James Cheng
On March 17, 2016, the State Administration of Industry and Commerce promulgated the Measures for the Supervision and Administration over Quality of Goods in Circulation (Zong Ju Directive No. 85; hereinafter, the “Supervision Measures”) to set out more detailed rules regarding the duties of goods sellers obligations of goods sellers. The Supervision Measures, which consist of 5 chapters and 39 articles, went into effect on May 1, 2016. Major issues involved in the Supervision Measures are introduced below:
(1) Industry and commerce agencies above the county level will implement an inspection system based primarily on random inspections.
The Supervision Measures provide that industry and commerce agencies above the county level (including market supervision and administration agencies) is the body responsible for supervising the quality of goods in commerce. Under the “double random” requirement of the State Council, the above will be primarily done through random inspections. To wit, the inspections are conducted by randomly assigning personnel to conduct supervisory inspection of goods for sale and goods for use in operational services.
(2) Obligations of operators regarding the quality of goods.
The Supervision Measures provide that sellers are required to set up and strictly enforce mechanisms for inspection and acceptance of goods, the suspension of sales and return and replacement of goods. In particular, for the acceptance inspection during the purchase of goods, the inspection should focus on the qualifications, certificate of inspection, manufacturing license and compulsory product certification (if any) of the suppliers. The Supervision Measures also set out rules regarding the requirements for product labeling on goods for sale, and the required Chinese labeling for sales of imported products. Prizes and gifts are considered the same as goods for sale and must therefore following the relevant rules for goods for sale under the Supervision Measures.
(3) Blacklist for prohibited goods.
Article 10 of the Supervision Measures sets out that a blacklist shall be established to prohibit the following categories of goods from being sold: (1) Goods which do not comply with national standards and industry standards for protecting human health and bodily and property safety; (2) goods which do not meet the product standards indicated on the goods themselves or their packages, goods which do not meet the quality indicated by way of product descriptions or physical samples, or goods which cannot perform at a level that is expected for such goods; (3) goods which are specifically phased out and prohibited from sales by the central government; (4) goods whose place of origin is falsified, or goods with forged names and addresses or fraudulent use of the names and addresses of others, or goods with false certification or other quality indicators; (5) goods whose shelf life has expired and has deteriorated as a result ; and(6) goods whose production date is altered.
In addition, the Supervision Measures also prohibit sellers from adulterating or mixing impurities into goods, selling fake or substandard goods or selling unqualified goods as qualified goods among the goods they sell (see Article 11). Purchase or sell goods with unknown sources, namely those with no product name, factory name and factory address, is also prohibited (see Article 13).
(4) Consumers may return goods within seven days upon receipt of the goods.
Article 16 of the Supervision Measures stipulates that if the goods sold by a seller do not meet the quality requirements, in the absence of national law or agreement between the parties stating otherwise, the consumer may return the goods within seven days upon receipt of the goods. For those that meet the requirements under law for rescission of a contract after seven days, the consumer may return the goods immediately. If the contract cannot be legally rescinded, the consumer may request replacement or repair. As for goods that have been determined by the relevant administrative agencies as unqualified, the consumers have the right to return the goods and are not subject to the above seven-day return period.
Article 17 of the Supervision Measures further stipulate that consumers have the right to return goods purchased through the Internet, television, telephone or mail order within seven days upon receipt of the goods, and the sellers shall accept and process returns that are without cause in accordance with the law.
(5) Obligation to indicate defects.
Article 12 of the Supervision Measures stipulates that goods that are being sold may contain defects in functionality that do not run afoul of compulsory requirements under law. This means that sales of “disposed goods,” “defective goods,” or “substandard goods” are allowed provided that the sellers indicate such information clearly in a conspicuous place on the goods, packages or sales locations to ensure that the consumers’ right to know the actual condition of the goods they purchase and use has been satisfied.
(6) Quality obligations of third-party operators such as venue or platform providers.
The Supervision Measures provide that entities that lease space for sales, organize trade fairs, provide online platforms, or operate shopping platforms on broadcast radio and television are obligated to examine and register the qualifications of any operator applying to sell goods at the physical premises or on their platforms. For those who fail to perform such examination and registration obligations, or fail to cooperate with the industry and commerce agencies in their investigations of suspected offenders, the supervisory agency may impose a fine of RMB10, 000 to RMB30, 000 upon those who refuse to rectify.
In addition, the Supervision Measures also provide for the manners and methods by which the industry and commerce agencies shall supervise the quality of goods and their inspection authority, as well as other requirements regarding the removal of goods from sale, source tracing and notification, disclosure of enforcement information and administrative guidance. There are also provisions regarding the legal liabilities of operators in violation of their duties regarding quality of goods and the circumstances where such liabilities may be reduced.