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CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL FOR TRANSMITTING THE PROPOSALS SUBMITTED BY THE STATE ECONOMIC AND TRADE COMMISSION AND OTHER DEPARTMENTS ON CRACKING DOWN ON THE ILLEGAL ACTIVITIES OF PRODUCING AND SELLING FAKE AND LOW-QUALITY COMMODITIES

    The Proposals on Cracking Down on the Illegal Activities of Producing and
Selling Fake and Low-Quality Commodities, submitted by the State Economic and
Trade Commission, the State Administration for Industry and Commerce and the
State Bureau of Technological Supervision, have been approved by the State
Council and are hereby transmitted to you. You are requested to implement
it accordingly.

Proposals on Cracking Down on the Illegal Activities of Producing and
Selling Fake and Low-Quality Commodities

    Since 1992, various localities and relevant departments have seriously
implemented laws and regulations on cracking down on the illegal activities
of producing and selling fake and low-quality commodities, reinforced the
action of cracking down on the illegal activities of producing and selling
fake and low-quality commodities (hereinafter referred to as cracking down
on fake and low-quality commodities), and obtained temporary results. The
situation that fake and low-quality commodities emerge constantly despite
repeated prohibition, however, has not been thoroughly rectified and the
problem is even more serious in some localities, which has brought great harm
to the interests of the state and the people and jeopardized the social
stability. More resolute and effective measures, therefore, must be taken to
crack down on fake and low-quality commodities. The following proposals are
hereby submitted for that purpose:

    1. The General Demand of the Work of Cracking Down on Fake and Low-
Quality Commodities in the Ninth Five-Year Plan Period

    The general demand of the work of cracking down on fake and low-quality
commodities in the Ninth Five-Year Plan period: aiming at establishing a
healthy and orderly market competitive mechanism and sound legislation
system and thoroughly suppressing the illegal activities of producing and
selling fake and low-quality commodities, taking laws and regulations as the
basis, emphasizing cracking down on producing and selling fake and low-
quality medicines, food, farm-oriented industrial products and building
materials, follow the division of responsibility, perform combined
operations, strictly enforce the law, intercept the sources of fake and low-
quality commodities, rectify the market order, investigate and deal with
major and important cases, reinforce the strength of the crackdown and
promote the sustained, speedy and sound development of the national economy.

    2. Six Key Points Which Need to Pay Attention in the Work for 1996 and
Current Period

    (1) Commercial Enterprises' Self-Inspection and Rectification

    All commercial enterprises, especially those with a sales volume up to
100 million yuan, shall, in accordance with relevant stipulations and
standards, conduct a self-inspection and self-rectification upon all their
commodities either in stock or on sale, with the emphasis on ferreting out
commodities the indications of which fall short of the reality, which are
inferior goods but passed off as good ones, or which are adulterated or of
short weights. The offices of cracking down on fake and low-quality
commodities in various localities shall, on the basis of enterprises' self-
inspections and rectification, organize a selective examination with a
coverage not lower than 30% and the examination results published through
news media. Commercial enterprises which are discovered, in the selective
examinations, having sold fake or low-quality commodities with serious
circumstances shall be dealt with strictly and given a heavier punishment,
with the persons directly responsible and the persons in charge of the
enterprises investigated for responsibility according to law.

    (2) Continuing the Rectification of Various Commodity Markets

    Devote major efforts to improving the market order, especially the
markets with serious problems of selling fake and low-quality commodities
shall be ordered to make rectification within a prescribed period. Markets
failing to have an effective rectification shall be closed without exception,
and the persons responsible shall be investigated for responsibility. The
main contents of the rectification are: whether the market has been
registered with the administrative department for industry and commerce;
whether the commodities for sale have a certificate of conformity, license
for the manufacture and name and address of the manufacturer; whether there is
a department in charge of the market; whether the market has a supervisory
and managerial organization or personnel; and other matters a locality
considers necessary to straighten out. A supervision and control system shall
be established and improved on the basis of rectification. Strengthen the
supervision over regions joining town and country, commodity collecting and
distributing centers and wholesale trading markets, and give a severe
crackdown on nests of producing and selling fake and low-quality
commodities.

