Measures for Managing the List of Untrustworthy Enterprises with Serious Violations (Draft Revisions for Solicitation of Public Comments)

Chapter I: General Provisions

Article 1: These measures are formulated on the basis of relevant laws and regulations so as to regulate the management of the List of Untrustworthy Enterprises with Serious Violations by the departments for market oversight and management, to strengthen credit regulation, expand social oversight, and promote creditworthiness and self-discipline.

Article 2: “Untrustworthy enterprises with serious violations" as used in these Measures refers to enterprises that have violated laws and administrative regulations of market oversight and management in a vile fashion, where the circumstances were serious, and where the social harm was quite large, and where they received administrative punishments or were subject to administrative judgments.

”Management of the List of Untrustworthy Enterprises with Serious Violations“, as used in these Measures, refers to market oversight and management departments' listing and removal of parties from the list List of the Untrustworthy with Serious Violations, carrying out credit restraints, joint disciplinary action, and credit restoration, and making public announcements through the National Enterprise Credit Information Publicity System.

Chapter II: Jurisdiction

Article 3: The State Administration for Market Regulation is responsible for organizing and leading the work of overseeing and managing the List of Untrustworthy Enterprises with Serious Violations for the entire country.

Departments for market oversight and management at the county level or above are responsible for leading and organizing the work of managing the List of Untrustworthy Enterprises with Serious Violations based on the provisions of these Measures.

Departments for market oversight and management for the place of registration are responsible for the work of managing the List of Untrustworthy Enterprises with Serious Violations.

Where the place where the violation occurred and the place of registration are not the same, the department for market oversight and management that issued the administrative decision is to make the entry into the List of Untrustworthy Enterprises with Serious Violations. Within 5 working days of the listing decision, the information for the List of Untrustworthy Enterprises with Serious Violations is to be exchanged with the department for market oversight and management at the place of registration. The department for market oversight and management shall make a note under the enterprise's name and make an announcement on the National Enterprise Credit Information Publicity System within 5 working days.

Article 4: Where a dispute occurs between two or more departments for market oversight and management as a result of jurisdiction of the List of Untrustworthy Enterprises with Serious Violations, it shall be resolved through negotiation within 5 working days of the dispute occurring; where negotiations are unsuccessful, it is to be reported to the department for market oversight and management at the common higher level above for a designation of jurisdiction.

Where the higher-level department for market oversight and management finds it is necessary, it may directly take jurisdiction over the List of Untrustworthy Enterprises with Serious Violations management work that is in the jurisdiction of lower-level departments for market oversight and management. Where for special reasons the lower level departments for market oversight and administration find that it is difficult to handle the List of Untrustworthy Enterprises with Serious Violations management work within their jurisdiction, they may request that the market oversight and management department at the level above take or designate jurisdiction. Within 7 working days of receiving the materials, the department for market oversight and management at the level above shall confirm the department with jurisdiction.

Chapter III: Circumstances for Listing

Article 5: Where parties violate laws and administrative regulations of market oversight and management in a vile fashion, where the circumstances were serious, and where the social harm was quite large, and they received administrative punishments or were subject to administrative judgments, they are to be entered into the List of Untrustworthy Enterprises with Serious Violations in any of the following circumstance endangering the public's physical health and security in their lives.

(1) Where non-food materials, recalled foods, or expired ingredients were used in food production, or where substances that endanger human health were added to food; or where health foods, foods for special medical purposes, or infant formula that have not been registered in accordance with regulations are produced or sold;

(2) Where meats or meat products that have not had quarantine inspections conducted or that did not pass quarantine inspections are produced or sold; where meats or meat products from poultry, livestock, or aquatic life that died of illness, poison, or unknown causes are produced or sold; or where wild animals are unlawfully purchased or processed.

(3) Where medicines (vaccines) for which the state has special management requirements are illegally produced or sold; or where medicines (vaccines) that have not obtained approval documents are produced, imported, or sold. (4) Where type 2 or type 3 medical instruments that have not been registered are produced or sold. (5) Where infant formula and children's cosmetics with illegal additives that might be harmful to human health are produced or sold.

(6) Where special equipment that has not obtained production permits, that the state has declared obsolete, that has been scrapped, that has not been tested or did not pass tests is sold, rented, or used; or where filling mobile pressure containers and gas canisters that do not meet the requirements of technical safety regulations.

(7) Where inspections, tests, or certifications are carried out beyond the scope of permits; where fabricated or seriously untruthful inspection, testing, certification, or endorsement results are issued; or where products listed in the directory requiring certification that have not been certified are shipped, sold, imported, or used in other business activities without authorization.

(8) Production or sale of fake or shoddy goods.

