Mstand Coffee Heavily Fined for Supplier Using Fake Qualifications to Produce Unauthorized Products

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MStand Fined Nearly 500,000 RMB for Illegal Production of Ice Pops

Recently, according to an administrative penalty decision issued by the Shanghai Xuhui District Market Supervision Administration, on October 11, 2021, market supervision law enforcement officers, acting on a report from the legal representative of a Guangzhou company, investigated Shanghai Ai Qia Catering Service Co., Ltd., which operates stores in Shanghai, Guangzhou, Shenzhen and other places providing coffee and other catering services (i.e., MStand).

Since September 2021, the ice pops used as ingredients for four floating ice products, including the Floating Ice Berry Americano, offered by MStand, had packaging printed with information about a certain Guangzhou company that did not match the actual situation. Through investigation by the Shanghai Xuhui District Market Supervision Administration, it was found that in August 2021, MStand signed a commission processing contract with a certain Guangzhou company, which agreed to provide MStand with 80,000 pieces of the "Woodside Binhe Fruit" series ice pops (including mulberry berry, passion fruit granule orange, grapefruit lemon, and kiwi green grape flavors). Since August 2021, MStand has gradually sold four floating ice series coffee products in its stores nationwide, all using the aforementioned ice pops as product ingredients. Upon investigation, the above ice pops were produced by the company at its business premises without obtaining a food production license.

MStand had paid the commissioned company, and the company actually delivered 62,800 pieces. However, when MStand received them through third-party logistics, it rejected 2,340 pieces, with 60,460 pieces ultimately entering the warehouse. Among these, 15,400 pieces were sent to the defective product warehouse, and 25,860 pieces were actually distributed to various stores. As of the investigation, MStand stores had used 15,169 ice pops, with the ice pops equivalent to a sales amount. The value of the above products was calculated based on the paid raw material payment, with illegal income amounting to 127,116.22 RMB. On August 15, 2022, the Shanghai Xuhui District Market Supervision Administration penalized MStand according to Article 33, Paragraph 1 of the "Shanghai Food Safety Regulations," which states: "When food producers and operators commission food production, they must commission enterprises that have obtained food production licenses and have corresponding production conditions and capabilities." Because consumers could choose takeout when purchasing MStand's floating ice series coffee, the ice pops were considered separately packaged products. The sold products consisted of regular Americano coffee that could be sold separately and ice pops, and the sales amount of the ice pops could be calculated separately. Therefore, the illegal income in this case was calculated based on the actual sales amount of the ice pops, which was 127,116.2 RMB.

After recognizing the problem, MStand immediately stopped the operation of the products in question, proactively provided relevant materials, and the unlicensed production behavior occurred in the Guangzhou area. MStand also provided inspection reports proving that food safety was controllable.

After the market supervision investigation, it was determined that although the production company indeed lacked production qualifications, MStand may not have been aware of this and had no obvious subjective intent. Considering these factors, a reduced penalty was imposed in accordance with the relevant provisions of the "Administrative Penalty Law."

Nevertheless, according to Article 95, Paragraph 1 of the "Shanghai Food Safety Regulations" and Article 28, Paragraph 1, Article 32, Item (1) of the "Administrative Penalty Law of the People's Republic of China," the party was ordered to immediately correct the illegal behavior, confiscate illegal income of 127,116.2 RMB, and impose a fine of 360,000 RMB, totaling 487,116.2 RMB in fines and confiscated funds.

Reflections on Food Production Qualification Issues

According to this administrative penalty notice, this incident was triggered by a food manufacturer fraudulently using third-party qualifications. Why do such illegal situations still frequently occur in the current food safety supervision? The heavy penalty imposed on MStand in this case may have been precisely because the owner of a compliant factory discovered that their production qualifications had been misused and angrily reported the incident.

The food production license is the entry threshold for food processing enterprises, but many small food enterprises, such as some small coffee brands, are unwilling to invest funds to establish a compliant factory.

Even MStand faced this situation, and some smaller brands or stores may not be able to obtain food and coffee bean production qualifications. In this case, they would commission third-party factories to process their own brand products. More adventurous ones might directly borrow third-party production qualifications to produce food in their stores, or steal third-party production qualifications.

The Problem of "Three No Products"

In earlier years, we often heard about "three no products" (products without production date, quality certificate, or manufacturer information). With increasingly strict market supervision, these "three no products" without production dates, quality certificates, and manufacturer information have gradually disappeared from the market, and even retail goods usually have relatively standardized labels.

Sometimes, products purchased online have manufacturer information and production licenses, but the production address and shipping location are clearly two very distant places, yet the product is shipped from another faraway location on the same day as the production date.

This situation is very likely a case of fraudulent use of production qualifications as described in the case. This may bring huge legal risks to oneself, and once discovered, it will inevitably lead to heavy penalties. This case deserves everyone's attention.

Image source: Internet

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