Cosmetics industry adds new members to the list of prohibited practitioners.
Recently, the Guangdong Provincial Drug Administration issued two penalty notices on the same day. Among them, Company A was fined for producing unregistered special cosmetics, and the original legal representative of the company was banned for life. Company B was banned for life because it added banned substances to children’s cosmetics, and both the legal representative and the person in charge of quality and safety were banned for life.
CHAILEEDO investigation found that the two companies involved are Guangzhou Baiyun District Fengcai Cosmetics Factory (referred to as “Guangzhou Fengcai”) and Guangzhou Zhonghao Biotechnology Co., Ltd. (referred to as “Zhonghao Biotechnology”). As early as last year, both companies were in a state of “abnormal operation,” and Zhonghao Biotechnology was also included in the list of severely illegal and untrustworthy enterprises this year.
Strike with a heavy blow: License suspension and lifetime ban
According to the administrative penalty decisions released by the Guangdong Provincial Drug Administration, the ×× Hair Dye Cream (Purple Red) produced by Company A on January 6, 2022, was found to contain the hair dye ingredients 2,6-Diaminopyridine and p-Phenylenediamine, which were not indicated on the product label or in the registration information as required by the “Cosmetic Safety Technical Specification” (2015 edition). Therefore, it was determined to be an unregistered special cosmetic.
Investigation revealed that all 469 boxes of the aforementioned implicated product produced by Company A were sold out. The selling price was 2.8 yuan per box, resulting in sales revenue of 1,313.2 yuan. The total value of the case and illegal gains amounted to 1,313.2 yuan.
Based on this, the Guangdong Provincial Drug Administration, in accordance with Article 59(2) of the “Regulations on the Supervision and Administration of Cosmetics,” ordered the company to cease cosmetics operations for 6 months, revoked its cosmetics production license, and prohibited the company from filing cosmetics records or accepting its applications for cosmetics administrative permits for a period of 10 years. In addition, the original legal representative of the company, Chen ××, was fined 152,500 yuan and permanently banned from engaging in cosmetics production and business activities.
Another penalty notice was issued to Company B. According to the administrative penalty decision information, on April 11, 2023, the company produced a certain Baby Cream (Batch No.: ZHBD04A02), and on April 8, 2023, it produced a certain Premium Cream (Children’s Type) (Batch No.: ZHBD02A01), both of which contained the prohibited cosmetic ingredient tacrolimus and were classified as children’s cosmetics. The total value of the implicated products amounted to 25,500 yuan, with illegal gains of 15,500 yuan.
Public information shows that “tacrolimus” is an antibiotic used to treat moderate to severe dermatitis. However, the “Cosmetic Safety Technical Specification” (2015 edition) in China explicitly prohibits the addition of antibiotic drugs as raw materials or components in cosmetics.
Finally, the Guangdong Provincial Drug Administration decided to impose administrative penalties on Company B, including a 6-month suspension of cosmetics operations, revocation of its cosmetics production license, and a 10-year prohibition on filing cosmetics records or accepting its applications for cosmetics administrative permits.
At the same time, the legal representative of the company received a lifetime ban on engaging in cosmetics production and business activities from the Guangdong Provincial Drug Administration. It is worth mentioning that in this penalty, the person in charge of quality and safety of the company also received fines and a lifetime ban on engaging in cosmetics production and business activities.
Both companies listed as operating abnormally with multiple penalties
According to the administrative penalty decision information, the cosmetics production license numbers of the two penalized companies are respectively Yuezhuang 20161534 and Yuezhuang 20220268. According to the public information on the National Medical Products Administration’s platform for cosmetic production enterprises, these two license numbers correspond to Guangzhou Baiyun District Fengcai Cosmetics Factory (referred to as “Guangzhou Fengcai”) and Guangzhou Zhonghao Biotechnology Co., Ltd. (referred to as “Zhonghao Biotech”).
The National Enterprise Credit Information Publicity System shows that Guangzhou Fengcai was established in 1993, with Chen Mouguo as the legal representative. Its business scope includes cosmetics manufacturing, wholesale, and technological development. Zhonghao Biotech was established in 2017 with a registered capital of 1 million yuan. Its business scope includes cosmetics wholesale, cosmetics retail, production and sales of Class I and Class II medical devices, as well as disinfectants. Fang Mou is the legal representative.
CHAILEEDO’s investigation found that Guangzhou Fengcai and Zhonghao Biotech have been subjected to multiple administrative penalties. Guangzhou Fengcai was penalized five times between 2019 and 2023, with a total fine of 194,400 yuan. Zhonghao Biotech has been penalized three times in the past year, with a total fine of 1,265,000 yuan.
