The Food Safety Law in China

Transcription

1 The Food Safety Law in China From Obstacle to Opportunity September 2016

2 Content The New Food Safety Law in China simplified Market Overview From Obstacle To Opportunity Q&A please prepare!

3 Who we are China since 2007 Headed Denmark s Commercial Work in Shanghai Government relations from production to sales 2012: Own Company Firsthand experience doing real business in China Focus on real sales online,b2c, B2B Not consultants but partners Today 4 teams: Regulatory & Government Affairs incl. Certification Online Solutions (China) Sales Solutions (China) Consumer/Market Research

4 01 The New Food Safety Law in China simplified

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6 01 Food Safety Law Explained Health Food The New Food Safety Law Infant formula Health Food Food for Special Medical Purposes Small Food Manufacturers & Retailers Online Shopping Imported Food Industrial Associations Consumer Associations News & Media Guidelines for non-compliance Fines & Compensation Other measures for illegal actions

7 01 Food Safety Law Explained Health Food Some Implications of Food Safety Law Health Food, Infant Formula, etc. T-mall Global Cross-border E-commerce Experience Stores Traditional Marketing Online marketing and Website (marketing) ü Daigou Trade C2C ü Personal import (tourist) import ü Marketing outside China

8 01 01 The New Food Food Safety Safety Law Law Explained Health Food Classification of Health Food in China The health food in China can be divided into two types TYPE DEFINITION WHAT IS NEEDED TO BE IMPORTED Nutrition supplement Food that provides the vitamins and/or minerals but without providing energy or other active ingredients Filing Function health food Food that labeled with health function claim has physiological effects on the human body Blue Hat Registration AUTHORITY: China Food and Drug Administration (CFDA), CFDA s responsibilities include: Draft laws, regulations and rules and policy plans on the administration and supervision of food (including food additives and health food, the same below) safety, drugs (including traditional Chinese medicines and ethno -medicines, the same below), medical devices and cosmetics Formulate the regulations on food administrative licensing and supervise their implementation; establish food safety risk management mechanism, formulate annual plans for nation-wide inspection for food safety and programs for major control actions, and organize their implementation; Formulate the investigation and enforcement system for food, drugs, medical devices and cosmetics, and organize their implementation; organize the investigation and punishment on major violations; establish recall and disposal system for defect products, and supervise the implementation

9 01 Food Safety Law Explained Blue Hat FUNCTIONAL HEALTH FOOD DESCRIPTION Food that labeled with health function claim has physiological effects on the human body. Ingredient and function based products 27 Functional claims; choose at one or two TIME 2-4 years sooner if documentation is prepared in advance COST RMB K (lower for more than one product from same manufacturer and if company prepare documentation) VALIDITY 5 years CFDA REGULATION Administrative measures of Health Food Registration and Filing COMPLIANCE Retail-by 1. July 2016, New detailed regulation expected published in October 2016; e-commence-by the end of ORGANISATION TEST Part 1: Physical, chemical, hygienic, stability, active ingredient etc. tests /Part 2: Toxicology test /Part 3: Function test (1 animal test;2 human test; 3 human & animal test) DOCUMENTATIONS Legal & technical documents (raw material, plant/manufacturer; GMP, tests, IPR, etc.), packaging and labeling sample PLANT INSPECTION CFDA, depending on actual condition BENEFIT Retail, whole-sale, e-commerce, etc.

10 01 Food Safety Law Explained Blue Hat FUNCTIONAL HEALTH FOOD NOTE DESCRIPTION Food that labeled with health function claim has physiological effects on the human body. Ingredient and function Owner of based certificate products can be a foreign company, but the 27 Functional claims; agent choose of application at least must one be a legal entity in China TIME 2-4 years Do not introduce new ingredients not already in the COST K ingredient catalogue - long approval time VALIDITY 5 years Function claims must be supported by evidence ORGANISATION CFDA Chinese adapted intake levels REGULATION Health Food Registration Can not claim and Filing to cure any diseases or other functions not approved COMPLIANCE Retail-by 1. July 2016, New detailed regulation expected published in October 2016; e-commence-by 11. may One year sales in country of origin/producing country certificate can be solved TEST Part 1: Physical, chemical, hygienic, stability, active ingredient etc. tests /Part 2: Toxicology test /Part 3: Function test (1 animal test;2 human test; 3 human & animal test) DOCUMENTATIONS legal & technical documents (raw material, plant/manufacturer; GMP, tests, IPR, etc.), packaging and labeling sample PLANT INSPECTION CFDA, depending on actual condition BENEFIT Supermarket, Gym, hotel, café shop, e-commerce, etc.

