Recently, an administrative penalty information disclosed by the China National Enterprise Credit Information Publicity System shows that Guangzhou Vopro Biotechnology Co., Ltd. (referred to as “Vopro Biotechnology”) entrusted a cosmetics OEM factory to produce the Overnight Mask, but the latter subcontracted production to an individual who did not have the qualifications for cosmetics production. Based on this, the Baiyun District Market Supervision Bureau in Guangzhou imposed a fine of 72,200 yuan on Vopro Biotechnology.
It is worth noting that this “Overnight Mask” is an export product. At the same time, this is also the first case in the industry where the outsourcing party was fined for cosmetics exports due to non-compliant operations by the subcontractor. A senior industry expert pointed out that “in the current strong trend of overseas expansion in the cosmetics industry, this case sounds an alarm for the entire industry, indicating that even for export products, strict compliance with regulatory requirements is necessary, otherwise, they will also face penalties.”
The subcontractor lacks production qualifications, the exporter is penalized
According to the administrative penalty decision, on April 24th of this year, law enforcement officers from the Baiyun District Market Supervision Bureau in Guangzhou conducted an on-site inspection of the enterprise Vopro Biotechnology, which is engaged in cosmetics sales and is the subcontractor of YESSCA Overnight Mask (also known as YESSICA’S Overnight Mask, both referring to the same product), based on clues provided by a flight inspection report from the Guangdong Provincial Drug Administration. However, during the inspection at its operating site, the products involved in the case were not found.
On May 15th of the same year, the legal representative of Vopro Biotechnology, Mr. Hong, went to the Baiyun District Market Supervision Bureau in Guangzhou and actively cooperated with the investigation. Mr. Hong confirmed that his company had entrusted Guangzhou Zhongying Cosmetics Co., Ltd. (“Zhongying Company”) to produce the aforementioned products involved in the case, and all products had been sold for export with no remaining inventory.
After an investigation and verification by the Baiyun District Market Supervision Bureau in Guangzhou, it was found that some of the specific batch products delivered by Zhongying Company to Vopro Biotechnology were cosmetics produced by an enterprise that did not have the corresponding cosmetics production license. In response to this, Vopro Biotechnology explicitly stated that they were unaware of Zhongying Company subcontracting the production of the products to a factory (Mr. Li) without production qualifications.
According to the administrative penalty decision disclosed, on June 28, 2023, Vopro Biotechnology placed an order with Zhongying Company to produce 65,300 boxes of YESSCA Overnight Mask. Among them, Zhongying Company independently produced 51,512 boxes of products and subcontracted the filling of 300,000 semi-finished products at a price of 0.01 yuan per piece to an individual (Mr. Li) who did not have the cosmetics production qualifications. Under their collaboration, a total of 66,552 boxes of finished products were produced and delivered in batches to Vopro Biotechnology’s designated warehouse.
As the products were for export purposes and no samples were retained, Vopro Biotechnology submitted four “Customs Declaration Forms of the People’s Republic of China” for verification. Based on the existing evidence, the value of the products involved and the illegal gains from the cosmetics produced by an enterprise without the necessary cosmetics production license sold by Vopro Biotechnology between June 28, 2023, and April 24, 2024, amounted to 18,000 yuan.
Ultimately, in accordance with Article 28(1) of the Guangdong Cosmetics Safety Regulations and Article 28(1) of the Administrative Penalty Law of the People’s Republic of China, the Baiyun District Market Supervision Bureau in Guangzhou confiscated the illegal gains of 18,000 yuan from Vopro Biotechnology and imposed a fine of 5.42 yuan, totaling a fine of 72,200 yuan; in addition, Vopro Biotechnology was also ordered to correct the behavior of selling cosmetics produced without obtaining a cosmetics production license.
Regarding the filing issue of the YESSCA Overnight Mask product, several industry insiders pointed out that “export beauty products can either be filed or not filed.” In addition, a search on various major e-commerce platforms by CHAILEEDO did not yield any relevant product information for the YESSCA Overnight Mask.
The process for filing export products is relatively simple in China
Many industry insiders believe that “since exported cosmetics are not sold in China, they do not need to comply with relevant domestic business regulations, leading to a large number of non-compliant exported cosmetics entering the market.”
Lin Lijun, the makeup research and development director of Guangdong Shangpinhui Cosmetics Co., pointed out, “Because exported products are not sold in the domestic market, it is only necessary to ensure compliance with the relevant regulations of the destination country or region, making the filing process relatively simple, requiring only the submission of the necessary documents.”
Through investigations and discussions with several industry senior engineers, CHAILEEDO learned that the National Medical Products Administration has not yet issued any specific guiding documents on regulations for exported cosmetics.
In addition, addressing the question of “how to file cosmetics intended only for export,” the Shandong Food and Drug Evaluation and Inspection Center previously stated in a document released on November 30, 2021, titled “Common Questions and Answers on Registration and Filing of Ordinary Cosmetics (Part One),” that production companies must submit three types of data to a designated platform: product name, the country (region) of intended export, product label images including front and flat views of the packaging, and product instructions (if applicable).
