The State Administration of Industry and Commerce (“SAIC”) has promulgated the Measures for Supervision and Administration of the Product Quality in the Circulation Sector (流通领域商品质量监督管理办法) (“Measures”) on March 21, 2016, and these Measures will be effective on May 1, 2016.

These Measures are comprised of thirty nine articles in five chapters. These Measures mainly set forth the obligations of sellers related to product quality, as well as the obligations of the local AICs with regard to supervision and inspection on product quality. These Measures restate several provisions in the Product Quality Law of the People’s Republic of China (中华人民共和国产品质量法) (“Product Quality Law”), which was promulgated on February 22, 1993 and amended in 2000 and 2009, and additionally provide details about products inspection and acceptance by sellers, categories of products prohibited from sale, and label requirements of imported products.

Products Inspection and Acceptance by Sellers

According to Article 33 of the Product Quality Law, the sellers shall implement products inspection and acceptance, and examine certificates and labels of the products.

The Measures further add in Article 7 that the sellers shall also examine qualifications of the suppliers, and licenses or authentication certificates if the applicable products are required to be licensed or authenticated by government authorities pursuant to relevant laws and regulations.

Categories of Products Prohibited From Sale

According to Articles 35, 37, 38 and 40 of the Product Quality Law, the sellers are prohibited from selling the following products:

1. which fail to conform to the product standards indicated on such products or their packages, or the quality conditions by way of products description or sample, or fails to have the required performance;

2. which are eliminated or prohibited from sale by official orders of the State;

3. which are marked with false place of origin, or with false use of other producers’ name or address, or false use of other producers’ quality marks such as certification mark; and

4. which are expired or deteriorated.

The Measures in Article 10further provide two categories of products which shall not be sold by sellers:

1. which fail to conform to the national standards or industry standards for safeguarding human health and personal and property safety. Prior to the issuance of these Measures, the foregoing mainly applied to manufacturers in terms of their quality guarantees for the products they manufactured according to Article 26 of the Product Quality Law. However, SAIC now expressly requires that sellers shall not sell such products and undertake the same responsibilities as manufacturers to consumers; and

2. which are marked with tampered production date.

Label Requirements of Imported Products

Article 27 of the Product Quality Law set forth the requirements of labels of the products or the packages thereof, but no provisions in the Product Quality Law indicate any particular label requirements for imported products.

Specifically, Article 27 states: “Labels on the products or on the packages thereof shall be authentic and meet the following requirements:

1. include a certificate showing that the product has passed quality inspection;

2. include the name of the product and name and address of the manufacturers in Chinese;

3. include necessary information in Chinese regarding the specifications and grade of the product, the main ingredients and their quantities contained in the product, according to the characteristics and the instructions for use of the product; and other information which should be disclosed to consumers in advance, or provide consumers in advance with documents indicating such information;

4. with production date, safe-use period or expiration date clearly indicated in easily spotted areas if the product is to be used within a certain period; and

5. with a warning label or statement in Chinese for a product which, if improperly used, may cause damage to the product itself, or may endanger personal or property safety.”

The Measures restate the requirements above in Article 8 with minor revisions, such as: the labels on the products or on the packages thereof shall be authentic, accurate, easy to recognize and shall not mislead consumers. In addition, the Measures delete the language “……or provide consumers in advance with documents indicating such information” in Item (c) above, which means that any information which should be disclosed to the consumers in advance shall be shown on the products or packages thereof, rather than in any separate documents.

In addition to the foregoing requirements, the Measures provide in Article 9 that labels or packages of imported products shall also include the following the information:

1. name of the product, place of origin, and name and address of importer or exclusive distributor in Chinese;

2. Chinese instructions if a product relates to health and personal or property safety, or has special requirements in terms of use or maintenance;

3. expiration date in Chinese if a product shall be used within a certain period; and

4. name and address of the assembly plant in Chinese if a product is imported in knocked down or split kits.

This is the first time SAIC clarifies that general imported products, other than imported food-related products, shall indicate names and addresses of the importer or exclusive distributor^[1] and assembly plant. Such requirements will help to avoid the presence of imported products without prior inspection of relevant government authorities, such as custom, quality supervision, inspection and quarantine departments or local AICs. Furthermore, the information contained in the labels or packages will make it more convenient for relevant authorities to conduct normal inspection and track the responsible person in case of any product quality issues.

China has focused on product quality in recent years and will continue to strengthen the supervision of product quality in the market. The Outline of the 13th Five-Year Plan for National Economic and Social Development of the Peoples’ Republic of China (2016-2020) (中华人民共和国国民经济和社会发展第十三个五年规划纲要) (“13th Five-Year Plan”), which was approved by the National People’s Congress on March 16, 2016, may be a proper illustration of the resolve of China in the next five years. It is upheld as a principle in the 13th Five-Year Plan that China will improve product quality and complete relevant punitive compensation rules. It can be rationally inferred that more regulations will be issued to guarantee the product quality and personal or property safety.

_{[1] According to Article 97 of Food Safety Law of the People’s Republic of China (中华人民共和国食品安全法) (“Food Safety Law”), the imported pre-packaged food and food additives shall indicate name, address and contact information of the agents within the territory of China. Generally in practice, importers or distributors would serve as such agents. The Food Safety Law was promulgated in 2009 and amended in 2015.}