By Huang Jianwen  King & Wood Mallesons’ Investment Group

huang_jianwenThe Regulations on the Supervision and Administration of Cosmetics (Draft for Review) (the “Draft for Review”) drafted by China Food and Drug Administration (the “CFDA”) was published on 20 July 2015 for public comments. The current regulation governing the supervision and administration of cosmetics in China is referred to as the Regulations Concerning the Supervision of the Hygiene of Cosmetics (the “Current Regulation”). The Draft for Review contains 7 chapters, 79 articles and approximately 13,000 characters compared to the Current Regulation’s 6 chapters, 35 articles and approximately 3,000 characters.

The Current Regulation was promulgated in 1989, and became effective in 1990. It focuses on implementing a supervisory system of government reviews and approvals rather than a purely market-based approach to regulation. The Current Regulation’s supervisory measures may be relatively deficient with respect to striking down regulatory violations.

In addition, the food and drug administration has replaced the health administration as the government institutions in charge of regulating the quality and safety of cosmetics. This replacement was made after the State Council adjusted the scope of various PRC government institutions. Such replacement is inconsistent with the provisions in the Current Regulation. Thus, the CFDA has drafted the Draft for Review with an aim towards establishing a scientific and highly effective regulatory system for cosmetics. The highlights in the Draft for Review include the following.

Elaborating on the Regulatory Framework for Cosmetics

The Draft for Review adopts a raw material management mechanism which combines category management and a system of government approvals and record filing. The CFDA is the authority that formulates the respective categories for prohibited materials, restricted materials, and allowed materials for cosmetics. New raw materials, depending on the degree of risk, will be required for either review and approval or record filing. For example, raw materials with high risks such as antiseptic, sun screener, colorant, hair colorant, and skin whitener are subject to review and approval whereas others are subject to record filing with the CFDA. Enterprises shall periodically report the use of new raw materials and shall also periodically provide a safety status report.

The Draft for Review revises the classification of “cosmetics for special purpose” and “cosmetics for non-special purpose” in the Current Regulation to “special cosmetics” and “common cosmetics” and continues to require registration for special cosmetics and record filing for common cosmetics. The categories of special cosmetics have been reduced from nine to five. Such special cosmetics include hair colorant, perm products, skin whitening products, sunscreen products, and other types of cosmetics which the CFDA deems as cosmetics that require special administration. The CFDA may adjust the scope of what it considers special cosmetics according to the CFDA’s risk evaluation of the product’s status.

It is worth noting that the Draft for Review includes oral care products such as toothpaste as a cosmetic product subject to regulation. The Draft for Review may significantly affect the supervision of such products.

Stricter Regulation of Function and Effect-Related Claims, Labels, and Advertisements of Cosmetics

The Draft for Review states that function and effect-related claims of cosmetics must have sufficient scientific evidence. Cosmetics manufacturers are responsible for such claims and shall publish relevant reference literature, research data, or other evidentiary materials for function and effect-related claims on designated websites and are subject to public supervision.

In addition, the Draft for Review prohibits cosmetics labels which imply or express medical effects, exaggerate functions, falsely claim functions or otherwise cause consumers’ misunderstandings, or violate good social morals or relevant laws and regulations. Cosmetics advertisements must be true and legitimate, and may not falsely claim product functions and effects via trademark, image, or other means. Cosmetics advertisements shall not explicitly or implicitly claim that the products have medical effects. Moreover, they cannot use the names of others to give guarantees or hints about product functions and effects to mislead consumers.

Determining the Scope of Subjects of Responsibilities

The Draft for Review specifies what constitutes a manufacturer or a distributor of cosmetics and their responsibilities. Cosmetics manufacturers shall release their products into the market under their own names and take the primary responsibility for the quality and safety of such products.

Cosmetics distributors shall examine purchase records, keep relevant receipts, and comply with the requirements for storage and transportation. Meanwhile, the Draft for Review raises requirements for centralized transaction markets and third-party platforms for online transactions. For example, the Draft for Review requires that online transaction platforms for cosmetics implement a real-name registration system. The Draft for Review aims to comprehensively cover and regulate each step in the supply chain such as manufacturing and distribution.

Enhancing Safety Evaluations and Combining Licenses

The Draft for Review requires cosmetics registration applicants and record-filers to designate specialized personnel or entrust independent third-party institutions to conduct cosmetics safety evaluations pursuant to the provisions of the State Council’s food and drug administration authority. Safety evaluation materials of a cosmetics product are required for its registration/record filing.

The Draft for Review proposes to combine the cosmetic manufacturing license issued by the quality supervision authorities and the cosmetic manufacturer’s sanity license issued by food and drug administration into a cosmetic manufacturing license issued by the food and drug administration. It also states that manufacturers of cosmetics shall comply with good manufacturing practices.

The Draft for Review draws significant attention from stakeholders including industrial associations and enterprises. It is important to follow developments with respect to the Draft for Review. We will follow up with updates regarding any significant changes to the Draft for Review as it nears finalization.

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