Article 81 of the Food Safety Law of the PRC (the “Food Safety Law”), revised in 2015,

stipulates that the product formulas for infant formula milk powder shall be registered with the

food and drug administration under the State Council. As a subsequent supporting regulation,

the China Food and Drug Administrative (the “CFDA”) promulgated the Administrative Measures

for the Registration of Infant Formula Milk Powder Formulas (the “Measures”) on June 6, 2016,

which shall come into force as of October 1, 2016. We consider the following points to be

worthy of attention:

 

Establishing application thresholds, and equal requirements for domestic and imported

products

 

The Measures apply to the administration of the formula registration of the infant formula milk

powder (the “infant milk powder”) produced, sold and imported to within the territory of the

PRC, and applicants must be domestic producers intending to produce and sell the infant milk

powder within the territory of the PRC, or offshore producers intending to export the infant milk

powder to the PRC. As a consequence, a CFDA-issued formula registration certificate is

needed when importing infant milk powder into the PRC.

 

Meanwhile, the Measures require applicants, which may also be producers, to have the capacity

to engage in R&D, produce and test infant milk powder, comply with good production practice

requirements for powdered infant formula foods, implement hazard analysis and critical control

point systems, and conduct inspections of outgoing infant milk powder batch by batch according

to the relevant laws, regulations and national food safety standards for infant milk powder.

Without meeting such conditions, producers cannot apply to register infant milk powder formulas.

 

Limitations on formula quantities to avoid market disorder

 

The Measures stipulate that each producer shall, in principle, have no more than 9 product

formulas under 3 formula series (each series includes 1, 2 and 3 stages), and require different

formulas for the same age group to have obvious differences, which must be proven by scientific

verification, in order to avoid market disorder caused by an overabundance of formulas.

 

In addition, the Measures allow wholly-owned subsidiaries within a corporate group, where such

subsidiaries already have registered infant milk powder formulas and production licenses, to

use the formulas registered by other wholly-owned subsidiaries within the same corporate group.

However, according to the Food Safety Law, a producer may not use the same formula to

produce different brands of infant milk powder. Thus, where a wholly-owned subsidiary

produces infant milk powder products using the formula and brand of another wholly-owned

subsidiary within a corporate group, the producer subsidiary may not produce the product by

using its own brand and the same formula at the same time, and vice versa. Such regulations

reduce waste of administrative resources caused by duplicative applications, and also facilitate

internal business arrangements within corporate groups, particularly multinational corporate

groups.