    (3) Rectifying Key Areas Within a Specified Time

    Some areas of Guangdong, Zhejiang, Hebei and Henan provinces shall be
treated as key areas for the rectification within a specified time. People's
governments of the four provinces shall work out their plan for the
rectification within a specified time, defining the task and responsibility,
and effectively accomplish the work of cracking down on fake and low-quality
commodities. Other local people's governments shall also, in accordance with
their local circumstances about the illegal activities of producing and
selling fake and low-quality commodities, determine the key areas for the
rectification with a specified time. The national office for cracking down on
fake and low-quality commodities shall organize a selective examination in
the form of either public observation or private investigation.

    (4) Launching Special Crackdown on Seven Key Categories of Commodities

    a. Investigate and deal with fake and low-quality medicines (including
traditional Chinese and western prepared medicines, traditional Chinese
herbal medicines and traditional Chinese medicinal materials);

    b. Investigate and deal with fake and low-quality farm-oriented
industrial products such as chemical fertilizers, pesticides and seeds;

    c. Crack down on the illegal activities of cotton adulteration;

    d. Investigate and deal with fake liquors, low-quality beverages, low-
quality salt and low-quality food;

    e. Investigate and deal with fake famous-brand cigarettes;

    f. Investigate and deal with fake and low-quality machinery and
electrical appliances; and

    g. Investigate and deal with fake and low-quality building materials.

    (5) Continuing the Investigation and Prosecution of Major and Important
Cases

    Take the investigation and prosecution of major and important cases as an
important means for promoting the work of cracking down on fake and low-
quality commodities. In addition to about ten cases determined every year by
the state to be dealt with as major and important ones, all provinces,
autonomous regions, municipalities directly under the central government and
areas with a grave situation of producing or selling fake or low-quality
commodities shall also choose some major and important cases every year,
stick to them, carry the investigation to the finish, and give a heavier
and prompt punishment according to law.

    (6) Protecting According to Law the Legitimate Rights and Interests of
Producers of Famous and Fine-Quality Products

    Severely punish enterprises, groups and persons who produce or sell fake
famous and quality products, strengthen the protection of famous and quality
products. All localities and relevant departments shall, through the clues
provided by producers of famous and quality products, conduct investigation,
select and submit a number of cases of fake famous and quality products to
the national office for cracking down on fake and low-quality commodities for
national focal investigation, make unified planning, perform regional
cooperation, conduct the work separately and wage concentrated crackdown.

    3. Adopting Effective Measures and Striving for Substantial Results

    (1) Strengthening the Leadership and Defining the Responsibility

    People's governments at all levels shall strengthen the leadership over
the work of cracking down on fake and low-quality commodities, practically
assume the responsibility. For developing in depth the work of cracking down
on fake and low-quality commodities, the knowledge and determination of
leaders of local people's governments at various levels, especially at the
county(city) and township(town) levels are very important. It is demand that
a target responsibility system shall be established level by level for the
work of cracking down on fake and low-quality commodities, and the target
responsibility for the rectification within a specified time shall be fixed
for the leaders of people's governments of key areas. In case of failure to
attain the rectification targets, the leaders of the local people's
government shall be investigated for responsibility. Leaders who obstruct the
work of cracking down on fake and low-quality commodities, connive at,
support or cover up illegal activities of producing or selling fake or low-
quality commodities shall be given disciplinary sanctions or investigated for
criminal responsibility. People's governments of all localities shall give
strong backing to and ensure the funds for the work of cracking down on fake
and low-quality commodities.

    Competent authorities for all trades shall further strengthen the
directions over the quality control of enterprises of their trade, help
the enterprises establish and improve the quality guarantee system and self-
supervision and binding mechanism, investigate and rectify the illegal
activities of producing and selling fake and low-quality commodities
conducted by enterprises of their trade, cooperate with relevant departments
and localities to eradicate the sources of the production and sale of fake
and low-quality commodities. State commercial departments and supply and
marketing cooperatives shall make strict checks in commodities' purchasing,
inspection and receipt, entering storage and sales, prevent fake and low-
quality commodities from flowing into main channels.

