By Mark Schaub, Effie Liu (Liu Guannan)
After years of debate in both academic and business circles, China has placed the removal of animal testing for cosmetics on the agenda.
The National Medical Products Administration (“NMPA”) has newly released Measures for the Administration of Filing for Non-Special Use Cosmetics (Draft for Comments)[1] (“Measures”) on 23rd of May 2019[2] which expressly provides that non-special use cosmetics (such as shampoo, perfume, cleanser, etc.) are exempt from toxicology tests if relevant safety requirements can be met. The Measures do not apply to special use cosmetics such as sunscreen or hair dye products. Despite this the Measures are extremely important and sends a strong and clear signal to the cosmetics industry that the Chinese authorities are taking steps towards a cruelty free approach.
In addition to representing ground-breaking progress in respect of animal testing, the Measures also set out a series of other major changes to and improvements in respect of the filing procedures for non-special use cosmetics.
Notable changes include:
- Exemption for Animal Testing & Exceptions
- Domestic Responsible Person & Responsibility
- Post Filing Supervision and Administration
Exemption for Animal Testing & Exceptions
According to Article 11 of the Measures, both domestically manufactured and imported non-special use cosmetics can be exempt from animal testing requirements provided the manufacturer has obtained relevant qualifications for quality management and the product passes a safety risk assessment. It is critical that the product’s safety can be fully confirmed.
The exemption does not apply to all products. Indeed it does not even apply to all non-special use cosmetic products as the following categories cannot be exempted:
1. claimed to be used by children or infants;
2. includes new raw materials which have been approved or filed on record but not included in the catalogue of used cosmetics raw materials;
3. the filing person, domestic responsible person or actual manufacturer is listed as a key supervision target according to the quantitative grading results;
4. the filing person, domestic responsible person or actual manufacturer has been investigated for cosmetics quality or safety issues within the past three years.
One issue that is unclear from the Measures is that animal testing may be waived if, amongst other criteria, the relevant manufacturer has a qualified quality management system. However, the Measures do not elaborate whether manufacturers will need to meet the qualification standards of the jurisdiction of manufacture or if China envisages a uniform standard being applied.
It should also be noted that the inevitable bugbear of post market testing is still not laid to rest even in the case of receiving an exemption. The Measures do not explicitly rule out toxicological testing from post-filing or post-market supervision. Accordingly, even after the Measures come into force there is still a risk of animal testing even for non-special use cosmetic products sold in China, even if they have satisfied the criteria for exemption of animal testing at the filing phase. Nevertheless, the risk of such testing taking place is in our experience remote (i.e. for the past several years there have been no reports of animal testing on cosmetics by Chinese authorities as a routine regulatory measure), and this will be little comfort for those campaigning for an end to animal testing.
Domestic Responsible Person & Responsibility
The Measures requires that foreign cosmetics company that wishes to apply for non-special use cosmetics filing must appoint a domestic responsible person to carry out the relevant procedures. This is not a novel requirement and was first aired in 2017 during the pilot scheme in Shanghai Pudong New Area to reform the filing system for import of non-special use cosmetics. This requirement was applied nationally in 2018.
However, the Measures do proposes two material changes in this regard.
Who can be a Domestic Responsible Person? – the existing system requires the domestic responsible person of an overseas cosmetics manufacturer to be an enterprise legal person entity registered in China. The Measures allow the overseas cosmetic company to appoint either a Chinese domestic enterprise legal person entity or establish a Chinese representative office to act as domestic responsible person.
More Detailed Responsibility – the current regulations only provide a very general description of the domestic responsible person’s responsibilities. Current requirements limit responsibility to carrying out filing formalities, handling the import and sales of the relevant products and assuming liability for product safety.
The Measures greatly expand the scope of responsibilities of a domestic responsible person to also include supporting monitoring of adverse reactions; supporting product recalls, and also establishing a system to examine and verify the qualifications of the overseas cosmetic company and safety of the products, and rejecting the import or production of the products if they fail to meet compulsory statutory requirements of China.
As a result of the above changes, many international brands may be very eager to break the bond or reduce the leverage of their current distributor or Chinese partner which is registered as the domestic responsible person. According to the Measures, this can in theory be done by setting up a Chinese representative office to act as the domestic responsible person. However, as so often is the case in China the Measures do open the door to gridlock in that NPMA requires an agreement to be reached between the existing and the new domestic responsible person in regard to the allocation of liabilities for cosmetic products imported and sold before the change. The Measures are silent as to whether such agreement must be submitted to or approved by the relevant authority. Accordingly, it may be difficult for international cosmetics brands to unilaterally sever the link in this regard in the absence of a clear agreement to the contrary with the Chinese partner.
Post Filing Supervision and Administration
The Measures also emphasize continuing supervision of cosmetics after filing and market entry and empower the NMPA authorities to undertake robust actions to ensure the safety of cosmetics circulating in the Chinese market.
In addition to the traditional measure of post-filing technical review of submitted product materials, NMPA will also conduct post-market sampling inspections of non-special use cosmetic products to check authenticity of filing information as well as tracing the circumstances of manufacture and import. NMPA is also authorized to carry out overseas onsite inspections in order to verify the filing information of imported cosmetics and the manufacturer’s production quality management system.
In addition, a quantitative grading system will be adopted for filing management. This means the NMPA will grade filing applicants and the domestic responsible person based on quality management system, product status and post-market supervision and inspection results. The results of the grading will determine the frequency of random checks on product. Better graded parties will face less intrusive supervision and checks.
The above post-filing and post-market supervision measures are very similar to the new actions provided under the Regulations on Supervision and Administration of Cosmetics (Second Draft)[3] which was circulated for comment in August 2018. The reiteration of these measures in the Measures may be interpreted as a signal of the Chinese government’s determination to build a stronger regulatory authority that can proactively take action to safeguard the health and safety of Chinese consumers.
In the meantime, the Measures provide more detailed guidance on how filings should work in practice but (as always) there are still issues that have not been clarified.
Conclusion
This is the first time the Chinese authorities have explicitly on the record opened the door to excluding animal testing for imported cosmetics products across the country.
This also further evidence a trend in that the Chinese authorities are s experiencing a strategic shift in regulatory thinking, moving from strict pre-entry control to a more balanced combination of pre-market regulation and active and on-going post-market supervision.
For international cosmetic companies, this may make the Chinese market more attractive for cruelty free brands. However, issues will still exist but the direction at least should be applauded.
For international cosmetic companies already in the China market or imminently entering then the Measures when implemented would allow for a weaning off Chinese partners in that their own representative office could serve as the domestic responsible person. However, existing players will likely need to negotiate the way to freedom or de-coupling from their Chinese partners as the Measures do hint at agreements being required for existing relationships.
International cosmetic companies will likely cheer the NMPA’s quantitative grading system that will result in more attention being paid to untested, inexperienced or non-compliant manufacturers. Most international cosmetic companies will already meet the requirements under Chinese law.
[1] <非特殊用途化妆品备案管理办法（征求意见稿）>.
[2] http://www.nmpa.gov.cn/WS04/CL2103/338025.html.
[3] <化妆品监督管理条例 (草案)（第二次书面征求意见稿）>.