NZ cosmetic firms unhappy about China insistence on animal testing

Friday, 26 August 2016

Linden Leaves chief executive Peter Allard said Trade Minister Todd McClay gave them 'the brush off' over Chinese trade barriers for cosmetics companies.

New Zealand cosmetics companies claim Chinese government insistence on animal testing of their products is unfair and makes a mockery of the free trade agreement.

Exporters are also nervous about increased regulation of products sold through China's free trade zones - rules which are due to come into force in May 2017 and will require pre-market approval for goods such as cosmetics.

New Zealand skincare company Evolu is among exporters battling a Chinese requirement that imported cosmetics undergo animal testing.

The New Zealand Cosmetics,Toiletries and Fragrance Association has 112 members and executive director Garth Wyllie, said they strongly opposed Chinese regulations for skin care and cosmetics products which were technically a trade barrier.

'Animal testing is the one area that companies have found the most distasteful, because none of them want to do it.'

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Wyllie said product testing on animals was prohibited here and a company that agreed to get it done in China risked a backlash from customers in other markets.

Re-formulating products specifically for the Chinese market was a tactic used by multi-national cosmetics companies. 'They don't sell the same products here so they can quite truthfully say that they're not testing on animals here.'

Linden Leaves chief executive Peter Allard, said the company could triple in size if it had 'unfettered' access to the Chinese market.

It currently sold into China online, through free trade zones, and recently opened a counter at a Shanghai duty free shop. Such sales channels had not been not subject to registration and animal testing requirements for imported cosmetics.

But these would be imposed if the company opened its own 'bricks and mortar' stores, or sold directly to other retailers which would greatly expand its market.

Allard said registering the company's entire range of more than 200 products would cost $250,000, and it was not prepared to compromise its cruelty-free principles by agreeing to animal testing.

'China is the only country in the world that imposes animal testing for cosmetics, and interestingly it is only on imported cosmetics.'

Allard said he could avoid animal testing by manufacturing in China but there was the risk of counterfeiting or loss of intellectual property.

Linden Leaves founder Brigit Blair took the company's concerns to Prime Minister John Key who referred her on to Trade Minister Todd McClay.

Allard said McClay's reply received last week was 'condescending' and simply told them what they already knew about the import requirements.

It said the Government was closely following developments in China and New Zealand Trade and Enterprise would provide advice on what the changes would mean for exporters.

In his reply to the minister Allard sought an assurance that the Government would do everything in its power to lobby China to change the obvious trade barrier.

'There is no FTA for us. It is not a level playing field and the Chinese, being the Chinese, have created numerous hurdles and barriers that render your 'Free Trade Agreement' invalid.'

Evolu marketing director Paul Westlake, said he was not prepared to sacrifice the company's credibility by allowing animal testing in order to win a bigger share of the Chinese market.

He was equally wary about manufacturing in China because he said having a New Zealand-made product was a big selling point..

'There's an enormous trust issue with the consumer because there are so many cowboys in the [local Chinese] market who are prepared to break the rules, so that's why foreign brands are seen as being more trustworthy.'

Westlake said there was growing pressure from multi-national cosmetics companies for China to change its approach to imported products and 'they have a lot of clout. Small businesses like us don't have a lot of leverage, so we just have to wait and hope that the rules change in our favour.'

Wyllie said he understood it could take up to three years to complete the registration process for cosmetics and he knew of only one New Zealand company that had gone through all the hoops several years ago.

It had not been required to do animal testing 'but the tightening up the Chinese have done have made it much more difficult to achieve what [that company has] achieved.'

Historically companies exporting into free trade zones got around a lot of issues by re-labelling their cosmetics onshore in China so they were classed as locally manufactured products, but that was no longer possible, he said.

Most New Zealand cosmetics exporters were quite small and the association advised caution when it came to the Chinese market.

'There are huge opportunities across Asia. You don't have to go straight into China. Build up your size and strength first and have a look at China a little later on,' Wyllie said.