Italian Cosmetic Companies Enter the China Market

The webinar “Italian Cosmetic Companies Enter into China Market” was hold online on September 16th, 2022 with over 40 Members and Friends.

The discussion was opened by Beatrice Aondio, Vice Coordinator of the Healthcare Working Group (HCWG) and Medical & Glass Industry Manager, Marposs China, with a brief introduction of the CICC Healthcare Working Group and its future projects, including a roadshow in 2022-2023 in hybrid form organized by Italian institutions: the aim is to introduce Italy as a strategic partner for China in the areas of scientific cooperation, healthcare tourism, innovative technologies, clinical and health management training and healthcare management models.

Tommy Li, Head of Global Program Management at CTI Group, was the first speaker to take the floor, presenting the inner workings of the Chinese cosmetics and introducing the new Cosmetic Supervision and Administration Regulation (CSAR), published by the Chinese State Council in June 2020 to replace the old Cosmetics Hygiene Supervision Regulation (CHSR) from 1989; the new regulation defines as cosmetics the manufactured chemical products intended to be applied to any parts of the human body for the purpose of cleansing, grooming and skin protecting.

The CSAR classification differentiates between general cosmetics (perfumes, skin care, hair care, nail care, make-up products) and special cosmetics (whitening and spots removal products, hair dyes, perm and sun screening products). It’s worth mentioning that products to be applied to damaged skin, to the teeth or any other part of the oral cavity are not recognised as cosmetics. Regular soap is not considered a cosmetic either, unless it carries some special properties.

The CSAR also introduced changes in regards to the registration and filing processes. General cosmetics usually require 1-2 months for record filing and product testing, after which the certificate to start importing or selling can be received in about a month. On the other hand, special cosmetics need to be registered and a technical review is required before the permission to import or manufacture the product is granted; the whole process can take several months to complete.

In the past China also required imported products to conduct animal testing, but with the new regulations all imported general cosmetics not intended for children are now exempted if provided with a GMP/QMS certificate. This presents a great opportunity for Italian cosmetic brands interested in entering the Chinese market, as such documentation can easily be issued by the Italian Ministry of Health. Other required documentation include quality assurance, safety assessment and efficacy claim certificates.

“China is one of the largest and fastest growing markets for cosmetic and personal care products with retail sales of cosmetics in China rose to $63.7 billion in 2021, a fourfold increase since 2010. China’s cosmetics market has experienced steady growth, driven by rising demand for premium products and increases in the number of working women, expanding by over 150% between 2012 and 2020, with expected growth of 6.3% by 2025. The new rules of CSAR bring significant changes to the regulation of cosmetic ingredients and products in China with the most significant change on animal testing exemption, which creates both opportunities and challenges for EU companies selling into China. Companies that are able to handle the challenges will definitely get a bigger market share in China.”

Tommy Li, Head of Global Program Management at CTI Group

The second speaker was Andrea Sorgato, Associate at Zunarelli Studio Legale Groupon, who elaborated further on the legal and contractual aspects of the new regulation. The main obstacle in entering the Chinese market is most of the times the approach, as many foreign companies mistakenly assume all liabilities to lie with their chosen Chinese partner.

According to the new CSAR the owner, as registrant or record-filing person, is responsible for the quality, safety and function claims of their cosmetics (Art. 6), while the Chinese partner is only responsible for formalities, relationships with regulating authorities and implementation of product recalls (art. 23). Other regulations indicate as responsible “anyone involved with technical requirements”, which are defined as those who have an impact on quality and safety, so it appears that in the end the ultimate responsible is actually the registrant.

So how can foreign registrants be protected when entering this market? The cosmetic market in China needs to be faced as a team by the registrant, the Chinese responsible person, the entrusted producer, the trademark protection department and the Chinese regulatory partner. Suggested measures include double-check and cross-procedures, production agreement with entrusted producers and implementing a quality and safety responsibility system between anyone involved.

“Since the new CSAR Regulation came into effect on 2021, Chinese Government boosted the renewal of the entire law system for cosmetics in China. In a couple of years, the new regulations cover the whole chain of production, registration, distribution and marketing of cosmetics, both domestic and imported. Unlike previous regulations, the new system aims at making the owners of cosmetics fully responsible for their products in China. This leads to a new approach to the liability, no longer based on a mere appointment of a local partner as unique responsible for the market entry. The owner of the imported cosmetics must know in details the scope of its direct liability, to set up a new model of shared liabilities between overseas registrants and Chinese partners.“

Andrea Sorgato, Associate at Zunarelli Studio Legale Groupon

We thank all panelists for sharing their views and experience during the discussion.