REGULATIONS ON QUALITY RESPONSIBILITY FOR INDUSTRIAL PRODUCTS

REGULATIONS ON QUALITY RESPONSIBILITY FOR INDUSTRIAL PRODUCTS Important Notice: This English document is coming from the "LAWS AND REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA GOVERNING FOREIGN-RELATED MATTERS" (1991.7) which is compiled by the Brueau of Legislative Affairs of the State Council of the People's Republic of China, and is published by the China Legal System Publishing House.

In case of discrepancy, the original version in Chinese shall prevail.

Whole Document REGULATIONS ON QUALITY RESPONSIBILITY FOR INDUSTRIAL PRODUCTS (Promulgated by the State Council on April 5, 1986) Chapter I General Provisions Article 1 The present Regulations are enacted in order to define the quality responsibility for industrial products ("products" for short hereinafter), safeguard the legitimate rights of the customer and consumer ("customer" for short hereinafter), ensure the healthy development of commodity economy in a planned way, and promote socialist modernization.

Article 2 "Quality of product" refers to the requirement for the applications, safety and other properties of the products stipulated in related laws and regulations, quality standards and contracts.

"Quality responsibility for products" refers to the responsibility that shall be born due to the product's failure to satisfy the above-mentioned requirements, which leads to loss on the part of the customer.

Article 3 The national standardization department is responsible for drawing up the unified national standards. The national standards shall not be lower than the international standards. National standards may be classified and graded. The competent authorities responsible for the enterprise shall fix a time limit for achieving the highest grade of the national standards.

The price department of the Central Government shall fix the prices according to the grades of standards and implement the principle of "price according to quality".

Article 4 Those enterprises engaging in the production, storing, transporting and marketing of the product must, in accordance with the stipulations of the present Regulations, undertake the quality responsibility for the products.

The various departments, various localities, especially the competent authorities for the manufacturer must exercise strict control over the quality of the products, supervise and see that the manufacturer concerned abides by the principle of "quality first", with a view to guaranteeing the quality of product and undertaking quality responsibility. Those failing to exercise effective control and supervision shall also undertake liability arising therefrom.

Article 5 Quality-supervision agencies and the industry and commerce administration departments must keep supervision over the quality of product and protect the interest of the customer.

Article 6 The quality certificate, manuals, "high-quality" sign and identity sign of a product must all be in conformity with the actual quality level of the product. The explanation in the advertisement of the product must conform to the actual quality of the product.

Article 7 All the manufacturers and the marketing firms must observe strictly the following rules: (1) unqualified product is forbidden from being dispatched from the factory or marketed; (2) unqualified raw materials and parts and components are not allowed to be put into production or be used for assembly; (3) it is forbidden to manufacture the products whose elimination the State has explicitly ordered; (4) product without the product-quality standard or without being tested by the state quality-testing organ is not allowed to be manufactured and marketed; (5) it is forbidden to plot frauds, to pass of unqualified product as qualified, to forge trademarks, or to imitate the famous brand products.

All the manufacturers and marketing firms are not allowed to sell their products by way of coupling-sale.

Chapter II Quality Responsibility of the Product Manufacturer Article 8 The manufacturer of the product must make sure that the quality of the product conforms to the requirements laid down by relevant laws and regulations, quality standards and stipulations of the contract.

The manufacturer of the product must set up a strict, well-coordinated and effective quality-guarantee system, with a view to fixing the quality responsibility for the product in an explicit manner.

The manufacturer must see to it that the quality-inspecting organ can independently perform its functions of supervision and testing. It is strictly forbidden to retaliate against the quality inspectors.

Article 9 The product shall not leave the factory unless it satisfies the following requirements: (1) achieving the quality requirements stipulated in Article 2 of the present Regulations, and obtaining the quality certificate of the product issued by testing organ and testing personnel; (2) having the written explanation of, according to specific characteristics, the product's name, size, model, ingredients, the percentage of the ingredients, weight, direction for applications, lot No.

of production, date of production, name of manufacturer, address of the manufacturer, and the serial number of the technical specifications of the said product; explicitly specifying the date of expiry in case of a product with time limit of efficacy. "High-quality" product must bear the mark thereof; (3) having the serial number, date of approval and the term of validity of the production licence in case of a product manufactured under the production licence system; (4) machinery, equipment, devices, apparatus and durable consumer goods, apart from satisfying the requirements in Items (1), (2) and (3) of this Article, shall be accompanied with detailed instructions on the use of the product. The content thereof includes: the product's technical-economic parameters, service life, range of application, term of guarantee, methods for installation, methods of maintenance and conditions for storing, term of technical maintenance and repair, and other effective data concerning the design parameters of the product. Electric products shall be attached with the circuit diagram and schematic diagram; (5) the package must conform to the related state regulations and standards. As regards the products that are drastically poisonous, dangerous, fragile, can not be laid on by heavy load, needing protection against moisture, can not be turned upside down, there must be, on both the external and interior packing, obvious indication marks and notices for storing and transportation. On the package of the product, there must be noted explicitly the actual weights (net and gross); (6) on the product or the package thereof on which the trademark and quality classification and grading system is applied, there shall be signs for the said trademark, classification and grading; (7) conforming to the requirements of the state laws and regulations concerning safety, hygiene, protection of environment and measuring.

