Manufacturer vs Responsible Seller

How does the law define a manufacturer and a responsible seller?

Article 2 of the Cosmetics Act defines the cosmetics manufacturing business as the business of manufacturing all or part of a cosmetic product, and the responsible seller business as the business of distributing and selling cosmetics while managing their quality and safety.

Manufacturing excludes processes consisting only of secondary packaging or labeling (Article 2(10)). The responsible seller business includes brokering or supplying cosmetics for the purpose of import-agency transactions (Article 2(11)). Both businesses must register with the Minister of Food and Drug Safety, and those registered are called, respectively, a cosmetics manufacturer and a cosmetics responsible seller (Article 3(1)).

How do the registration requirements differ for a manufacturer vs a responsible seller?

A manufacturer must have facilities, and a responsible seller must have management standards and a responsible sales manager (책임판매관리자). Article 3(2) and (3) of the Cosmetics Act set the registration requirements separately.

Facilities a manufacturer must have

• A workplace with facilities that can keep out rats, insect pests, dust and the like, the facilities and equipment needed for manufacturing such as workbenches, and powder removal facilities for workrooms where powder is airborne (Enforcement Rule of the Cosmetics Act (화장품법 시행규칙) Article 6(1)(1))
• A storage area for raw materials, supplies and products (Article 6(1)(2))
• A laboratory needed for quality testing of raw materials, supplies and products (Article 6(1)(3))
• The facilities and equipment needed for quality testing (Article 6(1)(4))

A business that manufactures only some processes of a cosmetic product needs only the facilities and equipment for those processes. A business that entrusts quality testing to a body such as an institute of health and environment or a cosmetics testing and inspection agency may go without the laboratory and the quality testing facilities (Enforcement Rule Article 6(2)).

The responsible sales manager a responsible seller must employ

Those who may serve as a responsible sales manager include a physician or pharmacist, a holder of a bachelor's degree or higher who majored in a science or engineering department or in a field such as cosmetology or cosmetic science, and a person with two or more years in cosmetics manufacturing or quality control work (Enforcement Rule Article 8(1)). In a responsible seller business with 10 or fewer regular employees, a qualified representative who personally performs the duties is treated as a responsible sales manager having been employed (Article 8(3)).

The grounds that bar registration are in Article 3-3 of the Cosmetics Act. Items 1 and 3, on persons with mental illness and persons addicted to narcotics, apply only to the manufacturing business.

Manufacturer vs responsible seller: which one describes my business?

Making cosmetics is the manufacturing business, and distributing and selling them while managing their quality and safety is the responsible seller business. A business can be checked against the detailed scope in Article 2 of the Enforcement Decree of the Cosmetics Act (화장품법 시행령).

• Manufacturing cosmetics directly is the cosmetics manufacturing business (Enforcement Decree Article 2(1)(a)).
• Manufacturing cosmetics on commission from another company is the cosmetics manufacturing business (Article 2(1)(b)).
• Doing only the primary packaging of cosmetics is the cosmetics manufacturing business (Article 2(1)(c)).
• Distributing and selling cosmetics you manufactured directly falls under the responsible seller business in addition to the cosmetics manufacturing business (Article 2(2)(a)).
• Distributing and selling cosmetics manufactured on commission by a cosmetics manufacturer is the responsible seller business (Article 2(2)(b)).
• Distributing and selling imported cosmetics is the responsible seller business (Article 2(2)(c)).
• Brokering or transferring cosmetics to conduct import-agency transactions through e-commerce is the responsible seller business (Article 2(2)(d)).

Article 2(10) of the Act does not count processes consisting only of secondary packaging or labeling as manufacturing. Which type a specific business falls under must be confirmed with the regional Office of Food and Drug Safety with jurisdiction, which receives the registration application.

How do compliance duties differ for a manufacturer vs a responsible seller?

A manufacturer's compliance duties center on manufacturing records and facility management, and a responsible seller's on quality testing, safety management after distribution, and reporting. The basis is Article 5(1) and (2) of the Cosmetics Act.

