Chinese Cosmetic Regulations Updates: How Will it Affect the Exports of Korean Cosmetics

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1 Chinese Cosmetic Regulations Updates: How Will it Affect the Exports of Korean Cosmetics (CN) www. cirs-reach.com(en) 15 th Jun 2018, April Guo, General Manager, Personal Care Division

2 CONTENTS Data analysis of China cosmetic market Updates of cosmetic regulations - New record-keeping system for imported non special use cosmetics in Pudong new area - Expanding 10 new free trade zones to implement new record keeping system of imported non special use cosmetics - New alternative methods available and consulted in public - Extending transition period of cross-border e-commerce - Imported cosmetics tariffs adjusted - Public opinion on new guidelines for cosmetic classifications - Guidelines for the evaluation of cosmetic claims consulted in public

3 PART I: Data analysis of China cosmetic market

4 Annual compound growth rate Global market share 9.1% 15.45% Source: National Bureau of Statistics of China

5 Registration data of imported cosmetics approved by CFDA

6 Registration or record-keeping data of domestic cosmetics

7 Record-keeping data of imported non special use cosmetics by Pudong new area Recorded cosmetics in Pudong new area (03-12,2017) Total recorded cosmetics in Pudong new area (2017/2018[Jan-Jun])

8 Distribution of recorded products by country of origin Recorded cosmetics in Pudong new area (till 6 th Jun, 2018)

9 PART II: Updates of cosmetics regulations in China

10 1) New record-keeping system for imported non special use cosmetics in Pudong new area 17 th Jan 2017, CFDA and AQSIQ jointly issued a Notice on Pilot Implementation of Record-keeping for Imported Non-special Use Cosmetics in Pudong New Area (Notice no.7). 18 th Jan 2017, CFDA issued a Notice on Work Program of Record-keeping for Imported Non-special Use Cosmetics in Pudong New Area (Temporary, Notice no.10). 23 rd Feb 2017, CFDA clarified the Work Program of Record-keeping for Imported Non-special Use Cosmetics in Pudong New Area (Temporary).

11 1) New record-keeping system for imported non special use cosmetics in Pudong new area From 1 st Mar 2017 to 21 st Dec 2018, cosmetics firstly imported through the port of Shanghai Pudong new area can be made record-keeping in Shanghai FDA instead of registration in CFDA. Detailed requirements of record-keeping including procedures and documents required Other requirements regarding record-keeping in Shanghai Pudong new area

12 What conditions can be met to make record -keeping in Shanghai FDA? Imported non special use cosmetics Imported through Pudong new area Having a company registered in Pudong new area as the responsible person

13 General process of record keeping via Shanghai Pudong New Area

14 Detailed procedures of step 1 Online submission for ID application Register a company in Pudong new area as responsible person Passing review of application material Get the user name and password Onsite submission for ID application CFDA reception center Testing in designated lab Online submission Full dossier preparation Book the time of onsite submission Gather all required docs Shanghai Pudong New Area administrative service center China (Shanghai) Onsite Pilot Free Trade submission Zone comprehensive service hall Filing material receipt form Electronic version of certificate

15 General process of record keeping via Shanghai Pudong New Area

16 Comparison of two ways of importing non special use cosmetics to China Item Registration in CFDA Record-keeping in Shanghai FDA Competent authority CFDA Shanghai FDA Chinese responsible person Legal entity No need involve in cosmetics business Only in charge of application for administrative license No need on the Chinese label Registered in Pudong new area Scope of business cover cosmetics import and operation, product quality and safety Required on the Chinese label Application scope All ports of the country Shanghai Pudong new area Dossier requirements Animal testing Almost same except product package (upload the flat and stereoscopic picture of package, and artwork for the record keeping of Pudong new area) Required Technical review process After the formal review, transferring to CFDA Health Food Review Center for technical review Issue of CFDA license or record-keeping certificate Issued after passing both format and technical review Within 3 months after record-keeping Automatically generating electronic version of record number after format review for the enterprise to download and print

17 Comparison of two ways of importing non special use cosmetics to China Item Registration in CFDA Record-keeping in Shanghai FDA If changing the product size, package color, design, etc No need to renew info with CFDA before import Required to renew info with the Shanghai FDA Valid period of license or certificate 4 years Not mentioned Post surveillance No specific requirement The responsible person will notify the status of product circulation regularly

18 Other requirements mentioned in CFDA clarifications Acceptable to have more responsible persons registered in Pudong new area based on they are authorized for different products; The unapproved products by CFDA are not allowed to make a record-keeping via Pudong new area; If the dossiers are not enough to prove the safety, the products are not allowed to import and sell until the documents are qualified; For illegal situation or safety issue, the products will be facing to dismount and recall deal.

19 2) Expanding 10 new free trade zones to implement new record keeping system of imported non special use cosmetics Issued on Mar 12, 2018 Same record keeping system as Pudong new area for free trade zones of Tianjin, Liaoning, Zhejiang, Fujian, Henan, Hubei, Guangdong, Chongqing, Sichuan and Shanxi. Pilot policy applicable until Dec 21,2018. Record keeping number labeled as 国妆网备进字 (abbreviation of province where the free trade zone is located)+four digits of years+ six digits of sequential number If recorded in local FDA of specific free trade zone, import activity only available to this specific free trade zone. When changing the import port, cancel the current record keeping certificate. New record keeping required in new free trade zone or CFDA.

