On 29 Dec., 2014, the Food Safety Law (Amendment) (the 2nd draft) was issued officially. The draft involves health-care products with the following modifications:

Firstly, health-care products with new raw materials and the first imported health-care products should be registered in China Food and Drug Safety Administration.

Secondly, other health-care products should be filed to the food and drug administration at province, autonomous region and municipal levels before entering into the market.

Registration system refers to the procedure that a health-care product can be on sales only after obtaining approval number through administrative means. Filing system refers to the procedure that a health-care product can be sold if it is registered and filed in related administrations.

Before the revision, China's health-care product industry carried out registration system, including the domestic and imported health-care ones. The procedures were so complicated that the industry threshold was high. Insiders suggested that it took enterprises 2-3 years to obtain an approval. Within these time, enterprises needed to invest about USD32,685-USD49,028 (RMB200,000-RMB300,000). Because of the restriction of this policy, by the end of 23 Jan., 2015, 14,376 types of the domestic ones were approved against 729 types of the foreign ones.

Entry threshold indeed played an important role in the supervision of health-care products in China. According to the president of Chinese Health Care Product Association, Zhang Dachao, since July 1996, the Ministry of Health of the People's Republic of China issued the filing to be applied into health-care product industry, no serious food safety incidents happened in 18 years.

However, it existed some flaws. Some specified approval could be transferred, leading to some counterfeit and inferior goods in the market. For example, some enterprises didn’t put into production in spite of obtaining these approvals, while those who wanted to enter the market bought from them. The biggest disadvantage of this policy was that the supervision would be ignored after the enterprises have passed through review. This act would posed great risks to food safety.

It is anticipated that Chinese health-care product industry will experience tremendous changes after the implementation of filing policy.

1. New comers will be on the increase, and large amount of health-care products will hit the market as Chinese health-care product industry presents huge prospects, incurring fiercer competition. In 2013, the expenditure of Chinese residents on health-care products exceeded USD32.69 billion (RMB200 billion) and will increase at the rate of 15%-30%,12% higher than of the developed countries. It is expected that this figure would be over USD98.06 billion (RMB600 billion) in 2015, after the policy comes into effect.

2  Price war might be triggered after the entry of foreign health-care products with lower price. In fact, 50% of raw materials of health-care products in the US were from China, but their prices were generally 30%-50% lower that the domestic ones. It was because the domestic enterprises had to cost a lot in approvals and they have no price advantage in intense competition.

3 The simplification of filing procedures ensured the government to strengthen the supervision over health-care products from production to sales. Free competition in the market helped to eliminate enterprises which produced unqualified products. All these contributed to the reorganization of the health-care product industry.

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Tag: health care