11 01 Food Safety Law Explained Filing NUTRITIONAL SUPPLEMENTS DESCRIPTION Vitamins and Minerals product approvals by CFDA and No Functional claims TIME 1 years sooner if documentation is prepared in advance COSTS RMB400K (lower if more than one product from same manufacturer and if company prepare documentation) VALIDITY life-time ORGANIZATION CFDA REGULATION Administrative Measures on Health Food Registration and Filing (CFDA) COMPLIANCE Retail-by 1. July 2016, New detailed regulation expected published in October 2016, e-commence-by the end of 2017 TESTS Physical, chemical, hygienic, stability, active ingredient etc. tests DOCUMENTATIONS legal & technical documents (raw material, plant/manufacturer; GMP, tests, IPR, etc.), packaging and labeling sample PLANT INSPECTION CFDA, depending on actual condition BENEFIT Retail, whole-sale, e-commerce, etc.

12 01 Food Safety Law Explained Filing NUTRITIONAL SUPPLEMENTS DESCRIPTION Vitamins and Minerals product approvals by CFDA and No Functional claims NOTE TIME 1 years COSTS 400K Limited number of vitamins, minerals, and food additives approved this may be expanded gradually VALIDITY life-time Do not introduce new ingredients not already in the ORGANIZATION CFDA limited ingredient and food additives catalogue REGULATION Health Food Registration and Filing (CFDA) No Functional claims COMPLIANCE Retail-by 1. July 2016, New detailed regulation expected published in October 2016; e-commence-by Chinese adapted intake levels 11. may 2017 TESTSPhysical, chemical, hygienic, stability, active ingredient etc. tests DOCUMENTATIONS legal & technical documents (raw material, plant/manufacturer; GMP, tests, IPR, etc.), packaging and labeling sample PLANT INSPECTION CFDA,depending on actual condition BENEFIT Supermarket, Gym, hotel, café shop, e-commerce, etc.

13 01 Food Safety Law Explained FMSP FOOD FOR SPECIAL MEDICAL PURPOSES DESCRIPTION Meet the special nutritional demands of consumers with a limited, impaired or disturbed capacity to intake, digest, absorb or metabolize conventional foods, or consumers with a particular disease or condition TIME immediately months COSTS depends on the New Health Food Regulations VALIDITY Five years ORGANIZATION CFDA REGULATION Administrative Measures of Foods for Special Medical Purpose (CFDA) GB General Rules for Foods for Special Medical Purpose GB General Rules for Infant Formula for Special Medical Purpose COMPLIANCE by 1. July New regulation expected published in October 2016 TESTS All the specific full nutritional formula foods should be completed the clinical trials. The Clinical Trials Quality Control Specifications of FSMP are the basis for qualified clinical trial methods and the technical indicators. These specifications will be released by CFDA. The list of FSMP sampling test institutions will be released by CFDA. DOCUMENTATIONS legal & technical documents, Products R&D reports,product standard requirements, label, production ability, test ability,clinical trial reports (only specific full nutritional formula foods do clinical trials), Certificate of the legitimate source of the food raw materials, food additives and the packing materials, such as the material manufacturing enterprises, sales invoice, duplicate of delivery inspection

14 01 Food Safety Law Explained FMSP FOOD FOR SPECIAL MEDICAL PURPOSES DESCRIPTION Meet the special NOTE nutritional demands of consumers with a limited, impaired or disturbed capacity to intake, digest, absorb or metabolize conventional foods, or consumers with a particular disease or condition Only food ingredients TIME immediately No months health function claims allowed COSTS depends on the Requirements; New Health Food own Regulations R&D, other; VALIDITY Five years Regarded as neither General food nor CFDA health ORGANIZATION CFDA food. It is the food for patients in special pathological REGULATION Administrative Measures condition of and Foods there for is Special an independent Medical regulation Purpose(CFDA) of FAMP. GB General Rules for Foods for Special Medical Purpose This products cannot be used for parenteral nutrition GB support General and Rules intravenous for Infant injection Formula for Special Medical Purpose COMPLIANCE by 1. July New regulation expected published in October 2016 Strategic focus in China now i.e. extremely good sales TESTS All the specific full and nutritional marketing formula opportunity. foods should be completed the clinical trials. The Clinical Trials Quality Control Specifications of FSMP are the basis for qualified clinical trial methods and the technical indicators. These specifications will be released by CFDA. The list of FSMP sampling test institutions will be released by CFDA. DOCUMENTATIONS legal & technical documents, Products R&D reports,product standard requirements, label, production ability, test ability,clinical trial reports (only specific full nutritional formula foods do clinical trials), Certificate of the legitimate source of the food raw materials, food additives and the packing materials, such as the material manufacturing enterprises, sales invoice, duplicate of delivery inspection