Based on the reasons for the penalties, Guangzhou Fengcai’s violations include producing special-purpose cosmetics without obtaining approval numbers, using prohibited ingredients in cosmetics, using unapproved new cosmetic ingredients, and inconsistencies between the labeled ingredients and the actual formulation of the cosmetics.
On the other hand, Zhonghao Biotech’s violations include producing cosmetics without a license or beyond the authorized scope and using prohibited ingredients to produce children’s cosmetics. For example, on January 2nd of this year, Zhonghao Biotech was fined a total of 1.1 million yuan by the Baiyun District Market Supervision Bureau of Guangzhou for using the prohibited ingredient “tacrolimus” to produce products such as Red Snail Baby Initial Cream, Apricot Orchard Premium Cream (Children’s Type), and Xiaowawa Baby Friendly Cream.
In terms of product filings, since 2022, Zhonghao Biotech has filed a total of 79 products, including creams, body lotions, and masks, with nearly half of the products already deregistered. Guangzhou Fengcai has filed a total of 301 products, including essences, hair masks, and hair growth powders, with a small number of products already deregistered.
It is worth mentioning that, in 2023, due to “inability to contact the registered domicile or business premises,” Guangzhou Fengcai and Zhonghao Biotech were separately listed in the operating abnormality list by the Guangzhou Baiyun Market Supervision Bureau. Furthermore, on January 16, 2024, Zhonghao Biotech was also listed in the list of seriously illegal and dishonest enterprises for “producing and selling counterfeit drugs, substandard drugs, medical devices, and cosmetics.”
Prohibition of Business” Normalized, 18 Individuals was Prohibited
According to incomplete statistics gathered by CHAILEEDO, since the implementation of new regulations in 2021, there have been a total of 18 practitioners in the industry who have been subject to business prohibitions.
In 2024 alone, as the first half of the year has come to an end, regulatory authorities have already issued four business prohibition orders.
Regarding the subjects of the business prohibitions, they include corporate entities, legal representatives, company shareholders, and individuals responsible for quality and safety. Regarding the reasons for the prohibitions, they mainly involve adding prohibited substances to children’s cosmetics, producing cosmetics that do not comply with technical specifications, producing unregistered special-purpose cosmetics, and selling counterfeit cosmetics.
Among these, children’s cosmetics have become the focus of regulatory attention. As shown in the chart above, up to now, nine prohibition orders have been issued due to the addition of prohibited substances in children’s cosmetics, accounting for nearly 40%. For example, Xiamen Daily Chemical Co., Ltd., the first company in the country to receive a “business prohibition” order, was permanently prohibited from business due to the unlicensed production of children’s cosmetics, and its legal representative was also permanently prohibited.
At the same time, the production of unregistered cosmetics is also a key target for regulatory authorities. For example, Guangzhou Tianke Cosmetics Co., Ltd. had its cosmetics production license revoked and faced a 10-year business prohibition, while its legal representative was permanently prohibited, due to products failing to meet the required standards and suspected production of unregistered special-purpose cosmetics.
In addition, CHAILEEDO has noticed that many of the companies facing business prohibitions are frequent offenders in cosmetic product quality inspections. Punishments tend to be more severe when dealing with companies with a history of violations. For instance, in September of last year, in the case of Guangzhou Dunfu Cosmetics Co., Ltd., the Guangdong Provincial Medical Products Administration specifically pointed out that Guangzhou Dunfu had been administratively penalized three times for similar illegal activities between July 19th and October of 2022, indicating a “serious situation.” As a result, Guangzhou Dunfu received a 10-year business prohibition, and both the legal representative and company executives were permanently prohibited.
It is worth noting that in some cases, the legal representatives and actual controllers or bosses of the companies facing business prohibitions are not the same individuals. Consequently, many industry professionals are concerned that the root of the problem is not being addressed. Chen Laicheng, the founder of Guangzhou Mashanghui Biotechnology Co., Ltd., frankly stated, “Business prohibitions serve as a warning to practitioners in the cosmetics industry, but they have limited effect in the long run. Many companies facing prohibitions simply change their identities and continue operating.”
However, some industry professionals point out that “the new regulations target a series of management personnel, not just a single legal entity or boss. The boss may flee, but if the entire management team resorts to ‘fraud’ using different identities, the operational difficulty increases significantly.”
All these signs indicate that regulatory authorities have normalized the strict enforcement of business prohibitions for major violations in the cosmetics industry. While this serves as education, guidance, and a deterrent for the entire industry, it also reminds companies not to engage in illegal activities and to focus on compliance management, establishing a solid foundation for regulatory compliance.