    (2) Strictly Enforcing the Law and Augmenting the Strength of Work

    With a view to strengthening the work of cracking down on fake and low-
quality commodities, strictly enforcing the law and rectifying the situation
in some localities and departments that the available laws are not observed,
the enforcement of laws is not strict and criminal offenders are given
administrative fines instead of criminal punishment, from now on, relevant
administrative law-enforcing departments shall, when having discovered and
seized fake or low-quality commodities, promptly seal up the objects and
places and tools used in committing the offenses and, in accordance with law,
notify banks without delay to block all accounts of the offending unit or
person and, if the circumstances are serious with violation of the criminal
law, transfer the case to the judicial organ for handling according to law,
and no administrative fine may be substituted for the prosecution of criminal
responsibility.

    Where activities of producing or selling fake or low-quality commodities
result in infringements on rights of other people, the infringer shall
compensate the party whose rights have been infringed for the losses; if
personal or property damages are caused, the infringer shall compensate the
victim for the losses.

    Public servants, personnel of medical institutions, relevant personnel of
state and collective enterprises and institutions and other persons engaging
in official business who purchase fake or low-quality commodities and accept
sales commissions or disguised sales commissions shall be strictly investigated
and punished.

    (3) Cooperating on the Basis of Division of Work and Taking Combined
Action in Cracking down on Fake and Low-Quality Commodities

    Further strengthen the organization and coordination of the work of
cracking down on fake and low-quality commodities. Relevant departments and
units shall do their respective duties and make a concerted effort for
tackling problems in a comprehensive way. Relevant administrative law-
enforcing departments shall, in accordance with their functions entrusted by
relevant laws and regulations, conduct administration according to law and
cooperate with judicial organs in the work of cracking down on fake and low-
quality commodities for improving the whole efficiency of the work.

    Enterprises shall dare to and know how to use legal means to safeguard
their own lawful rights and wage struggle against illegal activities. They
may organize public and private investigations, provide law-enforcing
departments with clues about producers and sellers of imitations of their
products, and take concerted action in the work.

    Depend on the strength of public organizations and various intermediary
organizations, give full play to the roles of those organizations. Fully
arouse the masses and mobilize the whole society to participate in cracking
down on fake and low-quality commodities.

    All localities shall establish a system for informing against fake and
low-quality commodities, encourage the masses to provide clues and take
strict precautions against retaliation upon the informers. Units and persons
having made remarkable contributions in informing against fake and low-
quality commodities shall be rewarded.

    (4) Combining Elimination with Prevention and Taking both Stopgap and
Radical Measures

    Try to seek an effective method for supervising and controlling the
market and speed up the formulation of relevant laws and regulations for
prohibiting the illegal activities of producing and selling fake and low-
quality commodities.

    Strengthen the examination and administration of and supervision over
enterprises of various types. For current period, especially the individual
businesses, private enterprises and township enterprises shall be put under
strict supervision with regard to the quality of products. Enterprises which
have not been registered shall be resolutely banned.

    Encourage producers of famous and quality products to adopt anti-
imitation technologies, and strengthen the supervision and control over the
anti-imitation technologies and products.

    Any unit or individual who makes various false quality marks such as
trademarks, authentication marks, high-quality marks, food labels and
licenses for the manufacture, etc. shall be revoked of their business
licenses and severely punished according to law.

    Administrative departments for industry and commerce shall strengthen the
supervision and control over advertising activities, conduct strict
examination on advertisement of medicines, food, medical apparatus and
instruments, pesticides and veterinary medicines, etc. and strictly forbid
pushing the sale of fake and low-quality commodities by making false
advertisement.

    (5) Strengthening the Publicity and Giving Proper Directions

    Continue to give report and publicity to typical cases, give wide
publicity to advanced experiences and enhance the whole nation's awareness
of legality, quality, fair competition and self-protection. Those who are
bold in boycotting fake and low-quality commodities and take active
participation in the struggle against the illegal activities of producing and
selling fake and low-quality commodities shall be widely cited.

    Further developing the work of cracking down on fake and low-quality
commodities is an objective demand for maintaining the market order and
keeping a proper relationship between the reform, development and stability,
and is also of great importance to the effective protection of the people's
immediate interests. There has been a high voice from the masses appealing
for cracking down on fake and low-quality commodities, and people place
high hopes thereon. All localities and departments shall, in the spirit of
holding high responsibility to the state and the people, reinforce the
work, take active cooperation and make joint efforts to effectively
accomplish the work of cracking down on fake and low-quality commodities and
bring about a sustained, speedy and sound development in the national
economy.