15 01 Food Safety Law Explained General Food GENERAL FOOD DESCRIPTION General food refers to standard and/or preserved food products that are that are suitable for human consumption, and do not fit into the other food categories, namely Health Food, Infant Formula, Pet Food, Organic Food, etc. General food includes, but is not limited to, liquid products such as alcoholic and non-alcoholic beverages, vegetable oils, animal oils, fruits, dairy products, spices, candies, biscuits, protein powder, and so forth. CATEGORY General Food SUB-CATEGORIES Some dairy products, e.g. liquid milk Genetically Modified Organisms Some seed products, e.g. extra virgin olive oil Other general food, e.g. biscuits, candy, red wine

16 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 1 CNCA REGISTRATION - FOR CERTAIN OVERSEAS MANUFACTURERS DESCRIPTION For dairy, meat, seafood and bird s nest products. Registration at the CNCA is a pre-requisite for manufactures of dairy products, meat and seafood TIME 1-2 years COST Depending on actual state VALIDITY 4 years ORGANIZATION CNCA REGULATION Order of the General Administration of Quality Supervision, Inspection and Quarantine ([2013] No. 152) COMPLIANCE by 1. May 2012, the regulation of bird s nest products is compliance by 1. January 2016 TEST Sample test of CNCA inspection and custom inspection DOCUMENTATION (Example: Dairy products): the sanitary certificates (The raw materials, certificate of neither diffuse nor carry any animal epidemic diseases, certificate of human safety) PLANT INSPECTION CNCA, BENEFITS Retail, whole-sale, e-commerce, etc.

17 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 1 CNCA REGISTRATION - FOR CERTAIN OVERSEAS MANUFACTURERS SUBCATEGORY GB NUMBER ENGLISH NAME Milk and dairy products GB GB GB GB GB GB GB GB GB GB Food Safety National Standards for Milk Powder Food Safety National Standards for Fermented Milk Food Safety National Standards for Modified Milk Food Safety National Standards for Sterilized Milk Food Safety National Standards for Pasteurized Milk Food Safety National Standards for Raw Milk Whey Powder and Whey Protein Powder Cream, Butter and Anhydrous Milkfat Food Safety National Standards for Cheese Food Safety National Standards for Processed Cheese

18 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 2 GMO SAFETY CERTIFICATION - FOR GMO IMPORTERS DESCRIPTION GMO Safety Certification is the pre-requisite for imported Genetically Modified Organisms (GMO) to China, including crops, microorganisms, animals and products derived from these sources. TIME 270 workdays COST Depending on documentation VALIDITY 3 years ORGANIZATION AQSIQ REGULATION Regulatory Requirements on Importing Genetically Modified Products into China, AQSIQ [2004] No.62 Notice COMPLIANCE by 24. May 2004 TESTS GMO test DOCUMENTATION The owner or its consignee should, at customs declaration, specify under Name of the Declaration Form of Import Commodities whether the product is genetically modified. If the commodity is declared as genetically modified, submission of the Safety Certificate of Agricultural Generically Modified Organism issued by the authorities as stipulated by relevant laws and regulations or any other related approvals (hereafter referred to as the approval documents and that of Review, Acknowledgement and Approval of Labeling of Agricultural Genetically Modified Organism. PLANT INSPECTION Not reformed

