Recently, CHAILEEDO learned that the Chinese distributor of the German skincare oil brand freiol was fined around 240,000 yuan for giving away unregistered sample products to customers.
It is reported that freiol entered the Chinese market in 2019, and in just five years, it has become the top brand in its subcategory on the Tmall platform. What impact will this incident have on the brand?
Fined due to 600,000 sample gifts unregistered
As is well known, distributing free samples or offering free samples with full-size purchases has long been a common promotional tactic used by cosmetic brands to introduce new products, attract new customers, and boost sales. However, despite being free gifts, the compliance of cosmetic samples cannot be ignored. Here, another company has encountered trouble over sample giveaways.
According to a penalty notice issued by the Shanghai Market Supervision Administration, Shanghai Xiabao E-commerce Co., Ltd. (hereinafter referred to as Shanghai Xiabao) is the exclusive distributor of German company XX, primarily dealing with imported cosmetics under the freiol brand, such as massage oils and facial care oils. Additionally, CHAILEEDO found that the German company in question is APOTHEKER WALTER BOUHON GMBH, and Shanghai Xiabao is its authorized exclusive distributor for the Chinese market.
The investigation by the Shanghai Qingpu District Market Supervision Administration found that from June 3, 2022, to June 6, 2024, Shanghai Xiabao imported a total of 596,484 bags of freiol anti-wrinkle firming massage oil (3ml), a regular-use cosmetic product. On July 1, 2022, Shanghai Xiabao began distributing 3ml of the freiol anti-wrinkle firming massage oil as a free sample to customers through online channels and distributors. By the time the incident came to light, a total of 209,495 bags had been given out, valued at 568,727.59 yuan, with no illegal profit.
According to the penalty notice, the 3ml product has the same ingredients, ingredient ratios, production processes, and quality standards as other product specifications, with only the packaging and product size differing. The product’s label displayed the registration number: National Cosmetic Network (Beijing) 2020001753. However, the product was not registered. It wasn’t until July 9, 2024, that Shanghai Xiabao learned that the 3ml product could not be sold without registration. On July 10, 2024, they immediately removed the product from shelves, stopped distributing it, destroyed 286,989 bags of the involved products, and issued a recall notice.
The Shanghai Qingpu District Market Supervision Administration considered that the free distribution of samples is a promotional strategy used by businesses to attract consumers and increase sales. Even though the samples were given free of charge, obtaining them was contingent on purchasing a product, and the act is still considered part of a sales transaction. The 3ml sample, provided as a gift, was intended to allow customers to try the product before opening the full-size version, making it essentially the same as the full-size product and classified as a regular-use cosmetic. Therefore, Shanghai Xiabao’s actions were found to involve the sale of unregistered imported regular-use cosmetics.
In the end, since the 3ml product had been registered with the National Medical Products Administration for regular-use cosmetics, and Shanghai Xiabao was not the responsible party for the product within China, the risk of the violation was considered low. Furthermore, since they took immediate corrective actions such as removing the product from shelves, recalling, and destroying the stock after the issue was discovered, the Shanghai Qingpu District Market Supervision Administration, according to Article 61, Clause 1, Item 1 of the Cosmetics Supervision and Administration Regulations, ordered Shanghai Xiabao to immediately cease the illegal conduct and imposed a fine of approximately 239,900 yuan.
However, based on the estimated value of the distributed samples, the remaining destroyed products could be valued at up to 800,000 yuan. When combined with the fine, Shanghai Xiabao’s indirect losses from this incident exceed one million yuan.
Five years in China, now ranked Top 1 in its subcategory
In fact, the brand involved in the fine, freiol, has a strong background. According to public information, freiol was founded by Walter Bouhon, the 31st-generation heir of the century-old German pharmaceutical family “Morlan Pharmacy.” The brand was originally created to address the stretch marks and spots left on his wife’s body after childbirth.
