China’s Standardisation Reform and Its Impact on European Companies with Business in China

Standardisation plays an important role in market access; in fact, it immediately impacts how companies can conduct  business, says Dr. Betty Xu, Standardisation Expert, Project Director of the Seconded European Standardisation Expert in China. China standardisation law reforms in recent years changed the way that standards were developed and implemented in China.  European companies wishing to sell their products in the Chinese market must become aware of the changes in the standardisation system.

Changes in China’s standardisation system

In line with economic development, China’s standardisation system has been in constant change. The State Council of China released the Reform Plan on Deepening the Standardisation Work in March 2015, and the Notice on the Action Plan (2015-2016) for Releasing and Implementing the ‘Reform Plan on Deepening the Standardisation Work’ in August 2015. The publishing of both plans has accelerated the pace of reform of China’s standardisation system. In January 2018, with the formal implementation of the new Standardisation Law, some important reform measures have been formally solidified in the form of legislation and have become the basis for the operation of the new standardisation system.

Under the new Standardisation Law, China’s standardisation system has undergone the following major changes:

  1. In order to implement the decision to streamline and integrate various standards, the Chinese Government will establish a standardisation coordination mechanism to coordinate the positions of all parties and help the reform work smoothly.
  2. Existing mandatory national, sectoral and local standards will be integrated into mandatory national standards.  There will no longer be any mandatory sectoral or local standards. Moreover, the mandatory standard text is free to the public.
  3. The national, sectoral and local standards that were too complex will be sorted out and streamlined, and standards with repeated, overlapping or conflicting contents will be phased out, converted or combined.
  4. In order to promote market-driven standards, China “encourages social groups such as institutes, associations, chambers of commerce, federations, and industrial technology alliances to establish association standards”.
  5. The management of enterprise standards is adjusted from the original filing to government for record purposes to establishing a self-declaration disclosure and supervision system for enterprise products and service standards. The new Standardisation Law encourages product standards or service standards implemented by enterprises to be disclosed to the public through a unified platform.
  6. The attitude towards international standards has changed from “active adoption” to “participation in the development of international standards and in the promotion of conversion between Chinese and foreign standards”.

The impact of China’s standardisation reform on European companies in China

Since China’s standardisation reform involves many major principle changes, from the original “government leading the development of standards” to “dual supply of government standards and market standards”, the new model of “mandatory national standards + recommended national, sectoral and local standards” is more in tune with the EU’s model of “mandatory technical regulations + recommended standards”.  Nevertheless, this reform will also have a far-reaching impact on the market and how enterprises can adjust. For European companies conducting business in China, this standardisation reform has both positive and negative impacts.

    1. Positive impacts:

  • Mandatory standards are easier to access: The multi-level mandatory standards that existed at the national, sectoral and local levels are abolished, combined or converted into a single field of mandatory national standards.  This harmonisation provides a unified interface for European companies, allowing them to more easily understand and master the mandatory Chinese market access policy.  The new Standardisation Law also makes it easier to acquire mandatory access information.
  • Better TBT (Technical Barriers to Trade) notification: The original mandatory standards and multi-party management models that existed at the national, sectoral and local levels were not conducive to fast and efficient notifications of TBT.  The unification of mandatory standards into national standards and the unification of mandatory standards management institutions into a single institution enables any TBT information to be more effectively and quickly perceived by the outside world.  This accelerated consultation process promotes trade.

    2. Negative impacts:

  • Standard supply: The new standardisation system encourages social groups to develop standards that may be different from the standards set by the government.  Since social groups have greater flexibility as well as the intention and ability to set their own standards, problems of duplication, overlap, conflicts and other issues between standards developed by different groups may arise.  The danger of the unusually-bloated Chinese standards becoming even more complicated and more likely to conflict with international standards such as ISO/IEC cannot be ignored. This situation is not conducive to the development of international trade.
  • Adoption of international standards: In addition to active participation in international standardisation, the new standardisation system also requires the adoption of international standards based on actual conditions in China.  This may result in the adoption of standards  needing many modifications based on China’s own perceived requirements. Moreover, the new standardisation system no longer expressly encourages the adoption of ISO/IEC standards; instead the system strives to promote the application of Chinese standards abroad. This goal has undoubtedly increased trade barriers for companies that use the ISO/IEC standard or European standard.
  • Development of association standards: The new Standardisation Law does not clearly define the groups that can set association standards; in fact, the ‘market’ attribute of association standards has yet to be developed. The association standards that have been developed may not be consistent with ISO/IEC standards, so the use of standards intrinsic to China will incur additional operating costs for European companies entering China. It remains to be seen how China will further promote the use of association standards and manage social groups. In addition, the development of testing and certification related to association standards is also in need of further improvement by policies and regulations.
  • Self-declaration of enterprise standards: The new standardisation system attempts to improve product quality and promote industrial upgrading through enterprise standards. The new system requires companies to set standards with higher indicators and to self-declare on public platforms with regulations overseen by market regulators. However, the large number of enterprise standards, a variety of testing methods, and limited regulatory system testing and regulatory capabilities severely constrain realising this goal. More likely, different enterprise standards and different testing methods make company disclosure functions and performance indicators incomparable, leading to both chaotic market competition and unfair competition.

The Seconded European Standardisation Expert in China (SESEC) is a visibility project co-financed by the European Commission (EC), the European Free Trade Association (EFTA) secretariat and the three European Standardisation Organizations (CEN, CENELEC and ETSI). Established in 2006, the SESEC project has been dedicated to supporting the strategic objectives of the European Union, EFTA and the European Standardisation Organizations (ESOs), and promoting EU-China standardisation information exchange and EU-China standardisation cooperation.