2026.05.11
A Korean company entrusted a domestic agent to sell four medical aesthetic products that were manufactured in Korea. During a random inspection, the Municipal Market Supervision Bureau found the product's quality to be substandard. Consequently, the National Medical Products Administration conducted a remote video inspection of the Korean company, determining that there might be issues with the company's product quality control system in Korea. It was suspected that the medical devices sold domestically might be unlicensed, prompting a directive for the Shanghai Municipal Market Supervision Bureau to investigate the compliance of all the products sold by the Korean company in China.
The challenges in this case were: (1) Issue characterization. Initially, the Shanghai Market Supervision Bureau believed that, based on the inspection and investigation directive from the National Market Supervision Bureau, it could be determined that the products sold domestically by the Korean company were unlicensed. If so, the penalty would be 15-30 times the value of the goods. If the issue was a mismatch in certification, the penalty would be 5-20 times. JunHe represented the Korean company's domestic distributor and submitted evidence to the Market Supervision Bureau to prove that the products were not illegal or, at most, had certification mismatches, and were not unlicensed. (2) Penalty imposition. The opinion regarding the initial penalty from the Market Supervision Bureau was that even if it was determined to be a certification mismatch, the minimum penalty would be five times the value of the goods. JunHe, representing the client, actively responded to the administrative penalty investigation and promoted the Korean company's investment in the medical aesthetic industry in Shanghai, contributing to the integration and development of the life and health industry in the region. As a result, the Market Supervision Bureau agreed to significantly reduce the penalty below the minimum statutory penalty standard. (3) Penalties. According to legal provisions and practical circumstances, foreign manufacturers of medical devices are subject to investigation and penalties. JunHe strived to persuade the Market Supervision Bureau that, considering the violation was a first-time offense and did not endanger life or health, and given the full cooperation of both the manufacturer and the distributor in the investigation, only the domestic distributor should be investigated and penalized.
The Market Supervision Bureau adopted JunHe's statement, agreeing to characterize the violation as a certification mismatch rather than an unlicensed product. The penalty amount was significantly reduced below the minimum standard, resulting in a penalty far below the statutory minimum of five times the value of the goods (approximately RMB 13.5 million), with the final penalty amounting to RMB 300,000. Only the domestic distributor was penalized, and the Korean client was not investigated or penalized.
The lead partner for this case was HU, Xiaohong.
