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Consumer Products


As a player in the consumer products sector, you face a myriad of challenges such as globalisation and digitalisation, environmental and health concerns, supply chain management, consumer and media pressure, growing retailer buyer power, the rise of online selling and counterfeiting. All place new demands on your management and business strategy but also drive the need for legal advice. Our team is structured around the key sectors of consumer products including food and drink, cosmetics and personal care, clothing and accessories, electronics, retail industry and household. Whether you are a supplier, investor or other stakeholder, we have consumer products experts to help, whatever your situation.

In order to give you the targeted legal advice your business needs, our teams have experts from every legal area affecting your sector. This means we can guide you on all legal and regulatory aspects - from the financing and acquisition of companies, through to antitrust and unfair competition law, media management, nutritional and health claims, advertising and marketing, strategies for the protection of intellectual property rights, import and export customs, outsourcing, e-commerce, distribution agreements, real estate transactions, product liability and recalls and much more. Our experts will keep you abreast of the latest sector insight and developments, giving you a commercial, as well as a legal edge.

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Re­call Pro­ced­ure Cla­ri­fied for De­fect­ive Im­por­ted Con­sumer Goods
The Gen­er­al Ad­min­is­tra­tion of Qual­ity Su­per­vi­sion, In­spec­tion and Quar­ant­ine (the “AQSIQ”) pub­lished the De­tailed Work­ing Rules on Re­call of De­fect­ive Im­por­ted Con­sumer Goods (the “Re­call Rules”) on 23 March 2018. They took ef­fect on the same day. Be­low we sum­mar­ize the main con­tent of the Re­call Rules and how they will af­fect im­port­a­tion busi­nesses.To read the de­tails of this art­icle, please click "read more" be­low.
New AIC Meas­ures will be Chal­len­ging for Busi­ness Op­er­at­ors in China
On 15 March 2015, the Meas­ures for Pun­ish­ments Against In­fringe­ments on Con­sumer Rights and In­terests (“Meas­ures”) is­sued by the State Ad­min­is­tra­tion for In­dustry and Com­merce of the People's Re­pub­lic of China (“SAIC”) came in­to force. This happened ex­actly one year after a re­vised ver­sion of the Law on the Pro­tec­tion of Con­sumer Rights and In­terests (“CPL”) took ef­fect on 15 March 2014, rais­ing con­sumer pro­tec­tion in China to a new level. By re­leas­ing these Meas­ures, the SAIC aims to provide prac­tic­al guid­ance to the au­thor­it­ies how to im­ple­ment the CPL, how to pun­ish vi­ol­a­tions, and how to in­ter­pret cer­tain vague pro­vi­sions and terms of the CPL. The Meas­ures will also play an im­port­ant role in po­ten­tial civil law dis­putes.The most im­port­ant con­tent of the Meas­ures is set out be­low.Fraud or no fraud – re­versed bur­den of proofOne of the main ob­ject­ives of the CPL is to pro­tect con­sumers against the fraud­u­lent ac­tions of busi­ness op­er­at­ors. Ac­cord­ingly, cer­tain con­sumer rights are only gran­ted if busi­ness op­er­at­ors have com­mit­ted fraud. Art­icle 55 of the CPL stip­u­lates that if busi­ness op­er­at­ors com­mit fraud in provid­ing goods or ser­vices, they shall pay to the af­fected con­sumer a com­pens­a­tion of three times the re­spect­ive