Regulations on the Supervision and Administration of Cosmetics (Mainland China)

Karl Zhang

On June 16, 2020, the State Council promulgated the Regulations on the Supervision and Administration of Cosmetics (the “Regulations”), which will go into effect on January 1, 2021, while the original Regulations on the Supervision of Cosmetics Hygiene will be simultaneously repealed.

1. Implementation of the cosmetics categorized administration system

The state conducts categorized administration of cosmetics and their ingredients according to the degree of risk.  Cosmetics are classified as special cosmetics and ordinary cosmetics.  Special cosmetics are subject to the registration with the state, while ordinary cosmetics only require recordation administration.  Cosmetic ingredients are classified as new ingredients and ingredients in use.  For relatively more risky new ingredients, registration is required, while other new ingredients are subject to recordation administration.  The Regulations not only improve the categorized administration of cosmetics and cosmetic ingredients but also streamline the registration and recordation processes, encourage and support cosmetic research and innovation, and optimize the institutional environment for corporate innovation.

Natural or artificial ingredients used in cosmetics for the first time in China will be considered new cosmetic ingredients.  New ingredients with antiseptic, sunscreen, coloring, hair dye or freckle whitening functions may not be used until they are registered with the pharmaceutical supervisory department of the State Council, while other new cosmetic ingredients shall be recorded with the pharmaceutical supervisory and administrative department of the State Council before their use.  Cosmetics used for hair dyeing, perm, freckle whitening, sunscreen or anti-hair loss, as well as cosmetics claiming new efficacy will be considered special cosmetics, which may.  Special cosmetics may only be produced or imported after they are registered with the pharmaceutical supervisory and administrative department of the State Council.  Domestically produced ordinary cosmetics shall be recorded with the pharmaceutical supervisory and administrative department of the people’s government at the province, autonomous region or municipality under the direct jurisdiction of the State Council where the recordation applicant is located before being sold on the market.  Importation of ordinary cosmetics requires prior recordation with the pharmaceutical supervisory and administrative department of the State Council.

2. The registration and recordation applicant system

With regard to managing the quality of cosmetics, the Regulations require the registration and recordation applicants to be responsible for the quality, safety and efficacy claims of their cosmetics.  Before the registration and recordation of new cosmetic ingredients and cosmetics, the relevant applicant shall conduct a safety assessment on its own or hire a professional organization to do so.  Production shall be organized in accordance with the quality management requirements for cosmetics production, with a quality management system in place, and setting up and implementing management systems for supplier selection, acceptance of raw materials, production process and quality control, equipment, inspection and sample retention.  After a cosmetics product is put on the market, the registration or recordation applicant shall monitor and timely report adverse reactions, promptly recall cosmetics with problems that may harm human health, and implement a system for reassessing the safety of cosmetics and raw materials.

The Regulations stipulate specific rules regarding how the registration and recordation applicants for imported products should carry out their primary responsibilities, such as designating domestic enterprises or legal persons for handling administrative approvals and assist in monitoring of adverse reactions and the implementation of product recalls.

3. Production and operational management of cosmetics

The Regulations provide for the outsourced production of cosmetic products.  A registration or recordation applicant may manufacture cosmetics on their own or outsource the production to another entity.  In the case of outsourced production, the outsourced entity shall have obtained the corresponding cosmetics production license, and the applicant shall supervise the production activities by the outsourced entity to ensure that the statutory requirements are complied with.

In operating a cosmetics business, a cosmetics operator shall establish and implement a purchase inspection record system, check the relevant certificates of the suppliers and keep the requisite time records.  For an e-commerce platform, the real name of each cosmetics seller on the platform shall be registered, and the platform is responsible for managing such sellers on its platform, including promptly stopping and reporting any violation of the Regulations by those cosmetics sellers on the platform.

For advertisement, the applicant is responsible for the efficacy claims of the cosmetics on its advertisements.  The efficacy claims shall be based on sufficient scientific evidence, and contents explicitly or implicitly suggesting medical effects are prohibited.  The applicant is required to disclose the literature, research data or summaries of the evaluation materials that form the basis of the efficacy claims on a special website as stipulated by the pharmaceutical supervisory and administrative department of the State Council.

4. Relevant legal liabilities

The types of penalties set out in the Regulations include warnings, confiscation, fines, orders to cease production and operation, revocation of licenses and certificates, temporary refusals to process (accept) license applications , and prohibition on employment.  In order to ensure that the penalty is properly implemented, foreign registration or recordation applicants who refuse to comply with an administrative penalty decision will be prohibited from importing cosmetics for 10 years.  The amount of fine is greatly increased with a part of the fine calculation base changing from “illegal proceeds” to the “value of goods.”  In addition, a minimum fine amount is stipulated, while the maximum increased to 30 times.  The legal representative, the principal persons in charge, the directly responsible supervisors and any other responsible person(s) of the violator entity may also be directly punished with a fine equivalent to 1 to 5 times their income from the entity in the past year, or from RMB 10,000 to RMB 30,000.  In addition, the aforementioned four types of people may also be prohibited from engaging in cosmetics production and operation for life, 10 years or 5 years, respectively.

In short, the Regulations have made a relatively significant revision to the supervisory and administrative system for the production, importation and operation of cosmetics products, which will have a significant impact on the cosmetics industry while promoting the industry’s healthy development and ensure the quality and safety of cosmetics products.