Article 6: Where parties violate laws and regulations of market oversight and management in a vile fashion, where the circumstances were serious, and where the social harm was quite large, and they received administrative punishments or were subject to administrative judgments, they are to be entered into the List of Untrustworthy Enterprises with Serious Violations in any of the following circumstances undermining the order of fair market competition:

(1) Where after collecting advance payments, operations are shut down or the service venue is moved, and products and services are not provided as agreed upon, and where they cannot be contacted after announcement for 30 days by the departments for market oversight at the enterprise' registered domicile, place of business, and on the departments' websites, violating consumers' lawful rights and interests.

(2) They organized or planned multi-level marketing or facilitated multi-level marketing.

(3) A decision was made to permanently stop them from engaging in patent agency operations, they maliciously applied for patents, or they intentionally violated intellectual property rights.

(4) They engaged in production or business without permits and licenses, or had administrative permits, filings, qualifications, or credentials canceled or revoked.

Article 7: Where parties violate laws and regulations of market oversight and management in a vile fashion, where the circumstances were serious, and where the social harm was quite large, and they received administrative punishments, they are to be entered into the List of Untrustworthy Enterprises with Serious Violations in any of the following circumstances of refusing to perform legally-prescribed obligations:

(1) Where it is confirmed that there are latent risks or defects in products that might cause harm to consumers' physical health or security in their lives, but production or sale is not stopped, or obligations to recall are violated by refusing to perform a recall as ordered.

(2) Where e-commerce platform businesses do not satisfy obligations to protect consumers' security, and still refuse to make corrections after being ordered to do so.

Article 8: Other violations of laws and administrative regulations of market oversight and management in a vile fashion, where the circumstances were serious, and where the social harm was quite large, and where market oversight and management administrative punishments were received, are to be entered into the List of Untrustworthy Enterprises with Serious Violations.

Chapter IV: Procedures for Entry and Removal

Article 9: Before departments for market oversight and management make a decision on entry in the List of Untrustworthy Enterprises with Serious Violations, they shall serve a notice of the planned listing on the party, informing them of the facts, reasons, and basis for the listing.

Parties may submit objections to the market oversight and management departments within 10 working days of receiving the notification.

Where the period is completed without objections, the market oversight and regulation departments shall make the decision on entry into the List of Untrustworthy Enterprises with Serious Violations within 5 working days. Where objections are raised during the period for objections, the market oversight and management departments shall conduct a review and verification, and where necessary may hold a hearing. A decision to list or not to list is to be made within 5 working days of the verification, and the decision is to be sent to the parties.

The entry decision shall include the name, uniform social credit code (ID type and number), the date of entry, entry matters, and the basis for the entry, the time period and channels for remedies and rights, and the organ making the decision.

Article 10: Three years from the date on which parties are entered into the List of Untrustworthy Enterprises with Serious Violations, the market oversight and management departments for their place of registration are to remove them from the list, stop announcing their relevant information through the National Enterprise Credit Information Publicity System, and lift the related management measures.

Where parties entered into the List of Untrustworthy Enterprises with Serious Violations as a result of having been in the directory of abnormal business operations for three years, apply to be removed after performing announcement obligations, the market oversight and management departments for the place of their registration are to promptly remove them from the List of Untrustworthy Enterprises with Serious Violations. Where laws and administrative regulations provide otherwise, those provisions control.

Chapter V: Management Measures

Article 11: The departments for market oversight and management shall carry out the following management measures against those entered on the List of Untrustworthy Enterprises with Serious Violations:

(1) make it an important consideration when examining registrations, filings, and administrative permits, qualifications, and credentials. Carry out corresponding restrictions on professional qualifications, or prohibit engagement in a profession, in accordance with laws and administrative regulations.

(2) List them as targets for key oversight.

(3) they must not be allowed to use facilitation methods such as notification pledges, that are based in enterprise creditworthiness.

(4) they must not receive honorifics, commendations, and rewards from the market oversight and management departments.

(5) they must be entrusted to undertake government procurement projects.

(6) other management measures provided for by laws and administrative regulations.

Article 12: The departments for market oversight and management shall share information for the List of Untrustworthy Enterprises with Serious Violations with other departments and establish and complete mechanisms for inquiries into it, its use, and feedback, to promote its mutual use and sharing, and to carry out joint disciplinary actions in accordance with laws and administrative regulations.

Chapter VI: Credit Restoration

Article 13: After performing their legally-prescribed obligations and correcting errors, parties that have been entered in the List of Untrustworthy Enterprises with Serious Violations for a full year may apply to the market oversight and management departments to be removed from the list on the basis of procedures in these Measures, and carry out credit restoration.

