New Infant Products

Novel infant products

China enters a new infant food age There has been a continuous overhaul of the oversight of infant formulae since the 2008 malaria outbreak. Registering powdered milks for infant formulae is probably one of the most significant changes. As of 1 January 2018, the new Food Safety Act's obligations to register infant formulae came fully into effect.

Baby infant formulae which are either produced locally or introduced through general distribution must receive a formulation registry before they can be marketed in the PRC. There will be a need to meet this demand from tens of millions of infant food brand names on the open markets - much of which will not be able to sustain this upheaval. Attention is drawn to the fact that infant formulae marketed through cross-border e-commerce retail[1] ("CBEC Retail") have a transitional deadline until the end of 2018, when another new Directive is likely to enter into effect.

Monitoring of infant formulae was designed in April 2015 under the Food Safety Act and improved in the last (almost) three years. In the meantime, a number of implementing provisions are in place to create a fully operational system for monitoring infant formulae. The infant formulae sold through CBEC Retail are ultimately covered by the regulatory requirement.

Although the CBEC Retail infant food standards have developed differently from those applicable to the general retail sector, the CBEC Retail standards have not yet been fully implemented. The following is a time line with applicable instructions and newsletters on infant formulae enrolment requirements: The core points of the present Act on the Registering of Infant Food are: Any infant formulae products to be marketed in China, whether produced in China or exported, must be licensed by the China Food and Drug Administration ("CFDA"); the total number of formulae that can be licensed by a single entity is limited to nine (9), and no more than three lines of products ("Formula Quota") may be licensed; as of January 11, 2018, there were 1,000 formulae licensed by 134 entities to the CFDA.

These included 96 indigenous producers (including FDI ) and 38 non-national producers[3]. Analyzing the information and dates in the registry list, we found the following: The restriction of the formulae quota is applicable to a unit (not to a group). For infant formulae, the corresponding enrolment requirements do not indicate whether the limit of the formulae quota (series 3, 9 in total) is applicable to a unit or group of enterprises.

Specifically, it is not clear whether each affiliate of a group entity is authorised to request the percentage rate on its own. CFDA's own list of registered formulae contains a number of successful cases in which subsidiaries of a group member have collected more than 9 formulae. It can therefore be inferred that each of the associated undertakings has its own quota of formulae if the request threshold is reached.

Of the 134 producers, 87 had 9 formulae recorded. More than half of the candidates had used up their total formula quota. However, a whole series of producers had kept part of their formula quota for later. Of those who had used up their total formula quota, only 37 came from abroad (foreign companies/investors).

Enterprises with 9 formulae were the most well-known trademarks. Only 28% of infant food enterprises are made up of international enterprises. Out of the 134 producers that have recorded infant formulae, about 40% are purely local, while about 60% have a non-national element of investment[4]. Management measures for the registration of infant milk powder allow the CFDA to carry out on-site inspection of applicant, even alien applicant, at the CFDA's own discretion. However, the CFDA is not obliged to carry out on-site inspection of applicant, alien applicant and alien applicant's milk powder.

Nonetheless, the process for overseas inspection is not clear. Following anonymised consultation with the CFDA, no on-site checks have yet been carried out abroad. It is not allowed to distribute or sell infant formulae in China without a prescription for them. Irrespective of whether the products are produced in China or whether they are exported to China via general trading.

1. Transitional regime - under the revised rule[5] (November 2017), infant formulae produced by non-domestic producers before 1 January 2018 may be exported and marketed without registering formulae before their expiry date. In comparison to the constantly developing monitoring system for infant food, the evolution of CBEC Retail over the last two years has been like a ride on a Rollercoaster!

In addition to the introduction of the requirement to register formulas, there were some back and forth as to whether (and when) the requirement to register should also cover CBEC Retail. In accordance with the latest policies recently heralded in September 2017 after the executive meeting of the State Council, the transitional deadline for the enforcement of various PRC registry obligations for CBEC retail products will again be prolonged by another year, i.e. until the end of 2018.

This means that Infant Formula products can still be sold in China through the CBEC Retail models without registering until the end of 2018. It will give a breathing space to those overseas trademarks that have not yet received inscription. Despite the continuously evolving CBEC Retail guidelines, further extensions of the deadline are unlikely.

Given that an infant formula enrolment request will require a reasonable amount of preparatory work, it is proposed that non-national trademark holders who rely on the CBEC Retail Scheme should be prepared to request enrolment as soon as possible.

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