The Chief Asia Inspector Blog

Walmart Recalls 1.5 Million DVD Players

$288 Product Inspection or Product Recall?

Walmart known for their “hot” deals, is recalling 1.5 million Chinese-made Durabrand DVD players sold exclusively at Walmart stores around the World.  The U.S. Consumer Product Safety Commission (CPSC) announced the DVD players were a high risk for overheating and catching fire.  Of the 12 reported incidents, five have caught fire and put consumers at risk.

Cheap but safe products, importers' new challenge

The AsiaInspection barometer: Markets and manufacturing might be down, but Product Inspections and Factory Audits in Asia keep growing

The figures from the Quality Control industry in Asia account for a good indicator of the health of International Trade. Based on a few selected indicators, AsiaInspection publishes this barometer on a quarterly basis.With 8,500 Inspections performed during the 2nd Quarter of 2009 (+ 26% vs. Q2 2008), AsiaInspection pinpointed some illuminating trends.

As consumers demand safer and more environmentally friendly products, AsiaInspection continued to see interest from companies keeping a close eye on every step of their supply chain, in order to prevent costly and embarrassing product recalls. After countless tainted product scandals coming from China and other Asian countries over the past two years, Factory Audits in Asia jumped +61% from the same quarter one year ago while Product Inspections were also stronger with +26% growth.

Companies around the globe are striving to improve their product, environmental, and social standards. As an example, Wal-Mart recently announced that by 2012, 95% of their production must come from factories that receive the highest environmental and social audit rankings.

 

China continues to be the world's manufacturing floor

Sales of Inspections by client zone echo the daily news with the United States remaining the most affected by the crisis in terms of imports from Asia. Indeed, AsiaInspection's turnover from US clients decreased by -4.8% between Q2 2008 and Q2 2009. In contrast, Europe was bullish with +29% growth, and emerging markets in Asia and South America saw brisk growth of +73%.

Based on the geographical split of Inspections performed by AsiaInspection, China continues to be the world's manufacturing floor. AsiaInspection saw Product Inspections in China jump to nearly 7,000 for the quarter, a +25% increase compared to Q2 2008, this despite tens of thousands of factories shutting their doors since early 2008. However, other low-cost Asian countries outpaced China with a cumulative growth of +42% during the same period.

At a time when markets are contracting, this reflects the ongoing trend of companies securing their supply chain while maintaining costs low by producing in Asia.

Governments and consumers are making quality a priority. After millions of toy recalls throughout the world in 2007 and 2008, toy Inspections performed by AsiaInspection had an impressive year over year growth of +42%.

AsiaInspection will publish the Q3 barometer based on similar indicators next October.

10 Tips for Quality Sourcing from Asia

Whatever the type of goods, there are some tips that each Importer should keep in mind while importing from China or greater Asia.

At AsiaInspection, we visit 25,000 factories every year. This enables us to formulate these “10 tips for Quality Sourcing from Asia”, that we believe can prove particularly valuable should you deal with Asian vendors:

1. To find suppliers in Asia, do use the Internet (Alibaba.com, Made-in-China.com, GlobalSources.com etc…) and attend Sourcing Tradeshows involving Asian exhibitors..
2. Perform an Audit before making your final choice of vendor in order to validate manufacturing capabilities.
3. Ask the factory for a reference sample along with the quotation (the sample is usually free and you pay for the courier fee between the country of origin and the destination country).
4. Make sure your needs and specifications are well understood, using written comments, pictures and drawings.
5. Provide your vendor with detailed specifications and clarify your expected level of quality by giving acceptance levels for possible defects.
6. Perform an on-site Quality Inspection systematically before shipment (PSI). It is recommended to perform an earlier Inspection to avoid last-minute surprises (DUPRO).
7. Make sure you comply with the standards / directives applicable to your product (REACH, RoHS, CPSIA etc…), by asking your supplier to have a sample of the product tested and certified by an accredited laboratory.
8. Plan things well in advance and take at least 1 week buffer on the Expected Time Arrival (ETA).
9. It is good to physically meet with your vendor and spend time with them, in order to strengthen the business relationship through personal bridges.
10. Never take the explanation for a “no / impossible” without challenging it…

As the crisis takes hold, consumers equip their homes yet reduce their purchases of mobile electronic gadgets & accessories

The figures from the Quality Control industry in Asia certainly account for a good indicator of the health of International Trade.

With 8,000 Inspections performed during 1st Quarter of 2009 (+ 29% vs. Q1 2008) on behalf of more than 2,000 Importers, AsiaInspection pinpointed some very illuminating trends.

It is clear that this growth is due in part to the numerous well documented cases related to the Quality of products made in China – since during this time, Asian exports have fallen (- 3% from China in 2008). It was just a few days ago that thousands of Americans were altered to the possibility of contamination by tainted drywalls imported from China and used in the building of houses.

