CHINA REGULATIONS UPDATE 29 APRIL 2016
Translations of CBEC regulations and the explanations of CFDA and AQSIQ on the second positive list are available on request, contact Kerry to receive a copy.
We have received the following update from NZTE Shanghai, for clarification please contact your NZTE Customer Manager or Fiona Murray.
The purpose of this email is to share with you updates in respect of implementation:
• Almost all CBEC bonded areas experienced significant drop in clearance volume as a result of increasing rejected orders since 8th April; e.g. Zhengzhou (70% drop), Hangzhou (65% drop), Ningbo (62% drop), Shenzhen (61% drop). The key reasons for rejections are:
o the products are not listed on either of the two Positive Lists
o the products are listed one of the two Positive List but there is still “interpretation controversy” about such products
o the exporters think that the products are included in the Positive Lists but the government officials at in bonded area may not agree (Please note the Positive Lists were co-released by eleven ministries and commissions and there are some misunderstandings among the ministries/commissions in terms of the product descriptions and corresponding HS Code.)
• Although both Positive Lists include some “health food categories” e.g. anima oil, vitamins and minerals and etc (please refer the Lists for details), the Lists also make it clear that “foods that are not listed as conventional food or special foods that are required to register or file by law are excluded”. The words underlined imply that the majority health foods will not be allowed to trade through CBEC anymore. In fact, this is how it has been interpreted and implemented by several bonded CBEC warehouses.
• Although the two Positive Lists include lip cosmetics, eye cosmetics etc. (again, please refer to the Lists for details), the Lists also make it clear “the products imported for the first time are excluded”. The words underlined imply that cosmetics which were never previously imported into China via General Trade and registered with the State Food and Drug Administration (SFDA) are not allowed to be traded via CBEC bonded warehouse mode. This means the products will have to be registered and filed with the SFDA first. Although the specific operation and implementation details are still unclear and require further explanation from SFDA, discussions with most industry people strongly indicate that CBEC products will fall under the same stringent requirements that are set for General Trade.
• Some dairy products are included in the Positive Lists, e.g. the UHT milk, formulated milk powder (again, please refer to the Positive Lists for more details), but they can only be sold through bonded warehouse mode, not direct mailing mode. As to infant formula, it was not included in the 1st Positive List (April 8th) but in the 2nd Positive List (April 15th). According to the “Draft Detailed Rules for Supervision and Administration on Food Imported by Bonded Mode of CBEC” as issued by AQSIQ last October, infant formula packaging is required to be labelled with Chinese (i.e. dual language – English and Chinese). Although the draft detailed Rules are not yet effective (rumour is that the rule may be effective in June), some bonded warehouses (e.g Guangzhou, Hangzhou, Shenzhen, Ningbo, Chongqing and Zhengzhou) have already started to require Chinese labelling on the infant formula products before they are dispatched from the bonded warehouses to Chinese consumers. As it is still a transitional period, the bonded warehouses allow the merchants to physically affix (stick) the labels on the product at the designated areas. In the near future, the government officials at the bonded warehouses will likely require the dual-language packaging before allowing them to enter (i.e. implement dual-language packaging in New Zealand prior to shipment).
• Although the products traded via Direct Mailing are exempted from the new CBEC policies for the time being, it is expected that this channel will also be tightened up. We anticipate seeing increased inspections, delays in clearance, and payment of personal parcel taxes (which are higher than CBEC taxes). The ultimate goal of the government is to “cut off the grey C2C channel” that has been using Direct Mailing and encourage the B2C CBEC bonded warehouse mode.
If your Customers are not yet doing so, we strongly suggest that they:
1. Double-check the HS Code and goods descriptions on the Positive Lists against their product categories and talk to their TPs and relevant authorities in advance where areas of ambiguity may arise.
2. For customers exporting heath foods/supplements, skin care and cosmetics, study the relevant administrative measurements and registration procedure for General Trade if they wish continue to export to China. This includes CFDA and the related National Standards (“Guo Bio”).
3. For third-party advisors, Chemlink provides good general information about products filing and registration processes for health foods and cosmetics https://chemlinked.com/.
The two Positive Lists include some products that were not allowed before, e.g. retail ready pet food and certain wine. We are collecting further intel in terms of how they are being implemented and will share more insights in the next update on CBEC. If you have customers from those industries who may be interested in CBEC, please feel free to contact us.