19 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 2 GMO SAFETY CERTIFICATION - FOR GMO IMPORTERS DESCRIPTION GMO Safety NOTE Certification is the pre-requisite for imported Genetically Modified Organisms (GMO) to China, including crops, microorganisms, animals and products derived from these sources. TIME 270 workdays AQSIQ: General Administration of Quality Supervision, Inspection and Quarantine of the People s Republic of COST RMB?/product China (AQSIQ) is a ministerial, administrative organ VALIDITY 3 years directly under the State Council of the People s ORGANIZATION AQSIQ Republic of China in charge of national quality, REGULATION Regulatory Requirements metrology, commodity on Importing inspection, Genetically entry-exit Modified health Products into China, AQSIQ [2004] No.62 Notice quarantine, entry-exit animal and plant quarantine, import-export food safe certification and accreditation, COMPLIANCE by 24. May 2004 standardization, as well as administrative law TESTS GMO test -enforcement. DOCUMENTATION The owner or its Labeling: consignee Label should, of GMO at customs must contain declaration, the wording specify under Name of the Declaration Form of Import Genetically Commodities Modified whether Product the product and is any genetically inconsistency modified. If the commodity is declared as genetically between modified, the label submission claims and spot of the inspection Safety Certificate results of Agricultural Generically Modified Organism will stop issued GMOs by the from authorities entering as China. stipulated by relevant laws and regulations or any other related approvals (hereafter referred to as the approval documents and that of Review, Acknowledgement and Approval of Labeling of Agricultural Genetically Modified Organism. PLANT INSPECTION Not reformed

20 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 3 CFNA AUTOMATIC IMPORT LICENSE - FOR IMPORTERS OF CERTAIN FOOD DESCRIPTION For instance olive oil, fruits, meats, dried vegetables, and so forth. TIME 20 workdays COST Depending on agent/documentation VALIDITY Automatic Import License is 6 months and the license can only be used in the same year as application. It means that If you get the license in October, 2016, it will expire on 31. December 2016 ORGANIZATION CFNA issued the Automatic Import License COMPLIANCE by 1. October 2012 TESTS No test to get HS code to be approved into China DOCUMENTATION Application form, product importation contract, legal & technical documents of importer PLANT INSPECTION No need BENEFITS Retail, Whole-sale, e-commerce, etc.

21 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 3 CFNA AUTOMATIC IMPORT LICENSE - FOR IMPORTERS OF CERTAIN FOOD DESCRIPTION For instance olive NOTE oil, fruits, meats, dried vegetables, and so forth. TIME 20 workdays COST Free CFNA: China Chamber of Commerce of Foodstuffs and Native Produce VALIDITY Automatic Import License is 6 months and the license can only be used in the same year After as obtaining application. the It Automatic means that Import If you License, get the license the food in importer can be allowed to importing specific food October, 2016, products it will expire as on noted 31. above December into China Import/Export ORGANIZATION CFNA issued the agents Automatic are often Import in possession License of the Automatic Import COMPLIANCE by 1. October 2012 License, therefore, food importers in China can choose TESTS No test to get HS either code to to use be their approved license into or China apply one themselves DOCUMENTATION Application form, product importation contract, legal & technical documents of importer PLANT INSPECTION No need BENEFITS supermarket,, transportation, café shop, grocery, e-commerce, etc.

22 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 4 NORMAL FOOD IMPORT DESCRIPTION Filing at Registration System for Importers and Exporters of Imported Food is the pre-requisite for firsttime importer/exporters. Consignees of import foods shall submit the filing application to their local Inspection and Quarantine Bureau before the foods are imported. TIME weeks (4-5 weeks for sample testing and issuing Sanitary Certificate) COST Around RMB 200 for general inspection/product VALIDITY 60 days ORGANIZATION AQSIQ REGULATION The Administrative Measure of Imported and Exported Food Safety COMPLIANCE by 1. March 2012 TEST Inspection and Quantity test DOCUMENTATION Declaration for Inspection and Quarantine (Sample of Labelling written in Chinese, Translation of the original labeling, Original certificate of the country of origin, Translated certificated of the country of origin, Hygienic certificate or certificate of free sales issued by authority in original country, Translation of Hygienic certificate or certificate of free sales, Original and copy of business license of distributor/ retailer), Customs Declaration(Copy of trading contract, Business invoice, Packing list, Bill of lading) PLANT INSPECTION No need BENEFITS supermarket,, transportation, café shop, grocery, e-commerce, etc.