pur­chase price. Just ima­gine the com­pens­a­tion that a com­pany would be li­able for on a high-end auto­mobile, giv­en today’s high prices in this sec­tor in China. However, the term “fraud” has not been defined in the CPL.The new Meas­ures do not only provide ex­amples of fraud, but also com­bine them with a re­versed bur­den of proof. Un­der gen­er­al leg­al prin­ciples, each party in­vok­ing a cer­tain fact in a civil law dis­pute should provide evid­ence for such. Ac­cord­ing to the above, a con­sumer as­sert­ing fraud on the part of a busi­ness op­er­at­or should provide and prove facts evid­en­cing such fraud. However, Art­icle 16 of the Meas­ures stip­u­lates that a busi­ness op­er­at­or shall be deemed to have prac­ticed fraud if it com­mits cer­tain acts and is un­able to prove that such acts were not com­mit­ted to de­ceive or mis­lead con­sumers.These acts are lis­ted as:Provid­ing goods or ser­vices that fail to meet safety stand­ards, are in­ef­fect­ive, or have de­teri­or­ated.The dis­play of in­cor­rect places of ori­gin, fact­ory names, ad­dresses, pro­duc­tion dates, cer­ti­fic­a­tion marks, and oth­er qual­ity marks.In­fringing upon trade­marks or us­ing the spe­cif­ic names, pack­aging, and ap­pear­ance of well-known com­mod­it­ies. In all of the above events it is the busi­ness op­er­at­or’s duty to prove that such acts were not com­mit­ted to de­ceive or mis­lead con­sumers.This may be huge bur­den for them re­quir­ing dis­clos­ure of con­fid­en­tial in­tern­al doc­u­ment­a­tion and com­mu­nic­a­tion. Apart from the above, the Meas­ures also con­tain a com­pre­hens­ive list of fraud­u­lent acts without grant­ing the busi­ness op­er­at­or a right to prove that such acts were not com­mit­ted to de­ceive or mis­lead con­sumers.Some of such acts are lis­ted be­low:Not provid­ing the true name and mark for goods.Sale of goods ex­pli­citly ordered by the State to be with­drawn from sales.Col­lect­ing pay­ment without de­liv­ery.De­cept­ive pri­cing.Con­ceal­ment of quant­ity or qual­ity.Need­less re­place­ment of parts and com­pon­ents.15 Days to Rec­ti­fy the Situ­ationUn­der the CPL, busi­ness op­er­at­ors shall not de­lib­er­ately delay provid­ing the re­pair, re­man­u­fac­ture, re­place­ment, re­turn of goods, mak­ing up quant­ity short­ages, re­fund­ing the pur­chase price or com­pens­a­tion for losses (the “Rem­ed­ies”). If they do so, the au­thor­it­ies are en­titled to im­pose fines up to RMB 500,000, con­fis­cate il­leg­al profits, and even can­cel the op­er­at­or’s busi­ness li­cense.However, there is no guid­ance in the CPL on what con­sti­tutes a de­lib­er­ate delay.Ac­cord­ing to Art­icle 8 of the Meas­ures, a busi­ness op­er­at­or shall be deemed to have de­lib­er­ately delayed sat­is­fy­ing, or un­jus­ti­fi­ably re­fused to sat­is­fy the Rem­ed­ies if they have not com­plied with them with­in 15 days from the date that the con­sumer made the re­quest.Art­icle 9 of the Meas­ures im­poses the same 15-day time lim­it for com­ply­ing with the con­sumer’s sev­en-day un­con­di­tion­al right of re­turn (with full re­fund of the pur­chase price) for products sold on­line. This right has been in­tro­duced in­to Chinese law for the first time when the CPL took ef­fect on 15 March 2014.Fi­nally, Art­icle 10 of the Meas­ures sets a time lim­it of 15 days for the re­turn of ad­vance pay­ments col­lec­ted by busi­ness op­er­at­ors from con­sumers when the busi­ness op­er­at­or fails to provide the agreed upon goods or ser­vices. This 