After 30 years, the National Medical Product Administration comprehensively revised the cosmetics regulatory system for the first time. Meanwhile,China’s announcement of an exemption for animal testing on imported cosmetics will come into effect from 1 May.
The size and growth of the cosmetics market in China means that every indie brands must be considering China into business strategy. It should be noted that cosmetic brands will be subject to greater scrutiny and regulatory paperwork.
How do they affect international beauty brands? One regulatory challenge for many beauty brands will be appointing the Domestic Responsible Person /Agent.The new management and responsible person system require brand owners to establish a more comprehensive presence in China.
Definition of Responsible Domestic Person: China Laws and Regulations
The responsible domestic person is a corporation's legal representative (The Appointee), authorised by an overseas cosmetics manufacturer (the Registrant). If a domestic cosmetics company (the Client) has an overseas cosmetics manufacturer to produce the product and have them imported. The Client is the responsible domestic person and will no longer require the authorisation for the purpose.
Where the authorisation is required, the responsible domestic person directly handles all matters relating to applying either the cosmetic products or new raw material on half on the overseas Registrant.
Obligations Performed By The Domestic Responsible Persons: China Laws And Regulations
Article 8 - Where the Registrant is an overseas entity, the Registrant shall appoint a domestic corporation's legal representative within the territory. The Appointee shall fulfil the responsibilities as the responsible domestic person for below:
1. Fill and handle the application on behalf of the Registrant for cosmetics and new raw materials;
2. assist Registrant to monitor the adverse reaction, safety and reports for cosmetics and new raw materials;
3. Help Registrant with the recall of cosmetics and new raw materials;
4. Once made available in the territory, take quality and safety responsibilities for the cosmetics and new raw materials; Following the Agreement with the Registrant.
5. Corporate with the Drug Administrative Department for any supervision and inspection.
Types of Responsible Domestic Persons
1) Domestic companies of foreign registrants (brand owners)
2) Authorised Distributor
3) Domestic third-party service provided agency
What are the Advantages & Disadvantages of the different types?
1) Domestic companies of foreign registrants (brand owners):
Advantage:
• Independent operation: better autonomy and control through the entire process;
• Quality and Safety procedure: establish, improve and maximise the protection for the brand image locally;
• The registration will belong to the brand owner entirely!
• Cohesive marketing strategy in line with the company overall strategy and development.
Disadvantage:
• The hefty initial investment for the operation establishment: compliance, employment, operation.
• Time-consuming process.
2) Authorised Distributor:
Advantage:
• Products will be made available sooner + sales revenue generated locally;
Disadvantage:
• Distributors might not have a thorough understanding of the new cosmetics regulations;
• Distributors might fail to establish the safety risk management system following the new "Regulations on Supervision and Administration of Cosmetics";
• Distributors might not be able to thoroughly apprehensive and elaborate based on the brand-related ingredients and function;
• Disagreement with the brand owners: If the distributor refused to change over to the new responsible domestic persons once the product is fully registered. The product will not be able to re-register until the current registration expired.
• Failure to establish a safety risk management system per laws and regulations will affect the credit rating of the brand overall, including the parent company: the brand and distributor will face increased scrutiny during the importation and post-surveillance random inspection rate. Brands might be banned to enter the Chinese market for a maximum of TEN years if found in severe breach of the safety risk management system.
Example:
If the A brand from the distributor's portfolio broke the law and regulation, all brands on the said portfolios would be affected.
3) Domestic third-party service provided agency:
Advantage:
Familiar with the cosmetics laws and regulations, which allow a swift entering. The agent can provide dedicated solutions for importing while ensuring regulatory compliance. It will set the foundation for brand development in China. In the long term, the agent will:
• Prevent unregistered products from entering the market;
• Review the registration filing materials to ensure a smooth process;
• Establish domestic responsible persons and relevant safety risk management system to ensure listing & sales compliance;
• Establish a product quality management system with its and its undertake responsibilities.
• Cooperate with the inspection by the supervisory authority when needed.
Disadvantage:
• The agency and distributor, respectively, now fulfil registration and sales separately.
• A limited number of third-party service companies and relatively high service fees.
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