Food and product safety remains a serious concern in China with several high-profile cases in 2010 highlighting shortcomings in China's regulatory process.

As China continues its rapid growth, food and product safety is of paramount importance, not only for the health and safety of Chinese citizens but also because of the negative impact food and product safety failures have on China's reputation as the world's largest exporter.

AmCham-China is pleased to see the Chinese government continue to address this issue over the last year by improving the regulatory framework for ensuring safety and quality of its products. The 2011 National People's Congress has given people's well-being and quality issues even greater attention as compared with previous years.

Nevertheless, many challenges remain, particularly with regard to inconsistent and under-funded enforcement of regulations. US companies have extensive experience with comprehensive regulatory systems for food and product safety. AmCham-China looks forward to continuing cooperation with the Chinese government and businesses on this
issue.

Significant Developments

The Chinese government has taken significant steps in the past year to bolster food and product safety protection in light of recently voiced public concerns.

In February 2010, the State Council established the Food Safety Commission to coordinate food safety efforts across the government. The Commission, directly responsible to the State Council and led by Vice Premier Li Keqiang, was given a mandate to coordinate the myriad of national, provincial and local agencies responsible for developing and enforcing China's food and product safety regulations.

Subsequently, the Ministry of Health (MOH) established national committees on food safety standards and food safety risk assessment. Within the past year, both the State Council and the MOH, along with the Administration of Quality Supervision and Quarantine and other government authorities, issued a number of food safety standards, regulations and notices covering management of food additives, food safety announcements and standards, among others.

AmCham-China is pleased with the commitment and speed with which China has moved to overhaul administration of food and product safety.

Specific Issues

Interpretation of Food Safety Standards

While China has promulgated food safety standards at unprecedented speed, ambiguity of many of these standards remains due to inconsistent interpretation, not only by government officials but also those subject to the new regulations.

AmCham-China believes that the most efficient solution to this problem lies with systematic training for the staff of relevant government departments and institutions as well as the business community.

To its credit, China has already started exploring partnerships between the food industry and Chinese universities to deliver training to the vast number of small and medium-sized food enterprises throughout the Chinese food supply chain in order to help reduce food safety risks.

Is your company paying more attention to the product quality and safety issues of goods manufactured in China?

The US government and AmCham-China members have extensive experience on food safety issues and could play a useful role in this training. AmCham-China would be pleased to increase collaboration with members of the National Food Standards Experts Committee and the National Food Safety Risk Assessment Expert Committee in order to develop these training programs.

AmCham-China therefore encourages the Chinese government to continue its efforts to inform and educate regulators, manufacturers and producers about accepted international standards and market requirements for food and product safety.

We look forward to collaborating with the government and contributing our extensive network and expertise to help facilitate these efforts.

Lack of Regulatory Capacity and Resources

As mentioned above, in 2010 the State Council established the National Food Safety Commission. However, due to the lack of capacity and resources, the efforts to develop an efficient regulatory network have not successfully addressed
safety issues.

Lack of regulatory compliance remains prevalent, for example, in the use of non-food grade chemicals as ingredients for food products; illegal use of food additives; inaccurate or misleading product labeling; and lack of  onitoring or management of pesticides and fertilizers used in food production.

AmCham-China applauds China's commitment to food monitoring and risk assessment system technologies. However, the Chinese government should increase resources so agencies can better enforce safety regulations and carry out more compliance education throughout the industry.

This would benefit companies in China by improving confidence in the "Made in China" brand while also ensuring product safety for consumers.

Supply Chain Management

Supply chain management is important for food and product safety.

AmCham-China member companies are leaders in supply chain management, and by bringing such best practices and international standards to their Chinese operations, they help raise the overall food and product safety levels in China. This is a valuable source of assistance for China as it formulates rules and regulations for enhancing food and product safety.

At the same time, member companies contribute to alleviating concerns for food and product safety by demonstrating risk management or mitigation approaches to reduce or eliminate risks in their supply chain. Domestic companies can then model their supply chains off these examples.

AmCham-China encourages China to promote the development of worldclass supply chain management practices, and encourage investment in a logistics network to support food and product safety, including cold chain logistics.

The US government, for its part, should increase opportunities for public-private cooperation and collaboration to promote sharing of best practices and improvements to supply chain quality.

Intellectual Property Rights Enforcement

Lack of intellectual property rights (IPR) protection and rampant counterfeiting remain significant barriers to effective food and product safety enforcement.

As long as counterfeiting continues, particularly in the production of products where safety is paramount, such as drugs and medical devices or the automotive industry, Chinese consumers will remain at risk and progress toward effective food and product safety will be further delayed.

AmCham-China renews its call for full IPR protection for all companies conducting business operations in China.

Conclusion

Although the last year has seen improvement in China's regulatory framework for ensuring safety and quality of China's products, the regulatory process still exhibits substantial deficiencies as a result of insufficient capacity and resources.

It is evident and encouraging that China recognizes this problem and has taken measures to address it, as demonstrated by the creation of the Food Safety Commission and promulgation of other safety standards and regulations.

However, vague and poorly enforced regulations continue to undermine China's positive efforts, to the detriment of the "Made in China" label as well as domestic and global consumers.

Increasing training regiments to educate government and business  employees on international standards for food and product safety, allocating more resources to relevant government agencies, and furthering supply chain development will help improve China's regulatory environment as well as food and product safety as a whole.

In return, confidence worldwide in the China brand will increase. The US government should facilitate China's efforts by engaging with China on product safety through high-level economic dialogues.

Additionally, the US should support the US Food and Drug Administration (US FDA) and Consumer Product Safety Commission's (CPSC) missions in China, and provide expanded resources for them to cooperate and collaborate with Chinese counterparts on food and product safety.

In this way, Chinese and US companies as well as consumers throughout China and across the world will benefit from improved health, safety and efficiency.

Recommendations For the Chinese Government:

• Improve enforcement of and compliance with food and product safety laws by building capacity of and allocating sufficient resources for relevant agencies at all government levels.
• Continue to inform and educate regulators, manufacturers and producers about accepted international standards and market requirements for food and product safety.
• Promote the development of world-class supply chain management practices and encourage investment in a logistics network to support food and product safety, including cold chain logistics.
• Fully enforce and protect IPR for all companies conducting business operations in China.

For the US Government:

• Continue to support the US FDA and CPSC's missions in China and provide expanded resources for them to cooperate and collaborate with Chinese counterparts on food and product safety.
• Increase opportunities for public-private cooperation and collaboration to promote best practices and improvements to the supply chain.
• Continue to engage at a high level with China on product safety through economic dialogues.