23 01 Food Safety Law Explained General Food GENERAL FOOD TYPE 4 NORMAL FOOD IMPORT DESCRIPTION Filing at Registration NOTE System for Importers and Exporters of Imported Food is the pre-requisite for firsttime importer/exporters. Consignees of import foods shall submit the filing application to their local Inspection and Import/export Quarantine Bureau agents before will examine the foods the are product imported. ingredient lists to see whether they fit into the category of general TIME weeks (4-5 food, weeks determine for sample whether testing they and require issuing certain Sanitary Certificate) COST Around RMB 200 certification for general for inspection/product import and look up for the HS code. VALIDITY 60 days Tax Calculation Example: ORGANIZATION AQSIQ The HS code for Virgin Olive Oil& Fractions is REGULATION The Administrative , Measure the of MFN Imported rate of and duty Exported is 10%, Food VAT is Safety 17% COMPLIANCE by 1. March 2012 and integrated tariff is 28.7%. TEST Inspection and Quantity test TYPE 5 HONEY AND WINE DOCUMENTATION Declaration for Inspection and Quarantine (Sample of Labelling written in Chinese, Translation of the original labeling, Certain Original food certificate requires of CNCA the country plant inspections of origin, Translated (perhapscertificated of the country of origin, Hygienic incl. certificate wine & or honey). certificate of free sales issued by authority in original country, Translation of Hygienic certificate No detailed or certificate regulation of free has been sales, issued Original yet. and copy of business license of distributor/ retailer), Customs Declaration(Copy of trading contract, Business invoice, Packing list, Bill of lading) PLANT INSPECTION No need BENEFITS supermarket,, transportation, café shop, grocery, e-commerce, etc.

24 01 Food Safety Law Explained General Food General Food Import GB regulations SUBCATEGORY GB NUMBER ENGLISH NAME Food Safety National Standards for Hygienic Standard for GB Biscuits Biscuits GB/T Food Safety National Standards for Biscuits Candy Chocolates GB GB/T GB GB/T Hygienic Standard for Candy Candy Classification Chocolate, Chocolate with Cocoa Butter Alternatives and Their Products Chocolate and Chocolate Products

25 01 Food Safety Law Explained General Food General Food Import GB regulations SUBCATEGORY GB NUMBER ENGLISH NAME GB/T Classification of Alcoholic Beverages Alcoholic beverages Beverages GB Food Safety National Standards for Distilled Liquor and Its Integrated Liquor GB Food Safety National Standards for Fermented Liquor and Its Integrated Liquor GB Food Safety National Standards for Wines GB/T General Standard for Beverage GB/T Solid Beverage GB Hygienic Standard for Solid Drink GB/T Carbonated Beverages GB Hygienic Standard for Carbonated Drinks GB/T Tea Beverages

26 01 Food Safety Law Explained General Food General Food Import GB regulations SUBCATEGORY NOTE GB NUMBER ENGLISH NAME GB/T Classification of Alcoholic Beverages CNCA (Certification and Accreditation Administration of the People s Republic of China) is a government GB organization that falls under Food Safety the administration National Standards of AQSIQ, for Distilled which Liquor is responsible and Its Integrated for the Liquor Alcoholic management beverages and administration of all product certifications, accreditations and conformity GB Food Safety National Standards for Fermented Liquor and Its Integrated Liquor assessments in China. CFNA (China GB Chamber of Commerce Food of Foodstuffs Safety National and Standards Native Produce) for Wines issued the Automatic Import License GB/T General Standard for Beverage AQSIQ: General GB/T Administration of Quality Solid Beverage Supervision, Inspection and Quarantine of the People s Republic of China (AQSIQ) is a ministerial, administrative organ directly under the State Council of GB Hygienic Standard for Solid Drink Beverages the People s Republic of China in charge of national quality, metrology, commodity inspection, entry -exit health quarantine, GB/T entry-exit animal Carbonated and plant Beverages quarantine, import-export food safe certification and accreditation, standardization, as well as administrative law-enforcement. GB Hygienic Standard for Carbonated Drinks CIQ: AQSIQ has set up in total 35 Entry-Exit Inspection and Quarantine Bureaus (CIQ) in China s 31 provinces, near GB/T branches and more Tea Beverages than 200 local offices across the country If health food is imported as general food, then no claims is allowed, no intake recommendations, and only powder and liquids are permitted Tablet form is ok for general food, such as milk tablets. Whether a product is a general food or not mostly depending on ingredients, not on the form.