All levels of market oversight and management department making decisions to allow credit restoration shall report to the market oversight and management department at the level above for approvals.

Article 14: The procedures for carrying out credit restoration include:

(1) Application. Parties shall submit an application for credit restoration, explaining the facts and reasoning, and attaching evidence related to the performance of legally-prescribed obligations and the correction of errors.

(2) Acceptance. The market oversight and management departments shall make a decision on acceptance within 3 working days of receiving an application. Where it is accepted, they shall issue a written notification of acceptance to the parties; where it is not accepted, they shall issue a written notification of non-acceptance to the parties and explain the reasons.

(3) Inspection and verification. Within 10 working days after acceptance, the market oversight and management departments shall conduct inspections and verifications through means such as online inspection, written inspection, or on-site inspection, and request that the parties make a credit pledge. In the course of inspections and verifications, the legal representatives, responsible persons, and others may be organized to participate in administrative admonishment, administrative guidance, or credit training. Fees of any kind must not be collected for credit training.

(4) Making a decision. The market oversight and management departments shall make a decision to allow or not allow credit restoration within 5 working days of completing inspections and verification. Where it is necessary to report to the market oversight and management department at the level above for approval, this may be extended by five working days. The decision shall include the name, uniform social credit code (ID type and number), the date of entry, entry matters, and basis for the entry, the time period and channels for remedies and rights, the reasons and basis for allowing or not allowing credit restoration, and the organ making the decision.

(5) Stopping announcements. Market oversight and management departments shall remove parties from the List of Untrustworthy Enterprises with Serious Violations within 5 working days of making a decision to allow credit restoration, stop announcing their relevant information through the National Enterprise Credit Information Publicity System, and lift the related management measures.

Article 15: Credit restoration is not to be granted where parties have any of the following circumstances:

(1) caused serious consequences endangering national security, public safety, people's health and security in property.

(2) were entered into the List of Untrustworthy Enterprises with Serious Violations two or more times.

(3) Where restricted or prohibited from entry into an industry in accordance with law due to violations of relevant laws and regulations, and the period of the restriction is not yet completed.

Article 16: In any of the following circumstances, the department for market oversight and management shall revoke the decision to grant credit restoration, and the prior state shall be restored:

(1) Credit restoration was incorrectly carried out in circumstances not complying with the provisions of article 13 of these Measures.

(2) Parties intentionally concealed the true circumstances or were false and misleading in procedures applying for credit restoration, and the circumstances are serious.

(3) stakeholders find that credit restoration should not be granted and it is sustained through verification.

Chapter VII: Correction, Relief, and Oversight Procedures

Article 17: Where the basis of an administrative decision for entry into the List of Untrustworthy Enterprises with Serious Violations has been revoked, the departments for market oversight and management shall withdraw the decision to enter the parties into the List of Untrustworthy Enterprises with Serious Violations, and promptly remove the parties from the list.

Article 18: Decisions to enter or remove parties from the List of Untrustworthy Enterprises with Serious Violations or to not grant credit restoration, defendants may apply for administrative reconsideration or initiate administrative litigation in accordance with law.

Article 19: Where the departments for market oversight and management do not perform duties in accordance with the relevant provisions of these Measures, the department for market oversight and management at the level above is to order corrections; where the circumstances are serious, the responsible management and other directly responsible personnel are to be punished in accordance with relevant provisions.

Chapter VIII: Supplementary Provisions

Article 20: The procedures for service and evidentiary hearing are to be implemented in accordance with relevant provisions of the State Administration of Market Administration.

Article 21: These Measures apply to the work of managing the List of Untrustworthy Enterprises with Serious Violations by the departments for drug administration and intellectual property rights management.

Article 22: The State Administration for Market Regulation is to uniformly draft form documents related to the management of the List of Untrustworthy Enterprises with Serious Violations

Article 23: These Provisions are to be interpreted by the State Administration for Market Regulation.

Article 24: These measures are to take effect on XXXX 2021. The "Guiding Opinions on Strengthening Management of Enterprises with Serious Untrustworthiness in Quality" (State Quality Inspection （2015）No. 289）released on June 26, 2015 by the former General Administration of Quality Supervision, Inspection and Quarantine, and the "Provisional Measures on the Management of Seriously the List of Untrustworthy Enterprises with Serious Violations" released on December 20, 2015 as order 83 of the former State Administration for Industry and Commerce, are simultaneously abolished. Where the "Measures on Patent Agency Management" released as State Administration for Industry and Commerce order number 6 on May 1, 2019, have provisions on the management of untrustworthy enterprises with serious violations that do not comply with these Measures, implementation is to follow these Measures.