China ingredients register gives counterfeiters opportunities

By Simon Pitman

- Last updated on GMT

Related tags Marketing Counterfeit China

Since the 2008 advent of compulsory ingredients registration in China the initiative has made doing business more complex and also opened up the door to counterfeiters, according to Campo Research.

Although the China market is brimming with opportunity off the back of unprecedented economic growth and growing consumer affluence, targeting the growth opportunities in the cosmetics arena is not a straight forward process.

A number of high profile consumer product scandals, mainly relating to foods, led the China government to introduce tighter manufacturing control when the ingredients registration was introduced in 2008.

The move meant that the ingredients process was transferred from the Ministry of Health to the State Food and Drug Administration and stipulated that only appointed laboratories could assess the safety of ingredients.

Ingredients registration process takes 18 months

Even if the ingredients have been tested and approved by European and US authorities, foreign companies without a registered office in China still have to be given the go ahead by local authorities, which typically takes around 18 months to complete.

“Business in China was brisk from when Campo entered the market about 10 years ago, until 2008,”​ said Joshua Teo, technical manager at US-based Campo Research.

“But when the new regulations came into effect, sales were affected. Previously registered products had to be re-registered, limiting the number of ingredients that we were able to continue selling.”

Teo also points to the fact that during the 18 months it takes to secure registration, local competitors have a window of opportunity to develop counterfeit products that they can rush to market before the registration process is complete.

“This means that by the time we launch our products in the market, similar ones will already be available, which potentially limits our sales,”​ said Teo.

Innovative approach to ingredients registration

However, the company was not deterred, and driven by the opportunities in the China market, it decided to adopt a method of custom extraction for its ingredients traded in China, an approach that has enabled it to maintain its business in the country.

The drawn-out registration process can have its advantages though, namely that the process ensures that ingredients have met a specific standard, a point the counterfeit ingredients often fall short on.

“The copying of our products is a big issue in China because it creates competition. But the good news is that at the end of the day, our discerning customers still choose to buy from us when they recognise the difference in quality and efficacy of our products compared to counterfeit ones,”​ said Kerry Yun, marketing manager at Korean-based company CQV.

Both Campo Research and CQV will be exhibiting at the PCHi exhibition, held in Shanghai, China from 27 to 29 February 2012.

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