UK GOV Update: Procuring Medical Equipment

Published on 2020-07-02

The COVID-19 outbreak has led to an increase in demand for Personal Protective Equipment (PPE), including equipment manufactured in China.

It is important that buyers consider risks and undertake due diligence before entering into any contractual arrangements or transferring funds to purchase PPE.

This note aims to inform UK companies and organisations of the main processes involved in procuring PPE from China as they are currently understood by the British Embassy, Beijing, and provide guidance to any companies who have run into difficulties. This includes guidance on new regulatory measures issued by the Chinese government to ensure the quality of PPE and other healthcare supplies for export.

Bribery and corruption

Before attempting any procurement, we advise strongly that business read our guidance in Understanding and Managing the risks.

Establishing that a manufacturer can export

In order to export to the UK from China, the Chinese authorities require all Chinese manufacturers to register with the Chinese regulator, the National Medical Products Administration (NMPA), and be CE marked.

If the Chinese manufacturer has not registered with the NMPA or has a CE mark, they can apply to be put on a ‘whitelist’ that facilitates clearance by Chinese customs.

Depending on the type of PPE equipment being procured, Chinese authorities may also require various documentation and certification in order to release products for export. It is recommended that buyers check the latest customs guidance before purchase, and verify with suppliers and intermediaries (including customs agents) that all documentation is available.

In addition, if you are procuring on behalf of the UK NHS, you should check with the Department for Health and Social Care (DHSC) or the relevant procuring agency to make sure the product’s specification meets NHS technical requirements.

Importers should also ensure compliance with all duty and other requirements at the UK border.

  • Whitelist

In order to process urgent international procurement requests resulting from the Covid-19 crisis, the Chinese government has introduced a temporary ‘whitelist’, of products that can be cleared for export, including those previously registered.

Further information is available from:

  • The China Chamber of Commerce for Import & Export of Medicines and Health Products (CCCMHPIE), a national industrial association in China devoted to promote international trade and investment in the healthcare sector, under Ministry of Commerce of the People’s Republic of China (MOFCOM)

  • National Medical Products Administration NMPA .

If the Chinese manufacturer (or the intermediary acting on their behalf) cannot show that they or their medical product is on one of these lists, their product cannot be exported from China.

Problems with suppliers

The high volume of PPE procurement during this time may increase the chances of running into problems with suppliers. It is recommended that due diligence checks are completed before any transfer of funds take place.

What we can do

Should companies experience difficulties with PPE suppliers in China, the British Embassy Beijing can offer basic advice and information on doing business in China, including on navigating the local legal and regulatory system. We can provide a list of English-speaking lawyers.

In the event of a dispute, the most appropriate option will always depend on the circumstances of the case. In general, settling a dispute in a way that avoids litigation or an arbitration procedure can be the best way to avoid potentially unnecessary high costs and risks. Settling disputes through legal and administrative processes in China should be carried out with advice from a lawyer who specialises in the laws of the People’s Republic of China.

Before entering into a contract in China you should take appropriate legal advice. Your lawyer should advise you on including dispute resolution clauses and governing law clauses in the contract, including covering in advance how, where and under what law you want any disputes to be resolved. Chinese courts very rarely enforce foreign court judgements in commercial cases.

What we cannot do

We are happy to share our understanding of doing business in China and lessons learned from previous disputes, but the Embassy does not become directly involved in civil commercial disputes between companies. Business disputes are primarily a matter for the relevant seat of arbitration or the courts. While we can seek clarification from the Chinese authorities when the dispute resolution systems experience problems, we cannot intervene directly with the courts or the authorities in every case. The Embassy is also not qualified to offer legal advice, to pay legal fees, undertake an investigation or guarantee safety in China.

Further advice on dealing with commercial disputes in China can be found here.

Source: content no.10 of 'Guidance: Overseas Business Risk – China'