“In the case of Vopro Biotechnology, subcontracting production to an unqualified manufacturer clearly constitutes a violation of the law,” emphasized Zhang Taijun, the research and development director of Quanzhi Meifu Biotechnology Research Institute. He stated, “The production of exported products is subject to regulatory constraints, while supervision in the sales process is relatively lenient. Whether targeting exports or the domestic market, all cosmetics produced domestically must adhere to domestic production management standards, including the requirement to possess the appropriate production license.”
Pan Guangle, the product manager of the Technical Department at Guangdong Baibo Biotechnology Co., mentioned, “Exported cosmetics mainly need to comply with the regulations of the destination country, while in the domestic market, only holding a production license is required.” Liao Linfeng, the chief engineer of Guangzhou Huijialing Biotechnology Co., also noted that although export products must comply with the regulations of the destination country and are not entirely restricted by the National Medical Products Administration, having legitimate production qualifications remains a basic requirement.
Li Jincong, the founder of the Forbidden Words for Cosmetics website, believes that “the root of the problem lies in many factories mistakenly thinking that as long as cosmetics are exported overseas, they can ignore standards and do not need to follow the ‘Cosmetic Supervision and Administration Regulation’ for production and operation.” He stressed, “Both the production and sale of cosmetics are subject to domestic regulations, and the three parties involved in the aforementioned case have violated Article 2 of the ‘Cosmetic Supervision and Administration Regulation,’ which states that ‘engaging in cosmetic production and operation activities and their supervision and management within the territory of the People’s Republic of China shall comply with this Regulation.'”
“In particular, Zhongying Company failed to commission an enterprise with the relevant cosmetics production license to produce cosmetics in accordance with the requirements of the ‘Cosmetic Production Quality Management Standard,’ and should bear the main responsibility; Vopro Biotechnology did not supervise Zhongying’s production activities, resulting in the sale of cosmetics produced by an enterprise without the corresponding cosmetics production license, and should also bear the main responsibility; and Li Ming did not obtain the corresponding cosmetics production license, constituting unlicensed production,” Li Jincong further stated.
Exported cosmetics must operate in compliance
In recent years, many cosmetics companies have actively sought international expansion to open up a second growth wave. Regarding the penalty imposed on Vopro Biotechnology, many responsible persons of cosmetics companies that have previously exported products abroad told CHAILEEDO that they had never heard of a similar situation before. Shen Yingjie, Assistant General Manager of COSMEDECOR (China), told CHAILEEDO that in the process of cosmetics production, selecting a production company with complete qualifications for entrusted production is a basic requirement.
“This behavior is clearly a violation,” said Zhu Hong, founder of Zhongtong Biochemicals. “The entrusting party has the responsibility and obligation to manage and monitor the quality of the products produced by the commissioned producer. At the global level, there is no such thing as ‘three noes’ (no qualifications, no standards, no supervision) products being recognized as qualified.”
It is worth mentioning that earlier this year, in face-to-face exchanges between CHAILEEDO and nearly 50 bosses or relevant responsible persons of cosmetics companies, more than half of the surveyed companies considered going global as the direction of development and the mainstream trend, with all the interviewed companies viewing Southeast Asia as their preferred region for going global. However, it cannot be denied that in the process of cosmetics companies seeking to export products to overseas markets, they will face many challenges and need to be vigilant against various risks, which is also a necessary condition to ensure that products can establish a solid foothold in the international market.
In addition to complying with Chinese laws and regulations, considering and respecting the laws and cultural customs of the target country is also crucial. Several industry veterans have told CHAILEEDO, “Cosmetics companies must not overlook the differences in laws and regulations of different countries when exporting products.”
Shen Yingjie said, “When exporting cosmetics, it is necessary to ensure legality first, and on this basis, ensure that the products comply with the relevant regulatory requirements of the destination country, such as ingredient restrictions, prohibited ingredient lists, and specific ingredient content limits. In addition, consideration must also be given to the brand intellectual property situation in the destination country, such as trademark infringement, which are key points that must be confirmed before engaging in international trade.”
Zhu Hong emphasized that due to the different regulatory requirements of each country, conducting thorough research in advance and seriously studying relevant laws and intellectual property knowledge is crucial, as this will directly affect whether success can be achieved in the international market. “Simply relying on (Chinese) domestic experience without proper preparation is like a blind person touching an elephant, inevitably encountering obstacles.”
Dai Chengfang, CEO of Tengyu Group, mentioned that the main issues faced when exporting cosmetics include: firstly, the dispute over trademark rights, where others may register one’s trademark; secondly, packaging design may involve patent infringement; thirdly, the presence of prohibited ingredients in products is also a potential risk; and finally, for countries in Southeast Asia and some others, halal certification requirements are also very important.
Zhao Kun, founder of Guangzhou Pinhe Biotechnology Co., also pointed out that risks to be aware of during the internationalization process include local government regulations and uncertainties with partners. He mentioned that different countries have their own detailed and specific laws and regulations. For example, Indonesia has detailed and strict regulations regarding BP and halal certification, with high standards as well.
He advised that it is extremely beneficial to learn from companies with mature operational experience. Due to significant differences between oral rumors and written information and the actual situation, a cautious attitude must be maintained when adopting information.
“The export of cosmetics by cosmetics companies is seen as a major direction for future development. This process requires a long-term perspective, expecting to encounter many challenges in the short term, requiring psychological expectation management. Compliance with regulations and operating in compliance is not only a primary condition but also the cornerstone of success,” said a cosmetics industry professional.