Article 10 The "substandard" goods that fail to achieve the requirements of the related state standards, but still have some use value, cannot be marketed at reduced price until having obtained the approval from the competent authorities of the manufacturer; and on the package there must be clearly marked with the words of "substandard goods". Products that fail to meet the requirements of the state laws and regulations concerning safety, hygiene and environmental protection and measuring must be destroyed or undergo necessary technical treatment in good time. They are not allowed to enter the market in the name of "substandard goods".

"Substandard goods" are not allowed to be used to manufacture or assemble market-oriented products.

Article 11 Within the guarantee period of the product, in case of the quality found out of line with the requirements stipulated in Article 2, the manufacturer shall, according to the following different circumstances, undertake the quality liability to the customer and marketing firm: (1) the common part or component loses efficacy and therefore, after being replaced, the performance can immediately be restored; in this case, the manufacturer shall be responsible for replacing with qualified parts or components and for restoring the normal performance; (2) in case that the main part or competent of the product has lost the efficacy and cannot be repaired within the set period, the manufacturer shall be responsible for replacing with qualified products; (3) in case the major function fails to satisfy the requirements of Article 2 due to such causes as designing and manufacture, if the customer requires to return the goods, the manufacturer shall refund; (4) in case of economic loss caused by the quality faults, the manufacturer shall also compensate for the actual loss; (5) if maintenance and repair service or marketing firm responsible for the aftersale technical service, so required and manufacturer must, according to the contract of aftersale service, supply sufficient standby products, spare parts and necessary technical support.

Chapter III Quality Responsibility of Enterprises for Storing or Transporting the Product Article 12 The enterprises which undertake to store, transport, load or unload the products must conduct the work of the storing, transportation, loading and unloading in compliance with the relevant state stipulations and the storing-transporting requirements indicated on the package of the product.

Article 13 In the course of the product entering the warehouse for storing or leaving the warehouse, undertaking to transport the product or handing over the product, the enterprise that stores or transports the product shall observe the pertinent state stipulations and the storing-trans-system of handing-over and checking before acceptance, so as to define the quality responsibility. In case it has been testified that the damage of the product is due to the cause of storage, transport or loading and unloading, the enterprises which store, transport or load and unload the product shall bear their respective liabilities and, according to related government regulations, compensate for the economic loss.

Chapter IV Quality Responsibility of the Marketing Firm of the Product Article 14 When laying in a stock of merchandise, the marketing firm shall, before acceptance, test the product, so that the quality responsibility can be clearly defined. The products sold by the marketing firm must conform to the requirements stipulated in Articles 7 and 9 of the present Regulations.

Article 15 In case the product sold by the marketing firm is found not up to the conditions stipulated in Article 2 within the period of guarantee, the marketing firm shall be responsible for guaranteed repairing, replacement, taking back the product and refunding, and undertaking the responsibility of compensating for the actual economic loss.

Chapter V Supervision and Control over the Quality of Product Article 16 The various quality-supervising agencies shall, in accordance with the relevant regulations of the state, organize independently, or together with the industry and commerce administrative authorities, the responsible departments of the various trades, and the responsible departments of the various manufacturers, regular supervisional sample-checking on the various links such as manufacture, storing, transportation, and marketing, and regularly publicize the result of the testing of the samples.

Enterprises must honestly furnish the samples for checking and provide facilities with respect to the testing means and working conditions.

Unless otherwise stated in state regulations, it is not allowed for the quality-supervising agencies to collect fees from the enterprises for sample-checking on the product, so as to guarantee the impartiality of the supervising agencies. The expenses needed for the technical means and measures and for the test by the quality-supervising agencies shall be covered by the state or local financial allocations according to the actual needs.

The economic commission at various levels are responsible for leadership, organization and coordination of the supervision and control over product quality.

Article 17 Responsible departments of the trades and responsible departments for the enterprises at various levels are responsible for the control over the quality of products in the respective trades within their authorization, which covers: formulating or taking part in the formulation of the quality standards for the products in their respective areas of responsibility and the pertinent rules and regulations, being responsible for supervision and control over the quality of products, urging the enterprises to ensure the quality of product, perfecting the quality guaranteeing system, and organizing the issuance of production licences.

Article 18 Exercise social supervision over the quality of product. The customer can make inquiries about the quality of the product at the manufacturer, the enterprises for storing and transporting, and the marketing firms; and the social associations and organizations can help the customers participate in the mediation, arbitration over quality disputes, and support the customers to file lawsuits with the people's court.