27 01 Food Safety Law Explained Infant Formula INFANT FORMULA DESCRIPTION Infant formula milk powder in China includes infant formula (0-6 months), older infants (6-12 months) and young children (12-36 months) formula. TIME 6-12 months depending on manufacturer and CFDA plant inspection COSTS To be confirmed VALIDITY Five years ORGANIZATION CFDA, sometimes need to do plant inspection (CFDA); AQSIQ: get CNCA Registration (as diary food) REGULATION The Administrative Measure of Inspection, Quarantine, and Supervision of Imported and Exported Dairy Products. Administrative Measures for the Registration of Formula of Infant Formula Milk Powder (exposure draft), GB , GB , GB , GB , GB COMPLIANCE by 1. October 2016 for retail; compliance is by 1. January 2018 for e-commerce. New detailed regulation expected published in October 2016 TESTS technical evaluation DOCUMENTATIONS Raw material quality and safety standards, Product formula, Product formula development report, Production processing, Trial sample test report, Evidentiary materials on production capacity, development capacity and inspection capacity, formula scientificity and safety, Samples of label and specification and related certificates. Product samples PLANT INSPECTION CFDA BENEFITS Retail, Whole-sale, e-commerce, etc.

28 01 Food Safety Law Explained Infant Formula INFANT FORMULA DESCRIPTION Infant formula NOTE milk powder in China includes infant formula (0-6 months), older infants (6-12 months) and young children (12-36 months) formula. TIME 6 months AQSIQ and local CIQs under AQSIQ are responsible for the supervision and inspection of online shopping COSTS To be confirmed bonded imported food VALIDITY Five years The infant formula milk powder should be only made ORGANIZATION CFDA, sometimes from need goat, to sheep, do plant and inspection cow s milk. (CFDA); AQSIQ: get CNCA Registration (as diary food) REGULATION The Administrative Measure of Inspection, Quarantine, and Supervision of Imported and Exported Dairy The overseas food exporter or his agent should apply Products. Administrative for the record Measures to AQSIQ for the Registration of Formula of Infant Formula Milk Powder (exposure draft), GB , GB , GB , GB , GB Each manufacturer can register with the CFDA for no COMPLIANCE by 1. October 2016 more for than retail; 3 brands compliance containing is by no 1. January more than for e-commerce. New detailed regulation expected published formulas, in October (apparent 2016 differences must be justifiable TESTS technical evaluation through scientific tests). DOCUMENTATIONS Raw material quality A same and formula safety cannot standards, be used Product for the formula, production Product of formula development report, Production processing, different Trial brand sample by one test manufacturer report, Evidentiary and the materials same on production capacity, development formula means that there is no nutrient content change capacity and inspection different capacity, brands formula with using scientificity any same and raw safety, material, Samples of label and specification and related certificates. food Product additive, samples nutrition enhancer and their sources. PLANT INSPECTION CFDA Some contents are forbidden in label and specification BENEFITS supermarket, transportation, incl. other function café shop, claims. grocery, e-commerce, etc.

29 01 Food Safety Law Explained Feed and Feed Additive FEED AND FEED ADDITIVE DESCRIPTION Feed and feed additive. For 1st-time imported pet food, Imported Feed and Feed Additive Product Registration Certificate issued by Ministry of Agriculture is needed in order to sell, distribute and market in China. TIME 6-12 months (Document Preparation 1-3months, document translation 1 month, legal overview 1-2 months, testing 5-6 months) COSTS The average agent fee is 5,000 USD, however, testing fees vary depends on the products (normally USD and higher) VALIDITY five years ORGANIZATION AQSIQ REGULATION Measures for Inspection, Quarantine, Supervision and Administration of Imported and Exported Feed and Feed Additives COMPLIANCE by 1. September 2009 TESTS Inspection and Quantity test DOCUMENTATION for pet food feasibility check: Product name and trade name, exporting country, product appearance, origin of product (animal, plant, chemical), ingredient list, effective content, related standard (quality standard, hygiene standard, test method, etc), documents for custom clearance, documents for for Imported Feed and Feed Additive Product Registration Certificate PLANT INSPECTION No need BENEFITS Retail, whole-sale, e-commerce

