Dr. Pinghui Xiao Food Law & Policy Summer School, University of … · License Inspection Monitoring and Reporting Stopping providing service upon serious incompliances. V. EN 2.1

V. EN 2.1 (CN14) Dr. Pinghui Xiao1

Dr. Pinghui Xiao

Food Law & Policy Summer School,

University of Eastern Finland

Helsinki, Finland

28 August, 2018


CONTENTS

Part 1 Digitalization in ChinaDigitalization in China

Food E-commerce: Industry DevelopmentFood E-commerce: Industry Development

Food E-commerce Legislation and Remaining ChallengesFood E-commerce Legislation and Remaining Challenges

Conclusion and Way ForwardConclusion and Way Forward

Part 2

Part 3

Part 4


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1

Digitalization in China


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Zhejiang

• Cross-border E-commerce and Jack Ma’s e-WTP: In Gateway 17, according to Jack Ma, his platforms will be able to provide services to 2 billion population and 10 million SMEs from around the world within 20 years and his platforms will become the 5th largest economy equal to California in the US in 2036.

Jack Ma and His Digital Ambition


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4Message Delivered from the New Four Great Inventions

• Three of the new inventions are based on the Internet;

• The list of ubiquitous internet uses is still developing…

Source: BBC


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4Personal Experience: Internet App based Car-sharing

Efficiency: Everyday, from my home to Guangzhou University where I work by a sharing car.Care for Environment: Battery driven Car (New energy vehicles in Chinese)Being Cheap: 3km travelling costing less than 1 euro per use.

Guangzhou University

My home


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Beijing

Zhejiang

Guangdong

BATJM

Let’s do an ‘Internet Plus’ game.

“Internet Plus” and BATJM


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4A Few Key Facts and Figures about E-commerce in China

• China is the largest e-commerce market in the world

reaching 900 billion USD in sales

• Chinese market represents 47% of international e-

commerce sales

• Tmall.com from Alibaba and JD.com represent over

80% market share;

• E-commerce sales represent 20% of total retail sales in

China;

• Online shopper population in China is about 437 million

with 60% internet users shopping online;

• Among the most popular products purchased online are

food and groceries, electronics and the like;

• 20% of Chinese consumers purchase abroad.


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Consumption Internet (E-commerce)

Industrial Internet (AI, IoT)

Food

Circulation

Agricultural

Production

CateringFood

Manufacturing

Food

import and

exportCross-border

food e-commerce

Online retailing (farm produce, packaged foods

etc)

Online catering

Digital Food Economy

Digital Food Economy


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Food E-commerce: Industry Development


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4Internet plus Food (BATJ)

Of world top 20 Internet companies, 9 from China as of May 2018

Source: Statista


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4Online Food (Food E-commerce) Chain

Categorization of food e-

commerce

Sub-categorization example

Online food retailing (farm

produce, packaged foods etc.)

Self-built model COFCO’s Womai、SF Best etc.

Platform model Taobao etc.

Mixed model Tmall, JD.com etc.

Online catering Online food

delivery

KFC Delivery ,Pizza Hut Delivery (Self-built model)

Ele.me, Baidu Waimai, Koubei etc.(platform model)

Similar to Groupon Baidu Nuomi etc.

mixed Meituan etc.

Cross-border food e-commerce Self-built model Kaola, VIP.com etc.

Platform model Amazon

Mixed model Tmall.hk, jd.hk etc.

Mobile food e-commerce Mobile e-

commerce

Mobile Taobao, Mobile Tmall etc.

Social media e-

commerce

Weidian etc.

Hybrid model WeChat, Weibo etc.


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4“Three Doubles” under Online Food Platforms

• The emergence of Platform Economy in China– The first type is the "innovation platform", which provides a common

technology framework upon which others can build, such as the many independent developers who work on Microsoft's platform.

– The second but also most common is “online transaction platforms", also known as "digital matchmakers". Examples of transaction platforms include Amazon, Airbnb, Uber and Baidu.

• Online food transaction platforms (‘Three Doubles’)– Double No-sees: Neither side of a certain transaction sees each other

in real life.

– Double Virtualities: Both trading players and food products or services to be traded appear as virtual information rather than tangible things.

– Double Identities: Platforms are treated as regulatees and regulators


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4Rising Food E-commerce Lawsuits

But this explosive e-commerce growth and boom also creates regulatory

challenges. China Judicial Big Data Service Platform reveals following harsh

facts:

• the number of e-commerce lawsuits in 2017 increased by more than 40%, far

higher than the average lawsuit growth rate of 13%, of which more than half

of these e-commerce lawsuits are concerned with food products.

• 83 % food e-commerce disputes are associated with online food platforms.

Source: China National Radio


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Food E-commerce Legislation and Remaining Challenges


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Food safety Regulatory

systemTech

benchmarking

Food risk assessment

Food standardization

Food safety administration

China’s Food Regulatory System after Milk Scandal and the Food Safety Law

Catalyst for reform Passed laws Created institutions

Melamine Milk Scandal Food Safety Law in 2009, revisedin 2015

CFDA, formally known asSFDA

Chinese Melamine Milk Scandal and Food Regulation Reform in 2009


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Title Legislation Type

Promulgation Institution

Aims

2015 Amendment to FSL Law NPC Laying down rules of online 3rd party food trading platform liability and responsibility.

Measures for Investigation and Punishment of Unlawful Acts concerning Online Food Safety(Measures III)

Rules byMinistry

CFDA Implementing 2015Amendment to FSL to specify rules to control almost all models of food e-commerce.

Measures on Supervision and Administration of Food Safety concerning Online Catering Services Providing (Measures Ⅳ)

Rules by Ministry

CFDA Implementing 2015Amendment to FSL to specify rules to control online catering services providing.