15-day peri­od starts on the date when the con­sumer re­quests a re­fund.New Guid­ance On Stand­ard TermsThe CPL re­quires that stand­ard terms, no­tices, de­clar­a­tions, shop bul­let­ins or oth­er ma­ter­i­als (the “Stand­ard Clauses”) do not im­pose any con­di­tions on con­sumers that ex­clude or re­strict the rights of con­sumers, re­duce or waive the li­ab­il­it­ies of busi­ness op­er­at­ors, or in­fringe upon the li­ab­il­it­ies of con­sumers.The Meas­ures now list six non-ex­haust­ive cat­egor­ies that ex­em­pli­fy pro­hib­ited Stand­ard Clauses:Ex­empt­ing busi­ness op­er­at­ors from the ob­lig­a­tion to per­form Rem­ed­ies.Ex­clud­ing or re­strict­ing the rights of con­sumers to re­quest Rem­ed­ies.Ex­clud­ing or re­strict­ing the rights of con­sumers to file com­plaints or law­suits in ac­cord­ance with the law.Com­pel­ling con­sumers to pur­chase and use goods or ser­vices provided by cer­tain des­ig­nated busi­ness op­er­at­ors.En­titling busi­ness op­er­at­ors to modi­fy or res­cind con­tracts at their dis­cre­tion or re­strict­ing the rights of con­sumers to modi­fy or res­cind con­tracts in ac­cord­ance with the law.En­titling busi­ness op­er­at­ors to uni­lat­er­ally en­joy the power of in­ter­pret­a­tion or fi­nal in­ter­pret­a­tion of con­trac­tu­al terms.Au­thor­ity in chargeThe com­pet­ent Ad­min­is­tra­tion for In­dustry and Com­merce (“AIC”) is in charge of im­pos­ing pun­ish­ments un­der the Meas­ures. In ad­di­tion to pen­al­iz­ing, the Meas­ures stip­u­late ad­di­tion­al tasks of the AICs, e.g. to provide ad­min­is­trat­ive guid­ance to busi­ness op­er­at­ors through the edu­ca­tion, su­per­vi­sion, and demon­stra­tion of their stat­utory ob­lig­a­tions. Pen­al­ties will be re­cor­ded in the cred­it files of the busi­ness op­er­at­ors and be promptly made pub­lic through the en­ter­prise cred­it in­form­a­tion sys­tem and via oth­er chan­nels. This in­creases the risk of un­wel­come pub­li­city for busi­ness op­er­at­ors in the event of a prob­lem.Con­clu­sionThe new Meas­ures will be of high prac­tic­al rel­ev­ance for busi­ness op­er­at­ors in China, es­pe­cially for­eign-in­ves­ted en­ter­prises (“FIEs”). As the Chinese con­sumer pro­tec­tion au­thor­it­ies fre­quently place FIEs un­der scru­tiny, they should take the new Meas­ures in­to re­gard when draft­ing and eval­u­at­ing their qual­ity man­age­ment sys­tems and sales prac­tices. In ad­di­tion, the new guid­ance on pro­hib­ited Stand­ard Clauses should give reas­on to re­view and up­date their B-to-C stand­ard terms and con­di­tions used in China.
China In­sight - Con­sumer Products
Can a buy­er who pur­chased de­fect­ive food or drugs, know­ing that such de­fects ex­is­ted, claim a full re­fund of the pur­chase price and com­pens­a­tion? Ac­cord­ing to the Ju­di­cial In­ter­pret­a­tion on Is­sues con­cern­ing the Ap­plic­a­tion of Laws re­lat­ing to Food and Drug Dis­putes (the “In­ter­pret­a­tion 2013”) pro­mul­gated by the Su­preme People's Court (“SPC”) on 23 Decem­ber 2013, con­sumers will in­deed be en­titled to do so.   The In­ter­pret­a­tion 2013 will be­come ef­fect­ive on 15 March 2014, the same date a new PRC Con­sumer Pro­tec­tion Law enters in­to ef­fect. The In­ter­pret­a­tion 2013 ap­plies to dis­putes about food, drugs, cos­met­ics and health care products (“Products”). The most im­port­ant con­tent of the In­ter­pret­a­tion 2013 is set out be­low.Please ac­cess the News­let­ter to read more.


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