30 01 Food Safety Law Explained Feed and Feed Additive FEED AND FEED ADDITIVE DESCRIPTION Feed and feed NOTE additive. For 1st-time imported pet food, Imported Feed and Feed Additive Product Registration Certificate issued by Ministry of Agriculture is needed in order to sell, distribute and market in China. AQSIQ: General Administration of Quality Supervision, Inspection and Quarantine of the People s Republic of TIME 6-12 months (Document China Preparation 1-3months, document translation 1 month, legal overview 1-2 months, testing 5-6 months) Each pet food product require individual certification. COSTS The average agent Different fee is products 5,000 USD, manufactured however, testing from the fees same vary factory depends on the products (normally USD and or higher) in the same company should apply for individual VALIDITY five years certificates. ORGANIZATION AQSIQ There are four steps of importing pet food to China. REGULATION Measures for Inspection, Overseas Quarantine, exporter is expected Supervision to work and closely Administration with of Imported and Exported Feed and Feed Additives certification agent on the application of Imported Feed and Feed Additive Product Registration Certificate and COMPLIANCE by 1. September the 2009 Chinese importer should collaborate with import TESTS Inspection and agent Quantity on test custom clearance. DOCUMENTATION for pet food feasibility check: Product name and trade name, exporting country, product appearance, origin of product (animal, plant, chemical), ingredient list, effective content, related standard (quality standard, hygiene standard, test method, etc), documents for custom clearance, documents for for Imported Feed and Feed Additive Product Registration Certificate PLANT INSPECTION No need BENEFITS supermarket, e-commerce

31 02 Market Overview

32 02 Market Overview China s Health food and Nutritional Supplement market The vitamins and dietary supplements industry grew 10% in 2015 to reach an overall sales level of $16 billion. If herbal and traditional dietary supplements are included, the growth rate is 19%. The sector is forecasted to reach a level of almost $23 billion in June 2016, the China Food and Drug Administration (CFDA) had approved a total of 16,573 health food products, of which, 15,822 were domestically made and 751 were imported. Functional food accounts for about 65% while nutritional supplements account for the remaining 35%. China Consumer Association found that over 40% of Chinese customer prefer foreign brands within the health category - and only 9 percent preferred domestic products.

33 02 Market Overview Scale of Chinese Nutritional Supplement Market ( /RMB100 millions) 15% CAGR 40% of the consumers habitually purchase health food products 24% of consumers purchase health food once every three months 22% of consumers purchase health food when they have a specific health issue. 7% CAGR Vitamins Non-herbs Minerals Herb-based nutritional supplement The market for vitamins and dietary supplements is a highly fragmented market, with the top five players in 2015 accounting for only 35% of the total value. The leading brand is Amway s Nutrilite, closely followed by the domestic brand Infinitus.

34 02 Market Overview Infant Formula Market in China Baby formula sales in China is expected to double in the next five years, from $19.9billion to $40.6 billion in (Euromonitor) The government relaxation of the One Child Policy increased the birthrate in 2014 with 1.237%. This translates into million new births in same year and 40 million babies aged between 6 months and 3 years. Fierce competition due to tighter regulations and challenges from domestic brands as well as mature e-commerce channels. In 2013 there were 128 baby powered milk manufacturers producing more than 700,000 tons of infant formula in China. The number of local manufactures have decreased lately due to tighter control and certification requirements.

35 02 Market Overview The Food & Snack Market By 2018, China is expected to become the top importer of foreign food products, with the total value of food imports set to reach RMB 480 billion (US$77 billion, WTO). International food and snack brands have huge business opportunities in China mainly due to distrust in domestic brands, production shortcuts, and trading up among consumers. Sales growth in sweet snacks is declining due to sugar scare while snack (meal) replacement and nuts sales are increasing rapidly. Milk and coconut health drinks are taking over the sweet snack market. Online sales of general food and fresh food are common in China. In a June 2015 survey of internet users in China, 24.5% indicated they had purchased fresh food digitally, and nearly half were interested in doing so in the future. Convenience and lower prices drive the online sales of food and snacks. Nuts Sales Amount through Online Sales (hundred million yuan) Percentage(%)

36 02 Market Overview Female Consumer Power The scale of the female health food market is set to expand continuously. Most women buy health food for purposes of beauty, weight loss, blood replenishment, bowel movements and detoxification. Females are main consumers of health food, among them those aged account for approximately 60% of the total sales of all health food, while the share of sales to young females (aged 18-28) is gradually increasing. Women in China need special focus, as they are often handling the family s finances and are the main influencers on spending decisions. They are independent and educated. The Chinese women s values and aspirations is most often shared by their families.

