Attention all small business owners – let me walk you through a real case.
A company sold several expired food items: glutinous rice, soybean paste, coffee, etc. Their total illegal proceeds were only 41.6 RMB. The market supervision bureau investigated and proposed a fine of 50,000 RMB, plus a warning and confiscation of the illegal income.
The company refused to accept the penalty and applied for administrative reconsideration. In the end, through mediation, the fine was reduced from 50,000 RMB to 5,000 RMB.
Three key points you must understand:
First, the violation was clear – you can’t avoid liability entirely.
Selling expired food violates Article 34 of the Food Safety Law; failing to keep inspection records violates Article 53. The company itself admitted these facts. So the penalty base existed – it was impossible to get off completely without any punishment.
Second, why was the fine so significantly reduced?
Because the illegal proceeds were only 41.6 RMB – a minor circumstance. The administrative reconsideration authority held that penalties should consider the overall circumstances, nature, consequences, and the amount of illegal gains. In addition, the company showed willingness to correct its mistakes and expressed a desire for mediation. The penalty was modified through mediation. Legal basis: Article 5 of the Administrative Reconsideration Law – reconsideration may involve mediation.
Third, reports by “professional whistleblowers” do not automatically mean the maximum penalty.
In this case, several whistleblowers may have been professional complainants – but even if confirmed, that does not affect the finding of a violation. Administrative agencies must take reports seriously and investigate according to law, while also preventing abuse of rights. As long as a business voluntarily admits fault, cooperates with corrective actions, and actively seeks settlement, there is a real chance to obtain a lighter penalty.
Four pieces of advice for small business owners:
Mandatory: Keep purchase inspection records – For each batch, clearly write down the product name, specifications, quantity, production date or batch number, shelf life, purchase date, and supplier information (name, address, contact). Keep supporting documents. Failure to keep records is itself a violation.
Regularly self-check for expired food – Especially for short-shelf-life prepackaged foods. Don’t let professional whistleblowers do your “inspection” for you.
Don’t give up your right to defend yourself after receiving a penalty notice – Adjust your mindset. Don’t confront enforcement officers directly – they follow procedures. Request a hearing, submit a written defense, apply for administrative reconsideration – these are your legal rights. This case was saved at the reconsideration stage.
Settlement is often more cost-effective than fighting hard – When the violation is clear, voluntarily admitting fault and seeking mediation can reduce a 50,000 RMB fine to 5,000 RMB. That money saved buys a lot of lessons.
Compliance is the bottom line. But if you do cross the line, know how to use the law to minimize your losses.
Relevant regulatory perspective:
Two points should also be noted:
First, when handling cases reported by “professional whistleblowers,” administrative agencies must both take the reports seriously, investigate in accordance with laws and regulations, and guard against abuse of rights by professional whistleblowers, so as to ensure fairness and justice in the market environment.
Second, if an administrative agency decides to change an existing administrative penalty on its own motion, it must follow the principles of legality and reasonableness, and proceed in accordance with statutory procedures or due process requirements (where no statutory procedures exist). Such a change may only be made when the party indeed meets the legally prescribed conditions for lighter, reduced, or waived penalties.
Relevant legal provisions:
Article 53, Paragraph 2 of the Food Safety Law
Food business operators shall establish a system for keeping records of purchased goods and verifying their compliance, and shall truthfully record the name, specifications, quantity, production date or batch number, shelf life, purchase date, and supplier’s name, address, contact information, etc., and retain relevant supporting documents. The retention period for records and documents shall comply with the provisions of Article 50, Paragraph 2 of this Law.
Article 124, Item (5) of the Food Safety Law
Under any of the following circumstances, if the act does not constitute a crime, the food safety supervision and administration department at or above the county level shall confiscate the illegal gains and the unlawfully produced or operated food and food additives, and may also confiscate the tools, equipment, raw materials, and other articles used for the illegal production or operation; where the value of the unlawfully produced or operated food or food additives is less than 10,000 RMB, a fine of not less than 50,000 RMB but not more than 100,000 RMB shall be imposed; where the value is 10,000 RMB or more, a fine of not less than ten times but not more than twenty times the value shall be imposed; if the circumstances are serious, the license shall be revoked:
(5) Producing or operating food or food additives with falsely marked production dates or shelf lives, or that have exceeded their shelf lives.
Article 126, Paragraph 1, Item (3) of the Food Safety Law
Where, in violation of this Law, any of the following circumstances occurs, the food safety supervision and administration department at or above the county level shall order correction and give a warning; if correction is refused, a fine of not less than 5,000 RMB but not more than 50,000 RMB shall be imposed; if the circumstances are serious, the business shall be ordered to suspend production or operation until the license is revoked:
(3) Food or food additive producers or operators fail to, upon purchase, inspect the license and relevant certification documents, or fail to establish and comply with the systems for keeping inspection records, factory inspection records, and sales records.
Disclaimer:
China is not a case-law country. Judges have discretionary power. Every case must be evaluated on its own facts. This article is intended only to provide ideas, not as a basis for judgment.
Attorney michael from Beijing
Focus areas: corporate legal affairs, corporate compliance, intellectual property, litigation & non-litigation, administrative reconsideration.
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