producers, who assume the main responsibility for the recall.

However, in the practice of recalling imported consumer goods, sometimes there are cases where multiple domestic companies import at the same time, but overseas companies have not established authorized institutions in China. Thus it is difficult to identify the party that is obligated to conduct the recall. In this regard, Article 29 of the Provisions stipulates that the institutions designated by an overseas producer of imported consumer goods as an agent within the territory shall be regarded as a producer; if the overseas producer has not designated an agent in China, the importer shall be deemed as a producer.

Compared with the Measures, Article 29 of the Provisions covers a wider range of producers who are responsible for the recall, which provides a more comprehensive protection for consumers.

Stricter time limits

Paragraph 2 of Article 19 of the Provisions require that producers should publish recall information and accept public consultation within three working days from the date of the report of the recall plan. Compared to the Measures, which leave five working days for the producers, the Provisions are stricter.

The Measures only required a report before the release and implementation of the recall plan, while the Provisions extended the reporting time scope to the date after the implementation of the recall plan. Article 21 of the Provisions stipulate that the producer shall submit a recall summary to the market supervision and management department reporting the recall plan every three months from the date of implementation of the recall, and submit the recall summary within 15 working days after completing the recall plan.

Conclusion

Relevant producers and operators should further strengthen the control of their product quality, understand and implement the (partly stricter) requirements of the Provisions and establish risk management systems to prevent legal risks in consumer products recalls.