37 02 Market Overview The Elderly Segment End of 2015, the population of seniors aged 60 or above was 222 million, accounting for 16.1% of the total population. It is projected that the mainland s senior population will reach its peak at more than 400 million in Nutritional supplements and health food targeting the elderly will be one of the leading categories on the market. Market forecast has it that, in , the consumer market of China s elderly population will jump from about RMB 4 trillion to about RMB106 trillion and it is estimated that spending on health, wellness and medical care will grow particularly sharply. Note; the buyers of health supplements for the elderly segments is primarily their children and mostly women.

38 02 Market Overview Daigou Trade In 2014, Daigou trade business was worth RMB 75 billion We have around 100,000 people re-selling our product in China" (Radek Sali, Swisse) App. 40,000 Daigou agents working on a daily basis in Australia; your sales and marketing staff Tencent s Wechat and Sina Weibo transactions through Wechat wallet and Alipay personal relations and avoidance of custom taxes. The main reason for Daiguo trade is due to concern over unsafe products, especially food safety problems. In fact, word-of-mouth recommendations accounts for over 75% of purchases in China.

39 02 Market Overview The Online Market Facebook, Youtube, Instagram and Twitter - all major Western social media are completely blocked in China. But make no mistake: The Chinese have their own world of social media and use it even more frequently than Westerners do. For companies wanting to reach Chinese consumers there is simply no alternative to mastering the social media landscape and use it to your advantage. WeChat is the no. 1 media - all companies in China should have an official account for marketing and storytelling. Of great importance is to work with Key Opinion Leaders (KOL) and BBS (bulletin board systems) - online discussion fora for specific purposes. Finally a tailormade and high quality website is a necessity.

40 02 Market Overview Importance of Trust in Health Food The Internet is not yet trusted as an information or purchasing channel Direct sales Online sales Non-professional retail Tradi=onal retail Source: Boston Consulting Group

41 02 Market Overview The Chinese Fitness and Wellness Market A report cited by Xinhua, the government s official news agency, stated that the number of gym attendees in 70 major Chinese cities increased by four to five million people each year between 2011 and Spending on health and wellness has seen tremendous growth over the last decade the market is poised to reach nearly $70 billion by 2020 a result of both rising incomes and awareness about wholesome living among a growing middle and upper class. Consumer research, 2016; 51 out of 60 men between years of age (tier 1 cities) prefer to supplement their work-out with sports nutrition if this could limit the time they spend in the gym. The same group said that they did not enjoy working out, but did so due to health and appearance related motivations. Women in the same age group were less inclined to take sports nutrition due to worry of increasing body-mass and scare of harmful ingredients. 58 out of 60 women would take weight control supplements if it was guaranteed safe and without side effects.

42 03 From Obstacle To Opportunity

43 03 From Obstacle to Opportunity Food Safety Law - from Obstacle to Opportunity CN/AUS government relations; FTA Large CN community in Australia Strong National Brand in China Financially strong/capable companies TCM cooperation/herbal traditions in health food Education of the customers => brand loyalty Product development to fit target customer; children, elderly, and beautification products Strengthen trusted sales channels Strengthen personal travelers channels Duty Free (SG, HK, AUS) Relative slow adaption? Long Product Lifetime/lack of innovation? Lack of strong local presence is China your second home-market? Lack of use of Chinese social media marketing and sales models Guanxi? South China Sea conflict China Regulatory Changes Australian Health Food Scandals Counterfeits

44 03 From Obstacle to Opportunity How to Exploit these Opportunities? Screen your product selection - and make a China product strategy Move fast enjoy the first-mover advantage Use your national brand in your marketing Maximize the use of all the re-sellers (daogou trade) for sales and marketing reward them! Health food; get some products through general food import, the filing option, or FSMP to be present on the market during the certification process Chinese language marketing outside of China Work pro-actively with Chinese government agencies make friends Manage and invest in the Chinese market as your 2. home-market AND; avoid scandals, bad press, etc

45 04 Q&A

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