After extensive research, Walter Bouhon launched the brand’s first skincare oil, the freiol Even Skin Tone Essence Oil (the big white bottle), in 1966. The product received immediate attention upon its release and quickly became popular in the European market. According to reports, the brand has since expanded to 25,000 pharmacies across Europe, with its products now sold in 40 countries. The big white bottle remains the best-selling skincare oil in German pharmacies for 50 years.
After entering the Chinese market in 2019, freiol quickly gained market traction through collaborations with celebrities such as Wang Ziwen, Yang Rong, and top influencers like Li Jiaqi. It became a “dark horse” in the body care oil category. According to CHAILEEDO intelligence data, freiol achieved a GMV of 151 million yuan on Tmall in 2024, an increase of 27.12%, ranking sixth in the body care category on the platform.
In addition to the big white bottle, the product involved in the case, freiol Massage Oil, is also one of the brand’s popular items. According to freiol’s Tmall flagship store, the freiol Massage Oil has topped the sales charts in its subcategory during both the 618 and Double 11 shopping festivals. It currently remains at the top of the Tmall best-selling body firming lotion chart.
According to CHAILEEDO’s investigation, freiol’s official stores on Tmall, Douyin (TikTok), Xiaohongshu (Little Red Book), and WeChat all belong to Shanghai Xiabao. Public information from Tianyancha shows that Shanghai Xiabao was established in 2018, with the controlling shareholder being Shanghai Puqi Industrial Co., Ltd. (hereinafter referred to as Puqi Industrial).
It is reported that Puqi Industrial is a beauty brand company focused on skincare, with a business model driven by both “own brands + N exclusive agency brands.” Besides freiol, Puqi Industrial also operates other brands, including the Thai professional acne care brand Oxecure and the skincare brand VALGER, which is designed for children aged 3-12.
Regarding the “sample fine” incident, CHAILEEDO reached out to Shanghai Xiabao through publicly available contact details for further information, but as of press time, no response had been received.
An industry insider commented, “This is a fairly basic mistake. As an exclusive distributor, they should have reviewed and archived all product information.”
The Chaos in the Sample Market
Nowadays, samples have evolved into an economic business model. However, due to the special sourcing channels for cosmetic samples, which often cannot be directly purchased from the brand, this characteristic has led to numerous issues in the sample market, with frequent problems arising.
On one hand, many samples in the market are difficult to trace in terms of their origin, lack “identity verification,” or violate regulations by missing Chinese labels. A typical example is the beauty retail chains Only Write and HARMAY, both of which have faced fines of several hundred thousand yuan over issues with samples.
On the other hand, companies or individuals may repackage full-sized products into samples for gifting or secondary sales, which often carries compliance risks and product safety issues. In response to this, major e-commerce platforms have taken action, explicitly stating that repackaged cosmetics are prohibited for sale, and have launched special campaigns to address “repackaged cosmetics” on their platforms.
As is widely known, laws and regulations such as the “Cosmetic Supervision and Administration Regulations” and the “Cosmetic Production and Operation Supervision Management Measures” have long outlined clear rules for the production, labeling, and sale of cosmetic samples. Simply put, samples should be treated the same as full-sized products—they must be registered and approved before being sold, and their labels must comply with regulatory standards. Article 49 of the “Cosmetic Production and Operation Supervision Management Measures” specifically points out that, “Cosmetics provided to consumers through free trials, gifts, or exchanges must fulfill the obligations of cosmetic operators as prescribed by the Cosmetic Supervision and Administration Regulations and this management method.”
According to the aforementioned industry insider, the root cause of repeated penalties for companies violating sample regulations lies in the high market demand for samples. However, compared to full-sized products, samples are often “less conspicuous” and exist in a regulatory grey area, leading many companies to take chances. Nonetheless, the insider believes that “these penalties will serve as a warning to the entire industry.”
As he put it, returning to the case of Shanghai Xiabao being fined, this case stands out because it is rare for companies to be penalized for issues with free sample giveaways, but it is highly representative. This is undoubtedly a reminder to brands and operators that even seemingly insignificant samples cannot be treated carelessly.
