Product Liability in the People's Republic of China
Binding, Jörg, Eisenberg, Claudius, Business Law International
The rapid economic boom in the People's Republic of China (PRC) has become a legend. While the impetus for the boost originally came from the country being a good location for production and manufacturing for industrialised nations, emphasis has now shifted towards the growing importance of the Chinese market for goods and services, along with its large population of consumers. Hence, the topic of product liability has increasingly moved into sharper focus for producing and manufacturing companies in China as well as exporting companies to this country. Similarly, this change has been supported by the Chinese Government, and thus Premier Wen Jiabao announced the 'Year of Quality and Safety' of Chinese products on the 10th National People's Congress on 5 March 2009.* 1 This was followed by a proactive engagement in legislative and regulatory activities. During the opening meeting of the 11th National People's Congress on 5 March 2012, Wen Jiabao once again stressed the importance of progress in the area of consumer protection as well as the need to strengthen the control and administration of product quality and safety in order to safeguard consumers' interests.2 As a result, interest and attention have centred on topics such as product quality, product safety and liability, creating increased public awareness. In particular, consumers are increasingly willing to enforce their claims of defective products. Consequently, it is crucial to understand and familiarise oneself with existing laws and regulations for companies carrying out sales activities and operating in China in order effectively to incorporate and adapt to the issue of product liability.
This article provides an overview of the legal framework regarding product liability in China by drawing on respective regulations manifested in public, criminal and especially civil law.
Public law - quality and safety law and supervision
Quality and safety law
Laws concerning quality and safety contain not only provisions applicable to all products, but also those solely related to certain products. The legal system comprises a variety of regulations and provisions on different levels, which eventually impedes the application of Chinese laws in those two regulative areas. At the same time, however, their relation to each other remains ambiguous. In this respect, great emphasis lies in the Law on Product Quality of the PRC3 (PQL) and the Law on Standardisation of the PRC4 (SL). Subsequent to the provisions of these two laws, particular sectors apply more specific laws to regulate the market. Most notably, this incorporates the provisions and regulations on food, medical and cosmetic health products, agricultural and veterinary products, pesticides and seeds as well as measuring equipment.5 In particular, important regulations are the Law on Food Safety of the PRC,6 the Regulation on the Supervision and Administration of Medical Devices of the PRC7 and the Metrology Law of the PRC.8 Furthermore, the most important provision regarding market regulation is China's new automotive recall law approved and published by an order of the State Council at the beginning of 2013. The Regulation on the Administration of Recall of Defective Auto Products9 stipulates the management and procedure of recall of defective auto products. This provision contains obligations for domestic manufacturers and importers and sanctions for non-compliance.
The PQL incorporates provisions, in particular Articles 26 et seq, applicable to all products and thus forms the basic legal foundation by referring to requirements of product quality and safety - as far as those that are not included in specific regulations for particular products - as well as producers' responsibilities under public law.
According to Article 26 PQL, products should comply with the following requirements:
* be free of any disproportional danger putting the safety of human life and property at risk, and thus conform with national or industry standards for safeguarding and protecting the health or safety of human life and property wherever those standards exist;
* possess the essential functions for use;
* fulfil and comply with standards as stated on the product itself and/or packaging, product instructions or samples; and
* be marked with reference to the stated requirements in Article 27 PQL, that is, regarding quality inspection, information about the manufacturer, manufacturing data, ingredients and warning signs. …