The proposal for a new category of functional foods in China is met with mixed reactions

At an annual festival in China Lianghui (Two sessions) Feihe Dairy President Leng Youbin suggested adding a third category of functional foods to the regulatory system. Currently, China divides complementary foods into two categories: “special medical foods” and “health foods”. Leng believes that the current categorization has shortcomings that could be eliminated by introducing a functional food label.

Problems with the current food regulation system

“Special medical foods” are processed and formulated to meet the specific nutritional needs of people with dietary restrictions due to diseases and health problems. Foods that fall into this category generally do not taste good and are not readily available.

“Healthy food” refers to consumer goods with specific health claims. These are supplements available in the form of capsules, tablets and powders that contain nutritional values such as vitamins and minerals.

“Producers of these two types of food face issues such as costly production and long registration periods for regulatory compliance. In addition, they are expensive and therefore do not effectively meet consumer demand for nutritious food that is affordable and easy to obtain.”Leng said.

Jeff Crowther, executive director of the China Health Products Association, similarly highlighted the restrictive and complex nature of China’s regulatory system and significant financial obstacles. Approval of a dietary supplement or health food product can take anywhere from 6 months to five years and costs upwards of $150,000.

To address these issues, Leng proposed a third category of “foods with functional labels”, which he believes will also be beneficial in the current context of an aging society and fast-paced lifestyles that make health problems more and more prominent.

Drawing inspiration from the Chinese concept that food and medicine come from the same source, the original form and taste of food with functional labels will be preserved, making healthy food more attractive.

Leng also cited Japan’s introduction of a “functional food labeling system” in 2015, which he sees as a successful example for China to follow. It anticipates that functional foods will be conveniently available across all retail channels, resulting in better nutritional support in everyday life.

In Japan, this food category does not require government approval, but producers are required to declare information such as health and risk claims. Leng noted that this has led to increased innovation and a revitalization of Japan’s food industry.

Will this encourage innovation for the benefit of consumers?

Doris Huang, a food regulatory consultant at China’s Chemical Inspection and Regulation Service (CIRS), applauds the move. If less regulatory compliance is required to make health claims on packaging, this could save companies a lot of time and money. This will encourage flexibility and creativity in new product development.

However, she warned that this is a double-edged sword for consumers.

“Consumers could have more options. And because food companies would save on compliance costs, the price of such products would be lower. However, consumers would need to be more cautious as it will be easier for companies to make health claims that will not be as rigorously scrutinized by authorities.”

However, Jane Li, principal consultant at Li, Page & Co, believes this will not provide any benefit to consumers.

“Brands will seize this opportunity by increasing prices without innovating or developing new products. One of the weaknesses of Chinese companies is the lack of innovation. This is not due to a lack of skill, but rather a way of thinking. If the government were to adopt this, brands will only see it as a new way to promote products that already exist.

Leng recognizes the need to effectively supervise functionally labeled foods to ensure compliance with national standards, but this may not be easy to implement. However, he is optimistic about the broader implications of having a functional food category.

“The introduction of ‘foods with functional labels’ could stimulate the cultivation of food and medicinal ingredients, which could revitalize rural areas. It could also increase exports of such products, which is in line with China’s Belt and Road initiative.”Leng said.

What benefits will this bring to food producers and facilitate the development of the industry?

David Ettinger, chief representative of Keller and Heckman’s Shanghai, believes that the introduction of foods with functional labels could only benefit conventional food producers if certain conditions are met – for example, if these products do not have to undergo the regulatory controls described earlier by Leng and Crowther.

“China has already created a catalog of substances traditionally considered both food and Chinese medicine, which may provide a basis for the potential inclusion of functional ingredients in food. It is possible that the door to functionally labeled foods will not initially be wide open to all food and food ingredient producers. Instead, China could start with foods containing ingredients with established functional properties that have already been reviewed and approved by the government. Authorities could ensure that food with functional labels are placed on the market in a measured manner, minimizing potential risks.” said Ettinger, who provides regulatory advice to global brands.

Will there really be a third food category with functional labels?

Ettinger noted that the government may be considering such a move. In draft GB 7718 General rules for labeling packaged foodin China, the concept of “claims regarding the impact of food ingredients on health” was introduced, indicating the possibility for manufacturers to use health claims based on the functional characteristics of food ingredients. This can take a long time for many processes, such as proposal review, consideration of industry and public feedback, and subsequent revisions and finalization. Food businesses are therefore advised to monitor the situation closely and actively engage with regulatory authorities to provide input.

Huang also believes he still has a long way to go.

“Currently, Chinese authorities only allow 24 health claims. For additional health claims, companies are required to conduct multiple tests to obtain approval. If a third category were to be introduced, clear definitions and guidance would be needed. “Different parties – including authorities, the food industry and consumers – may find it difficult to reach an agreement.”

Moreover, the recent Kobayashi red yeast rice scandal in Japan is likely to have an impact on this issue. When asked about this, Li and Ettinger believe it could be a hindrance.

“While Japan’s existing framework, in particular the Foods with Functional Claims (FCC) category, can serve as a benchmark for China, authorities are likely to be more cautious about relaxing their regulations. The China Consumers Association promptly alerted Chinese consumers to the potential dangers posed by Kobayashi red yeast rice products, signaling that this may have an impact on future regulatory discussions on related topics.”Ettinger said.

What impact will this have on the stakeholders involved?

Increasing the ability to make healthier food choices by creating a new category may seem beneficial. However, the suggestion of including it in the current framework raises concerns for Crowther, who believes China’s healthy food regulations are burdensome for the industry and troublesome for consumers. Introducing a different category of regulations will not only burden regulators and manufacturers, but will also deepen consumer confusion.

“Further complicating an already complex system is not the solution. This issue concerns three main stakeholders. First, there are companies producing these products that want to meet consumer demands while navigating regulatory complexities without impeding market access. Second, there are consumers who want safe, effective products, access to educational information and protection from misleading advertising. Finally, a government tasked with developing regulations to ensure product safety, effectiveness, true marketing and ensuring clear market paths for producers and sellers of health food products.

“Simplifying and streamlining the rules would reduce the burden on all parties involved. For example, the United States boasts an effective regulatory system for dietary supplements, covering a variety of ingredients and product formulations, all manufactured to FDA cGMP standards. This system uses a structure-function regulatory framework, categorizing products based on their functions and effects. This approach makes it easier to understand consumers and make informed decisions. The structure-function regulatory model strikes a balance between safety, industry access and consumer education. Consolidating industry regulations, rather than expanding them, would greatly benefit both China’s health food industry and consumers.”

Problems with the current food regulation system​

Problems with the current food regulation system