Exporting from Australia inevitably involves dealing with new trading partners, new regulations and new cultures. Exporting to countries with significantly different legal and political systems, which themselves are not static, and cultures, compounds many difficulties. When exporting food and beverages to China we face yet another layer of complexity: the changing nature of the regulatory and political environment.
In this article, we explore some ways in which exporters can protect themselves against the full force
of trouble that can come from dealing with regulations and regulators, and take best advantage of
access to what can be a highly lucrative market.
Our message: learn what regulations apply to your product:
- Before you decide on your market entry strategy so you can determine what works best for
you and price your product appropriately; and
- Before you finalise any agreements with trading partners so you can know up front what will
happen if trouble strikes, as much as possible.
When selling your food or beverage into China, here are some of the regulatory issues you may face:
A Chinese licence may need to be held by your Australian processing plant and others in
your supply chain: for example, a cannery or abattoir;
Labelling requirements that may differ across regions;
- Content requirements;
- Chinese certification requirements;
- Accreditation requirements;
- Your importer may need a licence;
- If your product is identified and sold as organic, it requires Chinese certification;
- Import quotas or higher tariffs based on your market entry strategy;
- Licences, registrations, and certifications are not centralised, but are handled by different
agencies in China.
Rules or authorisations in their various forms can change abruptly and without obvious reason: they
may change for health and safety reasons, for policy reasons, or to meet more opaque demands.
Two examples show why you not only need to know what regulations apply to you at all times, but
why you need to factor into your agreements and general strategy, the possibility that your supply
will be interrupted.
Bellamy’s Organic recently bought Camperdown Powder cannery, which holds a licence from
Certification Accreditation Administration of the PRC (CNCA). That licence was suspended,
apparently on the basis of an anonymous complaint. The suspension has been lifted but not before
Bellamy’s suffered from bedlam in the market, in China and at home. At around the same time,
Parmalat had a milk facility’s licence suspended by CNCA in South Australia.
Although we have protections built into our free trade agreement with China, they may be trumped
on the basis of public health.
Another shock interruption to sales into China was a suspension of the importation of chilled beef
from 6 Australian plants on the basis of a labelling issue. Again, after negotiation, the suspension
was lifted. The interruption comes on top of a period of poor stock levels in Australia and the re-
introduction of US beef into China.
Non-tariff barriers like complex technical specifications, import quotas and licence requirements
pose hurdles to exporters that are essential to be aware of before entering a market. Not only do
you need strong trading relationships to help you in market: a bit of legal advice helps you to
negotiate agreements that help to keep you nimble and protect your profitability.