The Legislative Office of China’s State Council is currently soliciting public opinions for a draft set of defective products recall rules. The draft has been prepared by the General Administration of Quality Inspection, Supervision and Quarantine of China.
The public can submit their comments on the draft by logging onto the website of the Legislative Affairs Office of the State Council http://www.chinalaw.gov.cn. The deadline for comment is May 26, 2009.
The draft rules are part of China’s efforts to improve the recall system. At present, there is a patchwork of recall regulations in respect of special products – often it seems to be a response to an emergency of some kind. The first recall regulations were issued in relation to automobiles in 2004 – against a backdrop of foreign manufacturers not affording Chinese consumers the same rights as enjoyed in other jurisdictions. Other recall regulations were passed in relation to food and toys in 2007 – again responding to specific crisis in these areas. The recent PRC Food Safety Law which was approved by the National People’s Congress (NPC) on February 28, 2009 also has specific provisions in respect of food products.
The draft rules currently being considered cover all types of products, whether manufactured within China or imported from outside. The only exceptions are drugs and military products which are excluded from the draft rules ambit.
The current draft states that manufacturers (including entities with production within China as well as importers or import agents) are required to immediately stop production and sale of defective products and commence a recall. Thereafter the manufacturer/importer will need to submit a report to the local quality inspection department immediately after the product has been confirmed to be harmful to human health and safety. The draft states that manufacturers must not conceal the hazards of their defective products and should report to the quality department details as to risks posed to human health and safety, damage or accidents that may have been caused as well as defects that have been identified outside of China.
The draft also states that sellers shall establish stock account and sales account, record details of sales including product type, specification, production batch and quantity etc. These details need to be stored for at least 3 years.
The draft also states that if sellers or service providers become aware that products may be defective and this is harmful to human health and safety, they should immediately stop sales, use or lease of products, inform the customers, producers and suppliers and report to quality department. The seller or service providers are also under a duty to coordinate with the producers to carry out the recall.
The draft states that violators of the rules will be warned or asked to rectify the issue within a fixed period. Producers failing to comply may be fined between RMB 200,000 and RMB 500,000 or subject to sanctions under PRC criminal law.
Similarly, sellers or service providers may face fines up to RMB 200,000 on PRC criminal law sanctions.
The draft rules will, if and when they are issued, address a major concern of PRC consumers – how to deal with defective products. The main criticism one could have on the draft is that its provisions are still too vague and the penalties too limited to adequately protect consumers. However, as an incremental first step it is useful. On the other hand of the equation manufacturers and retailers would prefer more clear statements as to what is considered a “defect”, “harmful to human health and safety” and how best to deal with situations which fall within gray areas.