The Effective Legislation of Online Food Trading in China


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4Platform Responsibilities

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Mea

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Filing for an official record (Art. 8)

Technical requirements (Art. 9)

Rule making (Art. 10)

Inspection of food business licenses (Art. 11)

Profiling and filing (Art. 12)

Food trading record-keeping (Art. 13)

Process control (Art. 14)

Reporting and stopping providing services (Art. 15)

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Registration

License Inspection

Monitoring and Reporting

Stopping providing service upon serious incompliances


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Sharing meals with strangers via online platforms as a hobby. It works as follows in a triangle relationship:• Host may use their private homes and kitchens, which some labels as ‘underground restaurants’ to provide

catering services. • The platforms generally charge a varying fee from the host. • Those customers vary from travelers to local residents.

Challenge One: Regulating Meal Sharing under Sharing Economy


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4Regulating Meal Sharing under Sharing Economy: The Challenges

Private homes used to share meals are a business or not? In 2014, some turned to San Francisco Department of Public Health to find out whether or not meal sharing is legal business, the department in turn consulted the city attorney, who believed that the websites themselves are operating above board, whereas the individual hosts are not. In the sector more generally, there is debate about whether dinners hosted in private homes but sold to members of the public are “private” events. According to New York City’s health department, a permit to operate a food service establishment is often required by municipal authorities and that requirement applies to “anyone who offers meals to the public for compensation”.

Why meal sharing as a disruptive innovation shall get more attacks from traditional canteens?Echoing the angry response of Paris cab drivers to Uber, French restaurateurs are calling for restrictions on meal-sharing websites. The more that existing businesses feel threatened by the disruptive innovation of meal-sharing, the more pressure is likely to be placed on local, regional and national governments for increased regulatory scrutiny. A number of academics and non-profits are already looking into what regulation may or may not emerge. But it is an open question.Source: The Guardian, 2017; Jonathan Kauffman, 2014


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4Case Study: What Can We Learn from the Facebook Case?

Facebook not to be punished, why?

Early Stage

• Ruelas was threatened to face a maximum penalty of two years in prison

Middle Stage

• three years probation and 80 hours of community service if she pleads guilty

Final Stage

• Dropping criminal charges


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4Case Study: Foods Available through Facebook’s Marketplace


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4Reflections on Facebook Case and Implications for China

• Who should be liable for what in case of food incidents arising from meal sharing and how to regulate it?

• There are also doubts about insurance cover. It is often unclear who would be liable should a problem such as injury or food-poisoning arise at a platform-facilitated public event held on private property. In other words, the host will be liable for what? What about the platform?


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electronic commerce is also changing the way trade takes place, creating new opportunities for food SMEs to enter value chains.

Source: FAO, Trade and Food Standards, p.51

Challenge Two: Cross-border Food E-commerce


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4 The Codex Alimentarius is a joint Programme, established by Food and Agriculture Organization (FAO)

and the World Health Organization (WHO) in 1963 under United Nations system.

Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) under WTO

(World Trade Organization) (non-UN system) recognize Codex standards as benchmarking for

international trade.

Codex standards become the single most important international reference point for international food

standards

Codex, WTO and Food Standardization

United Nations (UN) System

Non-UN System


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4Codex Recognizes Its Role in E-commerce

Digital labelling for cross-border food e-commerce?

China Customs (former AQSIQ) drafted a rule with a view to introducing digital

labelling for cross-border food e-commerce (to be approved)

• Increasing e-commerce of food related products is posing considerable challenges to food control;

• The globalization of food trade and new distribution channels in particular e-commerce of food and accompanying/associated risks to food safety and consumer protection were highlighted as important issues that needed to be addressed within Codex.

Source: REPORT OF THE 30th SESSION OF THE FAO/WHO COORDINATING COMMITTEE FOR EUROPE, 2016


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Conclusion and Way Forward


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3Conclusion: China’s Contribution to Food E-commerce Regulation

First Mover of Law-making: Among one of the very first country in the worldlaying down specific legislation relating food e-commerce.

Social Co-governance Model for Food E-commerce: China creates a so-calledsocial co-governance model to regulate food e-commerce:

a) Platforms are required to assume co-governance regulatoryresponsibility to ensure industry compliance from online foodbusiness operators;

b) co-governance regulatory responsibilities are so comprehensive thatthey include but are not limited to registration, inspection, reportingand stopping services.

Voice of China for Food E-commerce Regulation in the World:Food e-commerce is a relatively emerging sector in China and the rest of the world. There is little international experience guiding how to deal with it so this brings big challenges to China;With a lack of international good model, whatever China does will make it the first mover to be innovative to regulate this sector, making stronger China's voice for global online food governance.


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On one hand, regulatory responsibilities for online foods are more concentrated; On the other, reorganization is fairly recent and how this contributes good governance of online food safety is yet to be seen.

Way Forward: The Reorganization of China’s Food Safety Administration in 2018

Ministry of Agriculture and Rural Affairs

Agricultural production

Quality and safety of agricultural products

State Administration for Market Regulation

Domestic food safety

Regulating food advertising and food quality

China Customs

Food imports

Food exports


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“Edible Internet”

Trilogy

Way Forward: ‘Edible Internet’


Thanks for your attention

Q&A

If you have any questions, you can send me an Email: [email protected] can also find me via Facebook by pinghui xiao

Or WeChat: GIZSTAR

mailto:[email protected]

Documents

Dr. Pinghui Xiao Food Law & Policy Summer School, University of … · License Inspection Monitoring and Reporting Stopping providing service upon serious incompliances. V. EN 2.1