Violating the compliance duties in Article 5(1) through (4) carries a fine of up to 2 million won (Cosmetics Act Article 38(1)). A business operator's failure to fulfill compliance duties is also among the grounds for cancellation of registration or suspension of business (Article 24(1)(6)).

How are a manufacturer and a responsible seller related?

The responsible seller manages and supervises the manufacturer, and the manufacturer follows that guidance and those requests. Enforcement Rule Articles 8(2)(3) and 11(1)(1) set out the same relationship from each side.

The duties of the responsible sales manager include managing and supervising the manufacturer with respect to the tests, inspections or assays needed from receipt of raw materials and supplies through shipment of finished products. The manufacturer must submit to the responsible seller the items in its manufacturing records that are needed for quality control (Enforcement Rule Article 11(1)(6)).

Submission is not required in two cases: where the manufacturer and the responsible seller are the same, and where the manufacturer manufactures by designing, developing and producing the product and the items are trade secrets under a mutual contract. The second case must stay within a scope that does not affect quality and safety management.

Which duties fall only on the responsible seller, not the manufacturer?

Reporting results and ingredient lists, keeping safety data for products for infants and children, and using safety containers and packaging are placed on the responsible seller. The subject of these provisions is the cosmetics responsible seller.

• Reports the production or import results of cosmetics and the list of ingredients used in the manufacturing process to the Minister of Food and Drug Safety (Cosmetics Act Article 5(5)).
• To label or advertise a cosmetic as one that infants or children can use, prepares and keeps safety data for each product (Article 4-2(1)).
• Uses safety containers and packaging when selling cosmetics of the items set by Ordinance of the Prime Minister. Customized cosmetics sellers (맞춤형화장품판매업) carry the same duty (Article 9).
• Does not distribute or sell cosmetics that underwent animal testing, or cosmetics manufactured or imported using such ingredients. The exceptions are in the items of the same paragraph (Article 15-2(1)).
• The responsible sales manager receives training on securing the safety of cosmetics and on quality control every year (Article 5(7)).

Both manufacturers and responsible sellers may undergo the review of functional cosmetics or submit the report on them (Article 4(1)).

How many businesses register as both manufacturer and responsible seller?

Korea Cosmetics Safety Information Group groups the registry list by business registration number, which gives 3,721 business registration numbers. Of the 4,147 business registration numbers with a manufacturing registration, 89.7% also registered as a responsible seller.

The picture differs from the responsible seller side. Of the 28,277 business registration numbers with a responsible seller registration, 13.2% also registered for manufacturing. The structure behind the gap in registrations is in Why Sellers Outnumber Manufacturers, and counts by business type are in Korean Cosmetics Company Count.

When one company runs both businesses, some duties under the Enforcement Rule change. Where the manufacturer and the responsible seller are the same, the responsible seller's quality testing of each batch number may be skipped (Enforcement Rule Article 12(5), proviso).

How do a manufacturer and a responsible seller appear on the packaging?

The outer packaging of a cosmetic must show the trade name and address of the business operator (Cosmetics Act Article 10(1)(2)). "Business operator" is the collective term for manufacturers, responsible sellers and customized cosmetics sellers.

The packaging of a cosmetic with a small content volume may show only the trade name of the responsible seller or customized cosmetics seller (Article 10(1), proviso). Attached Table 4 of the Enforcement Rule sets the specific method for showing the trade name. Required label items are listed one by one in How to Read a Korean Cosmetics Label.

Does registering as a manufacturer or responsible seller guarantee product quality?

No. The documents filed with a registration application are items such as a statement of facilities, the rules on management standards and documents confirming the qualifications of the responsible sales manager. Quality data for each product are not among them.

The basis is Enforcement Rule Articles 3(2) and 4(2). Even after registration, the Minister of Food and Drug Safety may cancel the registration or order suspension of business if a business operator fails to fulfill compliance duties or does not have the facilities (Cosmetics Act Article 24(1)). Korea Cosmetics Safety Information Group only carries the counts from the registry list and the text of the articles, and does not rate companies or products.

Whether a company is currently registered can be looked up by following the steps in How to Check a Korean Cosmetics Company.