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.
1. Application Scope of Products
The recall obligations provided by the Recall Rules apply to consumer goods imported from abroad to the People’s Republic of China (the “PRC”). However, certain products such as cigarettes, motor vehicles, civil aircraft, civil ships, food, drugs, cosmetics, medical equipment, pesticides, etc., are clearly excluded, since specialized regulations on the aforesaid products already exist. Also, since 1 January 2016, the Measures for the Administration of the Recall of Defective Consumer Goods govern the recall of all consumer products (see CMS China Insight May 2016). In contrast, the new Recall Rules now specifically apply to imported products only.
2. Subject to Recall
The subjects who shall be responsible for the recall of defective consumer goods are: 1) enterprises importing consumer goods from abroad to the PRC for sale; or 2) authorized institutions established by foreign enterprises in the PRC (the above two entities are jointly referred to as the “Importer”).
3. Collection of Information on Defect
The local Inspection and Quarantine Institutions, as well as the National Monitoring Centre, are responsible for collecting, sorting out, and screening information on defective imported consumer goods. The sources of information include the importing inspection supervision information, information provided by test institutes, information reported by local governments, and industrial associations, as well as foreign governments, media information, complaint information from consumers, etc.
4. Investigation on Defect
- If any of the following situations occur, an investigation on defects may be initiated by the respective local Inspection and Quarantine Institution:
- Imported consumer goods have caused accidents of serious injury and significant impact, and the Importer has not reported them on its own initiative or taken measures of remediation;
- Recall has been carried out in other countries or regions, but not yet in the PRC;
- After investigation, it is found out that requirements on the safeguards of personal or property safety provided by the National Standards or Industrial Standards are not satisfied;
After investigation, it is found out that there are other dangers to personal or property safety.
The local Inspection and Quarantine Institution initiating the investigation shall report to the AQSIQ within 5 working days of the initiation of investigation. If the AQSIQ considers that the relevant consumer goods might cause severe consequences or significant impact, it may directly organize or appoint a certain Inspection and Quarantine Institution to carry out the investigation.
5. Recall of Products
An Importer may report, and apply for recall, on its own initiative (“First Circumstance”), or it may be demanded by the AQSIQ to carry out a recall after an investigation on defects by the Inspection and Quarantine Institution (“Second Circumstance”).
Under the First Circumstance, a voluntary recall procedure may be started. The Importer should file a recall plan with the Risk Assessment Centre of Imported and Exported Industrial and Consumer Goods at AQSIQ (the “Assessment Centre”). Such a recall plan should be formulated according to the Format Text of Recall Plan, attached as Appendix 8 to the Recall Rules.
Under the Second Circumstance, it is determined by the respective Inspection and Quarantine Institution or the AQSIQ that the relevant products must be recalled. Then, if the Importer believes that its imported consumer goods are not defective, the Importer may raise an objection and provide evidence. The Inspection and Quarantine Institution or the AQSIQ shall reconsider their decision on whether a recall should be carried out. If the Importer neither carries out a recall, nor raises an objection, or if after an assessment it is confirmed that the consumer goods are defective, the AQSIQ will demand the Importer to carry out the recall. Under such a circumstance, the Importer should formulate a recall plan within 5 working days after receiving a Determination Letter on Demand to Recall Defective Imported Consumer Goods, and file it at the Assessment Centre. In case of any amendment to the recall plan, the Importer should update its filing with the Assessment Centre and submit explanation documents.
The Inspection and Quarantine Institution that finds out the defect will be responsible for the supervision of the implementation of the recall, and if necessary, may carry out supervision jointly with the Inspection and Quarantine Institution of the place where the Importer is located. In addition, the Importer is required to submit a periodic report and a conclusion report to the Assessment Centre for an assessment on the state of fulfilment and the effect of implementation.
The Recall Rules are extremely important for all businesses dealing with the import and distribution of consumer goods in China. Existing distribution policies should be reviewed and adjusted under the new Recall Rules.