The China Food and Drug Administration (“CFDA”) has released the new Measures of the Investigation and Punishment of Illegal Conducts Concerning Online Food Safety (“Order 27”), governing online activities by food producers and operators and their third party platform providers. Order 27 came into force on 1 October 2016.
Order 27 is aimed at improving transparency and accountability of online food sales and advertising (“online food trading”).
Order 27 applies to all food producers and operators (including delivery service providers) engaged in online food trading (“food traders”) as well as any third party platform that supports online food trading (“third party platforms”).
Foreign food traders who use information from their home country web pages on their Chinese trading pages must now take special care to ensure that their online information complies with requirements under Chinese law.
Once Order 27 is implemented, food traders must:
- display their food production/operation licenses on their trading pages (if trading on third party platforms) or their home pages (if trading through their own websites);
- if engaged in restaurant/catering services, publish the information of their quantitative grading that is based on the administration system for food safety supervision;
- if trading through their own websites, file a record with local Food and Drug Administrations (“FDAs”) and obtain a record number;
- provide online instructions and tips concerning food with special requirements in respect to storage, transportation and consumption;
- take measures in storing and transporting food to guarantee safety for food with special storage conditions such as freshness preservation, thermal insulation, refrigeration or freezing;
- if trading through their own websites, keep trading records for not less than six months upon expiry of the shelf life of food products, and, when there is no shelf life, the record shall be kept for at least two years; and
- ensure consistency between online information and information on food labels.
Food traders should also conduct due diligence of their online activities to ensure compliance with the disclosure requirements. Special care should be directed towards ensuring the completeness and accuracy of online information.
In addition, food traders must be careful to only trade within the scope of their licenses, as these licenses will now be open to public scrutiny.
Special Restrictions for Health Food and Infant Milk Formulas
China’s Food Safety Law has special restrictions for certain foods including health food and infant milk formulas. Order 27 reinforces those restrictions as follow:
- Non-health food products must not explicitly or implicitly make health claims.
- Infant formula milk products must not state that the products can increase intelligence, improve resistance to disease, enhance immunity, protect the intestinal tract and serve other functions or have health care effect.
Food traders selling health food, formulated food for special medical purposes and infant formula milk powder shall disclose their product registration certificates or recordal credentials, and, where applicable, the advertisement examination and approval numbers.
Health food should be registered and/or recorded in accordance with the Food Safety Law. Health food shall be marked with a statement that “this product cannot be a substitute for medicine”.
Enforcement POwers of the FDA
The local FDAs are responsible for investigation and punishment of illegal conduct regarding food safety.
Under the Food Safety Law, third party platforms must review permits of food traders and register their real identities. If a third party platform becomes aware of food safety violations, the third party platform must immediately stop the food trader from the subject activity and report the same to local FDAs. For serious violations, the third party platform shall immediately stop providing platform services. If a consumer suffers damages from food products purchased through a third party platform, the consumer can demand damages from the food trader. Where the third party platform cannot provide valid contact information of the food trader, the third party provider shall pay the damages.
The investigation powers of the FDA include conducting on-site inspections, sampling of food, reviewing records and data and employing technological monitoring resources.
Benefits for Brand Owners to Attack Counterfeits
Although there is no provision relating to online counterfeits, Order 27 may potentially make it much easier to track down and prosecute counterfeiters because of the online disclosure requirements and strict product quality liabilities on the third party platforms.
Order 27 marks the continuing and ongoing efforts of the Chinese authorities to strengthen the food safety supervision of the distribution and sale of food products in China. A survey of popular third party platforms suggests that they have already begun implementing Order 27. Most domestic food traders are now showing their permits on their trading pages, and third party platforms have accommodated the disclosure requirements with new features allowing consumers to quickly access information. This suggests that the disclosure requirements in Order 27 will be vigorously enforced.