I. Background

On May 25, 2026, China's State Administration for Market Regulation (SAMR) promulgated the Measures for the Administration of Seriously Illegal and Untrustworthy Lists under Market Supervision and Administration (the "New Measures") via Order No. 128. The New Measures take effect on July 15, 2026 and simultaneously repeal the predecessor regulation issued under Order No. 44 in 2021.

The reform represents a significant milestone in China's credit-based regulatory framework. The New Measures broaden the scope of conduct triggering blacklist inclusion, introduce stronger procedural safeguards, and substantially increase the practical deterrence of the regime.

II. Expanded Scope of Triggering Conduct

The New Measures organize blacklist-triggering violations into six defined categories:

•    Food safety (Article 4): Unlicensed operations, use of non-food raw materials, prohibited additives, non-compliant infant food, and related conduct

•    Pharmaceuticals, medical devices, and cosmetics (Article 5): Counterfeit or substandard drugs, unregistered Class II/III medical devices, and cosmetics with illegally added substances

•    Product quality and safety (Article 6): Unlicensed or substandard special equipment, product adulteration, and false inspection or certification

•    Consumer rights (Article 7): Infringement of personal information rights, deceptive measuring instruments, and refusal to implement product recalls

•    Fair competition (Article 8): Commercial bribery, misappropriation of trade secrets, commercial disparagement, willful IP infringement, abnormal patent/trademark filings, and false advertising

•    Other violations (Article 9): Operating without required licenses, submitting fraudulent materials, and obstructing regulatory inspections

Particularly noteworthy for IP practitioners is Article 8(2), which expressly identifies willful infringement of intellectual property rights, submission of abnormal patent applications, malicious trademark registration applications, and seriously illegal patent or trademark agency conduct as standalone blacklist triggers. This signals a clear regulatory intent to treat IP bad-faith conduct as a category of serious market misconduct.

III. The "Heavier Administrative Penalty" Threshold

Blacklist inclusion under the New Measures requires, as a prerequisite, that the party has been subject to a "heavier administrative penalty." Article 3 defines this to include: fines imposed at the aggravated penalty tier, downgrading or revocation of qualifications or licenses, restrictions on business operations or ordered closure, and restrictions on employment.

Article 11 further provides that in determining whether conduct is "egregious in nature, serious in circumstances, or substantially harmful to society," regulators must weigh a combination of factors including subjective fault, frequency of violations, duration, penalty type, fine amounts, and harm to public safety or social order. A party that can demonstrate lack of subjective intent shall not be listed.

IV. Procedural Safeguards: Notice and Objection

Articles 13 and 14 establish a structured procedural framework designed to protect the rights of parties facing blacklist inclusion:

•    Proposed inclusion must be notified via the administrative penalty notice, setting out the grounds, basis, disciplinary consequences, and available objection channels

•    The party has 5 working days from service of the notice to raise an objection

•    Objections are reviewed by the Credit Supervision Unit; a valid objection prevents inclusion, while an invalid one results in concurrent issuance of the penalty and inclusion decisions

•    Where review cannot be completed within the standard timeline due to complexity, the deadline may be extended with head-of-authority approval, with the party notified accordingly

These safeguards represent a meaningful improvement over the prior regime, providing a more complete procedural pathway for parties to challenge proposed blacklist decisions.

V. Consequences of Blacklist Inclusion

Under Article 18, parties included in the blacklist will be subject to the following management measures:

•    Treated as a material adverse factor in reviews for administrative licenses, qualifications, and government procurement

•    Designated as a key supervisory target with increased inspection frequency

•    Excluded from commitment-based approval procedures

•    Ineligible for honorary titles or commendations from market regulators

•    Subject to cross-agency joint disciplinary action through the National Credit Information Sharing Platform

VI. Practical Implications

With the New Measures taking effect on July 15, 2026, market participants should pay close attention to the following:

•    IP compliance: The explicit inclusion of willful IP infringement and bad-faith patent/trademark conduct as blacklist triggers underscores the growing importance of proactive IP compliance management

•    Patent and trademark agencies: Agency firms engaging in seriously illegal conduct face direct exposure to the blacklist regime and should conduct thorough internal compliance reviews

•    Exercise objection rights promptly: Parties should make full use of the 5-working-day objection window and prepare evidence demonstrating lack of intent or minor circumstances where applicable

•    Credit repair: Removal from the blacklist is governed by the Measures for the Administration of Credit Repair under Market Supervision and Administration — early familiarity with that pathway is advisable

For further analysis of how the New Measures may affect your compliance framework, please do not hesitate to contact GreRoyalt Law Firm.