Worry and Reassurance: A New Food Safety Law in China and What You Can do for Your Customers
Fake wine is nothing new in China. Even though the economic incentives for going after counterfeiters have never been greater, the fakes are still out there. But there are two things to keep in mind.
First, Chinese consumers – and especially those with the income to buy quality wines - are becoming much more discerning. Information about a bottle of wine can be as close as a smartphone app or a look at the bottom of the bottle away. Second, counterfeit food is a very big deal in China. Health fears around food safety are real and not going away anytime soon.
Food safety, both as to quality and quantity, has also been of great concern to the Chinese government since the founding of the People’s Republic in 1949. Better economic times for the country and increasing demand have slowly bested China’s ability to remain food production self-sufficient. While quantity has been outstripped by demand, the far more serious problem for Chinese consumers is the decrease in the quality of the food that is available.
Many factors, such as poor environmental controls for heavy industries, have contributed to this decline in quality. But the counterfeiting of food products by unscrupulous producers is the most worrisome. And it’s more than a passing worry. If you have ever seen the lengths some Chinese parents go to get baby formula made anywhere but mainland China, then you know.
Added to that, the examples of the poor quality of food production, preparation and counterfeiting are unending on Chinese social media. In the past, the Chinese government has tried through laws, regulations and enforcement campaigns to guarantee food safety. But that promise has proven impossible to keep. While still heavily regulated, the current food safety scheme and even the newest proposed revisions to that scheme still rely primarily on the consumer’s ability to understand the risks that are out there.
PROPOSED CHANGES TO THE FOOD SAFETY LAW
You need information to balance risk, though. Food labeling is the first choice of regulators for that. The second round of proposed amendments to the Food Safety Law require producers to put more information on their labels. (The US Department of Agriculture has published a rough and ready English translation of the proposed amendments( as GAIN Report CH15002.) But the new requirements don’t end there.
Producers, wholesalers and retailers are required to inspect products and raw materials prior to sale, check the information of their suppliers, and retain detailed information for specified periods of time. (See Articles 48-59). Online retailers are expected to be part of the food safety effort as well. (Article 60). Higher fines (for example, 10 to 20 times the value of the commodity illegally sold or outright confiscation of any gain, Article 113) are also on the menu.
What this signals to stakeholders in the food production and distribution industries is that greater transparency and accountability are expected going forward. And this is what the release of this draft version of the new law is meant to do. Get everyone ready for a new normal.
Reputable firms will comply with whatever new law comes down, of course. But, as in all things, counterfeiters will also change their methods so their “products” appear legitimate under the new regime. While trademark litigation and administrative proceedings to stop counterfeiters are also effective in China - our firm has had great success in both areas - the horror stories about food safety in the Chinese media will probably still go on.
SELLING FOOD SAFETY AS PART OF YOUR BRAND
But is waiting on the government to develop a workable food safety regulatory environment, which could take years, the best course? Consumers are not in the mood to wait that long. Building food safety information into, and trust in, your product offerings can start right away.
Providing confidence in the provenance of their food is a very pro-active way to develop loyalty to your brand in your Chinese customers. It’s also a way to start chipping away at those firms and food regions with larger market share. As has been pointed out before, and in the wine market especially, Chinese customers are willing to try something new. If you have good products they’ll stay. If they can say for sure that your products are real, they’ll trust you. And trust gets around fast.
ABOUT THE AUTHOR: Samuel Speed
Samuel Speed is an American lawyer living in Guangzhou. He practices in the areas of intellectual property, cross-border transactions and business litigation. He is a member of the Kansas bar and the United States Tax Court bar.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.