Raymond Ng spoke to Feedinfo News Service about the challenge of overcoming China’s regulatory barriers for imported feed additives.

China is currently the world’s largest consumer of animal feed, representing 21% of global consumption. The Ministry of Agriculture’s (MOA) 13th five-year plan for 2016-2020 includes a project to continue increasing domestic feed output to 220 million tons by 2020. In tandem with feed production growth will come a rise in demand for feed additives.

Although the volume of imported feed additives has been increasing in recent years, their consumption in China is still relatively small compared to locally-produced feed additives.

Today, 51 countries are approved by AQSIQ (Administration of Quality Supervision, Inspection and Quarantine) to export specific feed additives to China after getting an MOA import registration license. But China’s regulatory barriers for imported feed additives remain high.

“It is a very competitive market for imported feed additives and in order to compete, the focus must shift to quality and innovative feed additives as price pressures are eroding margins. China continues to grow and the acknowledgement to tackle reliance on antibiotics requires innovative feed additives to partly fill the gap”, Raymond Ng of REACH24H, a Chinese consultancy firm, tells Feedinfo News Service.

AQSIQ published Administrative Measures of Inspection, Quarantine and Supervision on Import and Export Feed and Feed Additives Decree 118 which came in to effect in September 2009. Imported feed additives from this date had to apply for market access with AQSIQ and have their manufacturing facility registered. Products that are classified as “traditionally traded” by AQSIQ can continue to be exported to China while they complete the market access registrations. Feed additives to be exported to China for the first time must complete these registrations before export. The registration can only be completed through the exporter’s country authority who will then make the application to AQSIQ on the exporter’s behalf. If a manufacturing facility audits are required, AQSIQ will request the exporting country authority to recommend a list of manufacturing facilities prior to auditing. This policy is the most significant hurdle for feed additive exporters as the country, facilities and feed additive categories have to be approved by AQSIQ. Depending on the efficiency and political situation between exporter country and China, it could take around two years for these market access registrations.

In addition, the MOA published No.2 Decree on “Regulation on Feed and Feed Additive Import Registration” which was revised and entered into force on July 1, 2014. It addresses the “Administrative Measures for Feed and Feed Additives” and was put in place to strengthen the supervision of feed and feed additive imports, and ensuring the quality and safety of animal products. According to Articles 3&4 of the regulation, an MOA import license is required. Without this import registration license, the imported feed and feed additives cannot be sold and used in China as the MOA only accepts applications for product registration from registered local agents backed up by a qualified Chinese legal entity.

“The purpose of the regulation is that dossiers are prepared in Chinese so it is convenient to communicate between the MOA and the company. This often facilitates the process as the China-based agent will have the experience to manage the application”, Ng comments.

The import registration is viewed as a pre-approval step before market access which was introduced in order for the Chinese authorities to have control and supervision over products entering China, especially over their quality and safety. China has noted that this registration process is for quarantine, product safety and trace back reasons. The registration involves extensive submissions of information to the MOA.

LENGTHY PROCEDURE

These registration processes are required before exporting which can therefore take a significant amount of time to market.

“According to US FDA, many in the U.S. export industry complain that the current MOA registration process requests product manufacturing information, which might be the company’s proprietary information”, says Ng. “Problems continue to exist for those exporters who are not diligent enough in complying and keeping up with the regulations, so it’s important to work closely with relevant stakeholders with regard to requirements for smoother market access”.

Moreover, clearance procedure for entry ports in China can differ from one port to another. The first time that an overseas company uses an entry port, it is considered a first timer, regardless of any successful history using other ports. For example, importers have reported receiving different treatment when shipping to Shanghai or Tianjin.

“The Chinese government has recognized this issue and is working on harmonizing the systems between the different ports, although there remains the problem of different interpretation of standards in different ports. My suggestion is to invest in relationships with relevant stakeholders directly or indirectly with the China Inspection & Quarantine Services (CIQ) and Customs at port of entry for smoother market access”, Ng comments, pointing out that feed additive exporters need to consider every Chinese province like a separate country.

China also places a lot of focus on maintaining a “positive feed additive” list which includes all products approved for export to China. Ng said it is challenging to make it to that list, especially with regard to testing methodologies which are sometimes different in China compared to other markets.

Ng explains: “A feed additive which is not on the positive list is considered a ‘new’ feed additive requiring New Feed Additive Registration. This can be a very lengthy procedure since efficacy, tolerance and stability studies have to be conducted by designated entities in China. However, international studies and research can be used as reference. The testing methods and guidance have to be designed according to Chinese standards, even though the foundation of such standards are derived from EFSA and FDA and other entities”.

“China picks and chooses different policies to make it suitable to its own situation”, he adds, but stresses that clarification can be obtained by communicating with Chinese experts and policy makers.

For a “new” feed additive registration, it can take one to five years or more depending on the function of the feed additive and the target animal(s).

COST

The cost of registration depends on the complexity of the product and application, but Ng estimates the whole process at between USD 100,000 and USD 1 million or more.

“It is therefore important to evaluate the costs and benefits and whether in the long-term, it has the potential to generate significant market returns to outweigh the costs of entry”, he says. “It is very important to understand the regulatory obligations and to understand what options you have regarding market access and to strategically weigh up the costs and benefits before seeking to enter the Chinese market”.

But Ng stresses that while China is protecting its domestic feed additive industry, it is also supportive of innovation and will always favor the best quality products for use in the feed industry, no matter the country of origin.

“Although there are complications and challenges, the opportunities in the long-term may outstrip the short-term hurdles”, he says.

Raymond will be speaking at Feed Additives Asia 2018 about how Chinese feed additives approval legislation is changing . More information can be found here.

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FEED ADDITIVES ASIA 2018