China Food Safety Law - Practical Procedures, Trends and Opportunities for Dutch Companies

China Food Safety Law - Practical procedures, trends and opportunities for Dutch companies Yibo Jiang, Henk Stigter, Martin Olde Monnikhof Embassy of the Kingdom of the Netherlands, Beijing, February 2018 TABLE OF CONTENTS Introduction 3 China Food Safety Law 2015 4 Practical Procedures 7 Dairy Products 18 Meat Products 20 Hong Kong 22 Trends 24 Swot Analysis 26 Annexes 30 A list of abbreviations of authorities used in the brochure List of the 27 recognized health functions for dietary supplements Bibliography 32 2 INTRODUCTION In the previous century, one of the strategic goals towards a “moderately prosperous society” of the Communistic Party was “providing people with adequate food and clothing”. In a country where, as the Chinese saying goes, “food is seen by people as important as heaven”, food has always been the utmost import thing for rulers to keep its people content. A few decades ago, when a large part of the population still struggled to survive in poverty, the focus on food in China used to be simply providing sufficient food supply. Today, this focus has shifted towards ensuring food safety [1]. At the 19th Communist Party of China National People’s Congress in September 2017, which described the Party’s strategic plans for the future decennia, the implementation of food safety strategy was stressed. At the same time, strive for higher quality of life gives rise to demands among consumers for higher quality of food. The most famous incident from the Chinese food industry remains the 2008 melamine milk scandal. It affected tens of thousands of children and multiple deaths of infants due to kidney failure [2]. The aftermath is largely tangible even to this day, still frequently mentioned by China and the rest of the world. Even before this, another infant formula scandal had already been reported in 2004 [2]. Other well-known food safety scandals that have happened in the past few years include oil “drained from the gutter”, toxic bean sprouts and multiple kinds of unqualified meat products. These incidents have led to a significant decline of trust from Chinese consumers towards the conventional food systems, as well as disbelief towards government efforts to manage food safety and quality by measures such as certification systems [3]. A relatively high level of concern persists to exist among consumers towards food safety, accompanied with a willingness to pay a higher price for safer food [4]. There is an increasing interest in imported foods from the growing Chinese middle class, which is beneficial for the Dutch and European food industry [5]. By 2016, China had become the most important export destination outside the EU for Dutch agricultural products [6]. The significant number one in export growth is still infant milk powder, which increased fiftyfold in 10 years of time [7]. Other important food exports for the Netherlands include various dairy products, meat and fishery products. According to Chinese food safety policymakers, the most important areas of improvement should be aimed at reducing food borne illnesses, chemical contamination including illegal use of pesticides and veterinary drug residues, as well as food fraud. The 2015 Food Safety Law mentions the use of a risk-based management framework as a guideline for food safety policies. Building up a thorough and comprehensive implementation of risk assessment, risk management decision-making and risk communication is however still largely in progress [1] [8]. To a certain extent, this is contrary to the wants of the consumers. Through the food scares in the past few years, Chinese consumers hold the view that no risk is acceptable at all. In addition, there is often little awareness among consumers regarding unsafe foods that lead to food-borne illnesses. Concepts of food safety and food quality are often confused. Instead, main factors that consumers consider to cause concerns reportedly include pesticide and veterinary drug residues, food counterfeits, so-called inferior quality of foods, practical hygienic issues and food additives [9]. This brochure will explain the practical procedures for food safety compliance for Dutch companies who wish to export foods to China. A basic overview of the structure of the food safety regulatory system will first be analyzed. Subsequently, practical procedures will be explained for administrative compliance measures that companies are required to undertake. Then the current legislative environment for the two largest export product categories, dairy and meat, will be discussed, followed lastly by an extensive SWOT analysis for Dutch companies. An overview of abbreviations used in this brochure can be found in Annex 1. 3 China Food Safety Law 2015 4 CHINA FOOD SAFETY LAW 2015 Chinese jurisdictional system To understand the Chinese Food Safety Law system, it is important to take a look first at the general Chinese law system. Chinese legislations and jurisdictional documents are issued in accordance with the hierarchical position of the issuing institution, implicating the working power of the legislation. Only laws that are issued by the National People’s Congress can officially bear the name law in the document. Other legislative documents are considered law only in the broad sense. Figure 1 shows an overview of the hierarchy for relevant food safety authorities and legislative documents. In the basic EU food safety system, the rule of trias politica is applied, where a clear distinction is made between the legislative role, the implementation party and the scientific base of resource. The power division is less clear in the Chinese food safety system, as seen in Figure 2a and 2b. Figure 1. Overview of the hierarchy for Chinese legislative authorities In practice, responsibility is rather indicated by the assigned hierarchical position of the authorities. It is observed that this may leave the fields of power and responsibility disputed or even result in overlapping areas of authority between parallel positioned institutions, complicating decision- making processes and resulting in ambiguities and uncertainties in regulatory policies. This also leads to unpredictability in the legislative environment. These obstacles currently form the greatest challenges in Chinese food policy according to European companies [5] [10]. Figure 2a&b. Trias politica in EU and China Food Law 5 Food Safety Law 2015 Upon the occurrence of a series of food safety scandals, the Chinese government enacted by writing new food laws. Before the 2008 melamine milk powder scandal, the last food law dated from 1995 and was called “Food and Hygiene Law of the People’s Republic of China”. It was mostly based on sanitary issues occurring in the food industry. In 2009 a Food Safety Law was published replacing the Food and Hygiene Law. This was the first time that “safety” was mentioned in Chinese Food Law. The 2009 Food Safety Law was re-written and updated in 2015. This 2015 Food Safety Law now acts as the base of all other food safety regulations, providing a new legislative framework for food safety management. Compared to the 2009 FSL, the new FSL puts more focus on risk prevention and risk assessment, traceability and supervision in the whole food chain, and strict penalties for those who do not comply. It also stresses the use of social governance to help supervise the food regulatory system [11]. After the release of 2015 FSL, new regulatory legislations have been announced and put into practice in accordance. Older regulations that are not updated are still in force, but may be readapted in the future to adjust to the new framework and modernization movements of food safety management. 6 Practical Procedures 7 PRACTICAL PROCEDURES Although China is a country with a huge market potential, it is also a country whose vastly different cultural habits, social perspectives, work ethics and food history cannot be overlooked. In the end, these are all reflected in the business and legislative environment. It cannot be stressed enough that preparation and research is key for Dutch companies to understand practices in the Chinese legislative environment. The previous food safety legislative system that was outlined in 2009 FSL was rather complex and hard to understand. Responsibilities of food safety management were scattered and entangled between authorities. In comparison, the 2015 FSL presents a more structured framework with clearly assigned fields of responsibility and executive powers, mainly concentrated within the hands of CFDA and AQSIQ, with the former mainly concerning about domestic food safety and the latter mainly in charge of safety management for imported foods. This brochure will focus on the regulations that apply to imported foods, for most Dutch companies are trying to export their products into China. According to China Food Safety Law 2015, the import procedure is arranged with roles as follows: Manufacturer Exporter Importer Distributor The qualifications, proceedings and responsibilities are discussed for each role in the following subchapters as described in the legislative documents. However, due to unpredictable circumstances, regional inconsistency and product differences, practical situations may proceed differently than they are officially prescribed at the time of publication of this brochure. It is always highly urged to stay up-to-date through local authorities for accurate and newest information. Manufacturers The overseas manufacturers are usually defined as overseas farming, manufacturing, processing and/or

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