Article 19 The customer can, according to the mutual agreement between the customer and manufacturer, send his representative to the manufacturer to conduct on-the-spot-supervision over the process of the production and the quality of the product.

Chapter VI Settlement of Disputes over Quality Responsibility for the Product Article 20 Any dispute arising from the quality of product shall, provided there is an economic contract, observe the relevant stipulations in the Economic Contract Law. In the absence of such contracts, either party to the dispute can refer the dispute to a relevant quality-supervising agency for mediation or settlement, or take the case to the people's court.

Article 21 In case of any dispute over the data of technical testing of the quality of product, the party concerned or the mediating or arbitrating agencies can entrust legally designated quality-testing unit for arbitral testing; and the said quality testing unit shall be responsible for the data of the arbitral testing.

Article 22 Unless otherwise stipulated by the government, the request for arbitration or prosecution over quality responsibility shall be raised within one year from the date the party concerned is aware of or should be aware of his interest and rights being damaged. Where the party bearing the quality responsibility for the product is willing to bear the responsibility, it is not limited by the term of validity.

Chapter VII Penalties Article 23 Where the product of an enterprise fails to reach the state-stipulated standards, the competent authoritative department of the said enterprise shall order the enterprise to rectify production within a fixed period.

Where the said rectification within the fixed period turns out to be of no effect, the competent authoritative department of the said enterprise shall order it to stop production or switch over to a new line of products, or even suggest that the relevant authorities revoke the production licence and the business licence. In the period of rectification, the competent authoritative department responsible for the said enterprise may, according to different circumstances, deduct the bonus and wages of the executive members of the enterprise and of the staff and workers.

Article 24 Where the manufacturer or marketing firm has committed one of the following acts in violation of the stipulations of the present Regulations, the authoritative department responsible for the enterprise or firm shall mete out disciplinary punishment to the responsible persons of the enterprise and to the persons bearing direct responsibility; and the industry and commerce administrative organ shall confiscate all the illegal income, and impose on it a fine equivalent to 15% to 20% of the illegal income according to the degree of seriousness of the case; or even the legal liabilities shall be fixed by the judicial organs through due investigation.

1. manufacture or market adulterated product or imitated product, or pass off "substandard" product as qualified; 2. manufacture or market products without indicating the name and address of the manufacturer; 3. manufacture or market products without quality certificate; 4. manufacture or market products of which the State has issued explicit order for their elimination; 5. manufacture or market the products on which the State adopts the system of production licence, but fails to renew the said production licence after its expiry; 6. manufacture or market products manufactured or assembled with unqualified raw materials, parts or components; 7. manufacture or market products in violation of the requirements stipulated by state laws and regulations concerning safety, hygiene, environmental protection and measuring; 8. market products which have passed the expiry date.

The incomes collected from fines shall be handed to the state treasury.

Article 25 In the course of sample-check on quality supervision, in case it is found that the manufacturer or marketing firm has committed the act(s) listed in Article 24, the quality-supervising agency shall treat the case according to the stipulation in Article 24. As regards the product not in conformity to the provision of Item (7) of Article 9 of the present Regulations, the product shall be destroyed on the spot by the quality-supervising agency or be given the necessary technical treatment; and the manufacturer and the marketing firm shall be ordered to recover within the given time all the substandard products that have already been sold.

In case of violation of the stipulations in Article 8 of the present Regulations, or retaliation against quality-testing personnel, or the working personnel in quality-supervising and quality-testing agencies act wrongly out of personal consideration, the responsible authoritative department shall mete out disciplinary punishment. As regards those of extraordinary seriousness, criminal liabilities shall be investigated and fixed according to law.

Article 26 Where the poor quality of the product has resulted in the injury or death of the customer, and in his loss of property, hence violating the criminal code, the judicial organs shall investigate and fix the legal liability of the party concerned.

Article 27 The above-mentioned penalty does not acquit the party bearing the quality responsibility of its responsibility for the guaranteed repair, replacement, recovering the product with the money already paid, and the compensation for the actual economic loss to the customer(s).

Chapter VIII Supplementary Provisions Article 28 The relevant responsible authorities may, in line with the provisions of the present Regulations, work out the implementing details. The quality responsibility regulations for import & export products, for goods with military application as well as goods for special requirements, the relevant authorities may, with reference to the principles of the present Regulations, enact separate specific regulations.

Article 29 The present Regulations apply to all enterprises with ownership by the whole people, enterprises with ownership by the collective, individual industrial and commercial operators as well as the Chinese-foreign equity joint ventures, contractual joint ventures, and foreign-capital enterprises.

Article 30 The State Economic Commission is authorized to interpret the present Regulations.

Article 31 The present Regulations shall go into force on July 1st, 1986.