CIRS

CIRS held a free webinar (download) on 26 and 27 Apr,2018 on How to Comply with the Pilot Policy of Expanding 10 New Free Trade Zones (FTZs) for the Import of Nonspecial Use Cosmetics. The article includes 3 parts:

1) General info of pilot system in Shanghai Pudong new area and comparison with CFDA registration

2) Data analysis of record keeping in Pudong new area

3) Brief introduction and outlook of expanding 10 new free trade zones for the import of non-special use cosmetics.

Background

In order to implement the State’s decision making to unleash the vitality of companies’ innovation and entrepreneurship, and to promote a legalized, internationalized and facilitative business environment, the government decided to make a number of modifications on administrative licensing and decided to run it first in Pudong, Shanghai, and would expand to other cities if things went well.

On 17 Jan 2017, CFDA and AQSIQ jointly issued a“Notice on Pilot Implementation of Record-Keeping for Imported Non-Special Use Cosmetics in Pudong New Area”(Notice No. 7). On 18 Jan, CFDA issued another “Notice on Work Program of Record-Keeping for Imported Non-Special Use Cosmetics in Pudong New Area” (Temporary Notice No. 10) which gives clearer and more specific requirements.Later on 23 Feb, CFDA issued an official “Clarification on the Work Program of Record-Keeping for Imported Non-Special Use Cosmetics in Pudong New Area” (Temporary). The Clarification explains the differences between the recordkeeping system and registration with CFDA.

Scope

? First launched in Pudong, Shanghai;

? Implementing time: 1 Mar 2017 ～ 21 Dec 2018;

? Only for import non-special use products, first importation;

? Importation can only happen at the corresponding port;

? Overseas cosmetic company should have responsible person(s) registered in the corresponding area;

? Cancellation of current record-keeping is required if the product is to be imported through other ports, re-do the record-keeping in another FTZ where the port is, or registration with CFDA is required.

Procedures (Figure 1)

Comparison with CFDA Registration(Table 1)

Data Analysis

By the end of March 2018, there are a total of:

? 212 usernames;

? 136 responsible persons;

? 192 overseas manufacturers;

? From 30 countries and regions, plus 20 domestic companies with their products produced outside China.

Figure 1. Registration procedures

Table 1. Comparison with CFDA registration

We’ve summarized the data from Mar 2017 to 20 Apr 2018 and analyzed in Figure 2.

678 record-keeping numbers given out in 2017, and there are already over 520 numbers issued in 4 months time this year.

Compared to the total number of products registered with CFDA in 2017—13,785, there is less than 5% of total import products recorded under the pilot system last year.

We shall foresee an increase of this percentage this year as more companies are more familiar and have more confidence in the new system.

In 2017, after a blank period of only 5 products obtained the record-keeping number in the first 2 months, there is a general growing trend of the numbers (Table 2). At first,most of the companies trying this pilot system are the big companies.

Table 2. Approval passing rate, 2017～2018

Figure 3 is the No. of record keeping numbers by country and region. As we can see from Figure 3, Korea has the largest number, consists about 39% of the total.France and the US are the second and third, followed by Japan. The top 4 countries have covered 96% of the products recorded in Pudong.

Regarding countries, about half of the countries are from Europe.

Figure 3. No. of record keeping numbers by country and region

Figure 2. No. of products successfully obtained record-keeping, Numbers 03.2017～04.2018, Pudong

Figure 4. Top 10 manufacturing companies obtained record-keeping No. in Pudong

Figure 4 listed the top 10 manufacturing companies in regard to product numbers that have been recorded in Pudong. LG Household & Health Care is at the dominant position, doubles the number of products recorded by Chanel who is in the second place. Nars from Shiseido and Shiseido itself have been separate listed, in the third and sixth place respectively. Estée Lauder, The Face Shop, Elizabeth Arden,and Lanc?me have similar numbers, with Korderma and YSL in the ninth and tenth places. We can see that the top companies are mostly the well-known companies.

Typical problems especially for the pilot system

? Products should be cosmetics (used on healthy skin)and non-special use products;

? Hair-dye: can be regarded as non-special use products if the color can be washed off immediately after dying;

? Whitening products: physical whitening products, e.g.covering, are still considered as special use products;

? Anything changes on packaging and Chinese label should be renewed as these are public information.

Outlook of Expanding the Pilot Policy

After more than a year’s implementation of the pilot system, everything’s going smoothly according to Shanghai FDA, and the government thinks that the system can be copied and pasted to other FTZs. Therefore they issued a notice on 8th Mar 2018 to expand the pilot system to 10 other FTZs in China.

The 10 FTZs include Tianjin, Liaoning, Fujian,Henan, Hubei, Chongqing, Sichuan, Shaanxi, Guangdong,and Zhejiang. Among these 10 FTZs, Guangzhou and Zhejiang have already issued their notices to open the pilot system.

Zhejiang Zhoushan FTZ

? 120 km2implementing area;

? Issued their notice on 6 Mar 2018;

? Held the press conference of launching the system, and the first record-keeping number of Zhejiang was issued;

? Having the second largest number of cosmetic factories in China.

Guangzhou Nansha New Area FTZ

? 60 km2implementing area;

? Issued notice on 11 Apr. 2018;

? Implementation time: 8 Mar. 2018～21 Dec. 2018;

? Having the largest number of cosmetic factories in China.

To overseas manufacturers, the expansion of the system enables you to import through varies ports in different cities for different products, and you can have responsible persons in different cities. The market entrance permit in this way is less time-consuming and the process is easier.

The responsible person will take good responsibility for the products, including marketing activities and product safety. Competent authority will carry out their on-site supervision regularly. This results in a more stringent on- and post-market surveillance. Authorities will build-up an enterprise integrity system in the near future to grade the companies.

As CFDA and CIQ have been combined to one department, they will have close contact and information exchange, this will make the process more efficient as well as having more rigid check on the information to avoid mismatch and result in misleading to our customers.

More details will be coming for these cities soon, and CFDA may issue further notice on what happens after the implementing time.