Business Alert - China
According to a circular jointly issued by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), Ministry of Commerce (MOFCOM), and State Administration for Industry and Commerce (SAIC) on implementing electronic monitoring of certain products pertinent to the requirements of the State Council for strengthening the supervision of product safety, starting from 1 July 2008, 69 products under nine categories have to bear an electronic barcode before they can be produced and marketed. The nine categories are food, household appliances, man-made board, harnesses and cables, agricultural resources, gas-fired appliances, labour protection articles, electric blankets and cosmetics.
The China product quality electronic supervision network is a public service network built by the product quality supervisory department making use of electronic information with the aim of strengthening supervision over product quality and safety.
The network, a national network system built on the basis of the public information service platform provided by a third party (i.e. Citic Group and China Telecom), makes use of modern information technology, network technology and encoding technology to implement electronic supervision over product quality. The core function of this network is "real traceability". The network, focusing on products with safety issues and linking up production, circulation and consumption to carry out whole-process supervision, provides monitoring and inquiry services for the government, consumers and enterprises.
All products covered by the electronic supervision network are products managed by administrative permission. Putting these products under electronic supervision is a further step in regulating the labelling and marking requirements of such products. Enterprises producing the covered products are required to apply an electronic barcode with a unified mark on the packaging of their products. The barcode, a unique code with one code for one product, serves as the "electronic identification" of the product. Production enterprises and distribution enterprises may have access to circulation information via the Internet. Consumers can obtain production information by means of telephone, text messaging, Internet and terminal inquiries. Enforcement departments can monitor the covered products at any time, and whenever any defective products are found they can quickly trace and recall the products and take prompt action against counterfeit and substandard products.
The supervision network is made up of one net, one databank, one call centre and four systems. One net refers to the China product quality electronic supervision network that covers the whole country. Four systems are online declaration and filing system, online barcode application service system, online inquiry system, and online report system. The network has already been verified by experts in the computer, information security, encoding technology and printing technology sectors jointly organised by AQSIQ and the State Council's Information Office.
Taking advantage of the fact that product quality can be traced, the China product quality electronic supervision network links up the functions of government supervision, enterprise self-discipline and social monitoring. This network can help enhance the government's supervision of the market, crack down on fake and shoddy products, ensure product quality and food safety, protect well-known and superior products, regulate the order of market economy, protect the legitimate rights and interests of enterprises and consumers, as well as establish an integrity system. After three years of implementation, it can be seen that the network plays an important role in five areas.
First, consumers can now readily obtain product information and can easily distinguish between genuine and fake products. This has made it easier for them to lodge complaints against fakes and substandard products and protect their legitimate rights. For instance, in villages in Hebei province, farmers are beginning to stop buying chemical fertilisers and seeds without barcodes. Second, distribution enterprises can establish a sound purchasing system, thereby enhancing the efficiency of demanding certifications and documents from suppliers. It has also made it easier for them to trace and recall defective products, thus helping them to purchase genuine goods, sell genuine products and increase sales. Third, production enterprises and enforcement departments can now discover counterfeit products more promptly and accurately, which can lead to prompt reports and prompt crackdowns. By so doing, the legitimate rights and intellectual property rights of enterprises are protected. Many enterprises which have joined the network have experienced these advantages. Fourth, the quality supervision departments have been able to enhance their supervision efficiency, focus their efforts on supporting good and strong enterprises, and promote industrial restructuring. Fifth, the network facilitates the establishment of a social integrity system.
A total of 69 products under nine categories are the first batch of products put under supervision on the network by AQSIQ, MOFCOM and SAIC. During implementation, AQSIQ has formulated detailed regulations for problems encountered based on the opinions and suggestions provided by some enterprises. Enterprises which cannot assign barcodes to their products due to special reasons are required to give a written explanation. Quality supervision bureaus at provincial level are responsible for checking the reasons and approval will only be granted if the cases are found to be valid. A grace period will be given but the period may not be beyond 31 December 2008.
AQSIQ will implement this supervision system in phases based on the principle of combining mandatory and voluntary participation. For products with safety issues and are subject to administrative permission, products which are well-known Chinese brands, and products granted inspection exemption, mandatory participation is enforced.