Member Article

The State Council passed the Regulations of the People's Republic of China for the Administration of Production Licences for Industrial Products on 29 June 2005. The Regulations were promulgated by premier Wen Jiabao on 9 July 2005 and entered into effect on 1 September 2005. The Regulations repeal the Trial Regulations for Industrial Product Production Permits promulgated by the State Council on 7 April 1984. Controlled products The Regulations require that a production permit be obtained for the production of certain important industrial products. The products include: • processed foodstuffs which have a direct connection with human health, such as dairy products, meat products, beverages, rice, noodles, edible oils, and alcoholic beverages; • products which may threaten the safety of persons or property, such as electric blankets, pressure cookers and gas water heaters; • products related to financial security and the quality and security of communications, such as fiscal cash registers, anti-counterfeiting bill scanners, satellite television broadcast ground receiving equipment, wireless radio and television transmission equipment, etc.; • labour safety protection products, such as safety nets, safety helmets, construction fasteners, etc.; • products which affect work and public safety, such as electric power pylons, bridge supports, railway industrial products, hydraulic metal structures, hazardous chemicals and their packaging, containers, etc. The list may be extended with other products. The Regulations provide for the State Council's industrial product production permit authority ("competent State Council authority") to formulate in conjunction with the relevant departments of the State Council a catalogue of industrial products subject to the state's production permit system (the "Catalogue"). The opinions of consumers' associations and industry associations are to be sought on the relevant products. Industrial products shall be exempted from the mandatory production permit system if their quality and safety can effectively be guaranteed by the judgment of consumers themselves, enterprise self-regulation and market competition or through a certification and accreditation system. Scope of licensing The Regulations govern the production, sale or use in the course of business activities inside China of products listed in the Catalogue. The import and export of the products listed in the Catalogue shall be handled in accordance with other relevant Iaws and regulations. If a product is listed in the Catalogue, enterprises may not produce it and work units and individuals may not sell or use it in the course of business activities, if no production permit has been obtained. Application process The Regulations require an enterprise that wishes to produce a product listed in the Catalogue to apply for and obtain a production permit from its local industrial product production permit authority at the provincial level (the "competent provincial authority"). Such an enterprise shall satisfy the following conditions in order to obtain a production permit: • it has a business Iicence; • it has appropriate professional technicians; • it has appropriate production resources and inspection and quarantine measures; • it has appropriate technical documents and process documents; • it has sound and efficient quality control and responsibility systems; • it has products that comply with the requirements of the relevant health and safety regulations; and • it complies with state industrial policy and does not use obsolete processes. The examination of the applicant enterprise includes an on-site enterprise and product inspection. The competent provincial authority shall forward its examination comments and all of the application materials to the competent State Council authority which shall decide whether or not to grant permission within 60 days of receipt of the application. If it grants permission, it shall issue the enterprise an industrial product production permit certificate ("Certificate"). The Certificate must be kept by the enterprise for inspection. A production permit is valid for five years, with the exception of a foodstuff production permit , which is valid for only three years. The enterprise shall place its production permit mark and number on its products or on their packaging and instructions therefor unless this is physically impossible. Sanctions If an enterprise fails to obtain a production permit as required under the Regulations, it may be subject to an order to suspend production, confiscation of illegally produced products, a fine and criminal liability.