Hainan Province Pilots Electronic Labeling for Offshore Duty-Free Cosmetics

On August 30, 2024, the Hainan Medical Products Administration (MPA) announced the launch of a two-year pilot program for electronic labeling of offshore duty-free cosmetics, starting September 1, 2024. During the pilot period, these cosmetics may opt to have electronic labels or traditional labels for marking Chinese label information.

Key highlights of the announcement include:

1. Definition of Electronic Labels

An electronic label refers to a QR code that stores Chinese label information of an offshore duty-free cosmetic through a certain electronic storage mechanism. Consumers can use smartphones to scan the code to access the product’s Chinese label details.

2. Application Process

The registrant, notifier, or domestic responsible person of offshore duty-free cosmetics must submit the Chinese label information online via the Hainan MPA’s official website before the product is put on the market or imported. For those that meet the requirements, Hainan MPA will generate electronic labels and publish them on the official website. Companies can download the electronic label by themselves from the website and print it on or affix it to a prominent position on the visible surface of the product sales packaging.

3. Labeling Content Requirements

The content of electronic labels should comply with the Cosmetic Supervision and Administration Regulation (CSAR), the Administrative Measures on Cosmetics Labeling, and other relevant regulations. Unlike traditional labels, electronic labels are just a different labeling form, whose content remains the same. In addition to electronic labels, products must still display the Chinese product name, registration certificate number (for special cosmetics only), net content, expiration date, and other required details on the visible surface of the product packaging.

For offshore duty-free children's cosmetics, the children's cosmetics logo and safety warnings must be marked in a prominent position on the packaging per the Supervision and Administration Provisions on Children Cosmetics and the "Announcement of the NMPA on the Release of Children's Cosmetics Logo (No. 143 of 2021)”.

4. Paper Label Information

For products with electronic labels, offshore duty-free shops should provide paper versions of the Chinese label upon consumer request.

5. Inspection of Electronic Labels

Haikou Customs will inspect electronic labels on Hainan's offshore duty-free imported cosmetics. Non-compliant labels must be rectified under customs supervision, and the products can only be sold after passing re-inspection.

Chemlinked Comments

While both offshore duty-free and cross-border duty-free shopping involve duty-free shopping, they differ significantly in terms of policy and operation. Hainan's offshore duty-free program provides a tax-free quota of 100,000 yuan per year for specific consumers, namely, travelers departing Hainan (excluding those leaving China) by plane, train, or ship. The policy exempts 45 categories, including cosmetics, from tariffs, consumption tax, and value-added tax. In addition, offshore duty-free cosmetics must comply with relevant regulations such as the CSAR, Administrative Measures on Cosmetics Registration and Notification, Supervision and Administration Measures on Cosmetics Manufacture and Operation, and Administrative Measures on Cosmetics Labeling.

In comparison, cross-border duty-free refers to international transactions conducted via e-commerce platforms between different customs territories, with goods delivered through cross-border logistics. This category offers a wider product range and is accessible to all Chinese citizens, with fewer consumer restrictions. Cross-border duty-free purchases are exempt from tariffs but typically subject to 70% of consumption tax and VAT.

Compared with traditional labels, Hainan's pilot program for electronic labels on cosmetics are just a different labeling format, which do not change the requirement for compliance with Chinese cosmetic labeling regulations. The labeling contents must still strictly conform to all relevant regulatory standards.