20 What s the actions of local FDAs to implement this policy? Zhejiang FDA On 26 Mar, 2018, Zhejiang FDA issued a notice to gather the list of companies which plan to import the non special use cosmetics by Zhejiang Free Trade Zone. Company name, current registered address, type of enterprise, country (region) of origin, contact info are required. There are 120 square kilometers of Zhejiang free trade zone.(zhoushan Island area) Guang dong FDA On 11 Apr, 2018, Guangdong FDA issued a notice regarding the related work of record keeping for non special use cosmetics imported by Nansha Area, Guangdong Free Trade Zone. Applicable time period: from 8 Mar, 2018 to 21 Dec, 2018 Guide on the record keeping of imported non special use cosmetics attached

21 3) New alternative methods available and consulted in public 21 Aug, 2017, two alternative methods accepted by CFDA In Vitro Skin Corrosion:Transcutaneous Electrical Resistance Test (TER)--- available to cosmetic ingredient Skin Photoallergy Test--- available to cosmetic ingredient and cosmetic product

22 3) New alternative methods available and consulted in public 5 Feb, 2018, two alternative methods consulted in public In Chemico Skin Sensitisation: Direct Peptide Reactivity Assay (DPRA)---refer to OECD 442C Short Time Exposure In Vitro Test (STE)--- refer to OECD 491

23 4) Extending transition period of cross-border e-commerce 20 th Sep 2017, Premier Li Keqiang highlighted in the State Council executive meeting the transition period of supervising import business of cross-border e-commerce will be extended to the end of 2018.

24 5) Imported cosmetics tariffs adjusted On November 22, 2017, the Tariff Commission of State Council released a Notice regarding the adjustment of import tariff to some consumer goods. The adjusted import tariffs will come into force on December 1, 2017

25 5) Imported cosmetics tariffs adjusted On November 22, 2017, the Tariff Commission of State Council released a Notice regarding the adjustment of import tariff to some consumer goods. The adjusted import tariffs will come into force on December 1, 2017 Imported cosmetics tax rate from the original 15%, 10%, 9%, 6.5% down to 5% and 2% Other related personal care items dropped from 25%, 18%, 15%, 14% and 10% to 8% and 5%

26 5) Imported cosmetics tariffs adjusted On May 31, 2018, the Tariff Commission of State Council released a Notice regarding the adjustment of import tariff to some consumer goods. The adjusted import tariffs will come into force on July 1, 2018

27 5) Imported cosmetics tariffs adjusted On May 31, 2018, the Tariff Commission of State Council released a Notice regarding the adjustment of import tariff to some consumer goods. The adjusted import tariffs will come into force on July 1, 2018 Except shampoo, imported cosmetics tax rate dropped from 5%, 3% to 2% and 1%. Tax rate of shampoo increased from 2% to 3%. Other related personal care items dropped from 8%, 5% to 6% and 4%

28 6) Public opinion on new guidelines for cosmetic classifications Background On 15th Mar, 2016, the National Institutes for Food and Drug Control published the Standards for Cosmetic Classifications (Draft version) On 17th Jan, 2018, CFDA published the Guidelines for Cosmetic Classifications (Draft version) non special use: 5 special use: 9 efficacy claim: 26 application site: 27 product forms: 18 Suitable user: 7

29 6) Public opinion on new guidelines for cosmetic classifications Code Efficacy claim Code Application site Code Form Code Suitable users 01 Hair Growth 01 Hair 01 Cream 01 General user 02 Hair Dye 02 Scalp 02 Emulsion 02 Pregnant women 03 Hair Perm 03 Skin 03 Aqua 03 breast feeding women 04 Depilation 04 Body 04 Gel 04 Children Facial (excluding Breast Shaping Oil mucosa) Men 06 Body Shaping 06 Eye area 06 Powder 06 Elderly 07 Deodorant 07 Lip 07 Mud 00 Others 08 Whitening and Anti-freckle 08 Nose 08 Spray 09 Sunscreen 09 T-region 09 Aerosol 10 Anti-wrinkle 10 Back of ear 10 Filming 11 Anti-acne 11 Hair line region 11 Wax base Organic Oil control Shaving area solvent 13 Anti-dandruff 13 Eyebrow 13 Capsule 14 Exfoliator 14 Eyelash 14 Multi-phase Talcum Powder Facial hair Blending agent Cleansing 16 Neck 16 Tablet 17 Make-up Removal 17 Shoulder 17 Wipes 18 Moisturizing 18 Breast 00 Others 19 Nourishing 19 Armpit 20 Repairing 20 Hand 21 Beautify 21 Foot 22 Perfume 22 Finger (toe) nail 23 Hair Styling Foundation 23 Body Hair (including armpit) Body Hair (excluding armpit) Pore Cleansing 25 Hip 00 Others 00 Others Oral cavity (dental and oral mucosa) Pre-, in-, post-market surveillance: - supporting documents of efficacy claiming - suitable advertising words - exposure site - safety assessment of exposure group

30 7) Guidelines for the evaluation of cosmetic claims (draft) On Jan 24, 2018, the National Institutes for Food and Drug Control published the Guidelines for the Evaluation of Cosmetic Claims for public opinion. a) Not required for the function in direct identification such as beautifying, cleaning, perfuming b) Required for specific function like sunscreen, anti-freckle, hair growth, breast shaping, fitness, deodorant, anti-aging, anti-acne, oil control, anti-dandruff, repairing, moisturizing (>2hs) c) Self-evaluation by the manufacturer or appoint third party lab to evaluate the function d) Available testing method: in vivo(human or animal), in vitro (consumer surveys), selfdevelopment by verified lab

31 Thank You! 4 th Summit on Cosmetics Regulations in Asia Pacific(21-22, Jun, Hangzhou)

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