Draft targets retailers of substandard products

A draft law amendment unveiled on Monday has proposed raising the top compensation that business owners must pay if they intentionally sell substandard products.

The latest draft amendment to the Law on the Protection of Consumer Rights and Interests requires business owners, who are aware of a product's flaws but sell it anyway, to pay up to three times the monetary loss to affected consumers if the products and services cause severe health problem or death.

If the flawed products do not cause major health problems, the compensation will be three times the retail price, the draft says.

The draft was submitted to the top legislature — the National People's Congress Standing Committee — for a second reading on Monday. A new draft law or amendment usually goes through three readings before it is adopted.

Experts and industry professionals said the proposal is a big step forward in protecting consumer rights, and may help reduce the country's food-safety incidents.

The existing law on consumer rights, enacted in 1993, stipulates that producers should compensate consumers for damages if the flawed products they intentionally sell cause severe health problems or death.

If the products do not cause major health problems, the compensation is only the product's price. In other words, compensation would be only 10 yuan ($1.60) if the price of the product is 10 yuan.

But such low compensation usually cannot offset the damage caused to consumers and may result in consumers not asking for compensation, said Qiu Baochang, head of the legal team of the China Consumers' Association.

"A bag of instant noodles is sold for 1 to 2 yuan, which made many consumers opt to give up asking for compensation from the sellers and producers, not to mention bringing them to court," he said.

Therefore, the first draft amendment to the law, unveiled in April, set the compensation ceiling at twice the monetary damage for a product causing severe health damage or death, or two times the price if the consumer isn't injured.

However, many legislators argued this was not enough, as it might not be a sufficient deterrent.

For that reason, the latest draft further raises the compensation to three times the damages if the victim is injured or dies, or three times the price if he or she is not injured.