These scandals have pushed Importers to control their production lines more systematically – high time it was too – and introduce many of new International regulations, often making Lab Testing compulsory in addition to standard Product Inspections.

Analysis of the 8,000 Quality Inspections performed by AsiaInspection during 1st Quarter 2009 has identified some trends of International Trade with Asia, as well as the impact of the global economic crisis on families’ consumption worldwide.

AsiaInspection: Q1 barometer of International Trade with Asia 

As you would expect, the USA is the market which is the most affected by the crisis in terms of imports from Asia. Indeed, AsiaInspection’s turnover from serving US clients has grown by only + 2.7% between Q1 2008 and Q1 2009, while sales to European and Asian clients have risen by + 32.4% and + 8.7% respectively during the same period.

Based on the geographical split of Inspections performed by AsiaInspection, it is evident that the Asian country least affected by the crisis is Bangladesh, with + 180% growth between Q1 2008 and Q1 2009.

Inspections undertaken in China have also grown significantly (+ 8.3%), while Inspections in India have remained stable (- 0.9%).

In the context of crisis, families tend to equip their houses, and also switch to low-cost products that could present higher Quality risks

The evolution of inspected product categories also acts as a good indicator of the impact of the crisis on consumers’ behavior.

With + 64% growth in Inspections of homewares (electrical appliances, lighting, kitchenware and bathroomware, audio & video etc...) between Q1 2008 and Q1 2009, it seems that families wish to make their homes more comfortable as they have been forced to limit their external activities.

Garments and other textile products manufactured in Asia are also beneficiaries, with a + 85% growth in the number of Inspections.

Conversely, non essential and already ubiquitous small electronic products (mobile phone, mp3/mp4 etc) have been particularly affected, with a - 64% fall in the number of Inspections.

  

AsiaInspection will publish the Q2 barometer based on similar indicators next July.

Who said that food safety problems were unique to China?

Recent buzz around the Chinese tainted milk suggests that you can eat safely as long as your food was not produced in China.
But let's be realistic and see that China is under the spotlight because the country provides most of the world's goods nowadays (although less than 1% is food), and because it's always more frightening and impressing when China is concerned.
Indeed, not less scary food-related accidents happened and keep happening in Europe or America too. Take last year for instance: some Canadian meat caused the death of 15 people just a few days before the tainted milk scandal due to a Listeria bacteria outbreak, Italian mozzarella cheese was recalled for containing potentially cancer-causing dioxins, and American chocolate was found to contain Quinoline Yellow, a food colorant banned in some countries as it may cause dermatitis, provoke hyperactivity and reduce intelligence at children.
A media coverage trend quite convenient for Western countries, who can thank China for letting them keep "their" scandals discrete...

Paying the cost of unsafe imports

Interesting opinion article in the Mercury News, written by professors of law at University of California - Berkely.

2 of their opinions made me react :

1. First on the FDA implementation in China :

"Several weeks ago, for example, the Food and Drug Administration opened its first office in Beijing. This is a fine idea, but how will the eight employees working at the FDA's China facility inspect even a meaningful fraction of the $321 billion worth of goods imported from that country each year?"

I can only agree.. Though this FDA move is a clear improvement in the collaboration at state levels between the US and China on the products quality and safety issues, it is only symbolic in my opinion, and won't have much concrete consequences...

2. Then, our 2 professors have an interesting proposal :

"Where U.S. regulators expect a threat to consumer protection from foreign goods and services (because, for example, foreign regulatory structures are ineffective), they should increase the penalties for dangerous products levied on domestic companies involved in the importation and sale of the goods."

This is an interesting one, and I agree that there is much to be done at a legislative level in western countries to impose stricter supply chains to local companies. However, I would add that it is important to understand the supply chain itself, and who should hold the highest liability when unsafe imports are put on western markets.

My point is that it is easy to blame it on the Importer - often a SME - when he is only repercuting the cost pressure he gets from the final distributor (big retail groups) on his own Chinese or Asian suppliers. Ultimately, the real decision makers on the quality of imported goods are often big corporate retailers, who won't deal direct with Chinese factories, and who transfer the liability and risk of importing to smaller specialists importers.

So who should pay when something goes wrong ? And, more importantly, who should pay to make sure everything goes right (by implementing for ex. systematic quality controls at the source) ?

Itchy feet...?

While contaminated milk, seafood, toothpaste, candy, pet food etc... have been raising health concerns about ingestible products made in China - other recent cases show that products in simple contact with your skin may be harmful too.

4 months ago the French furniture retailer Conforama withdrew chairs made in China from its stores because they presented an allergy risk due to presence of dimethylfumarate, a chemical substance meant to fight humidity and mold.

Last week, it was the Popular French clothing chain Etam which had to stop selling Chinese-made boots and shoes containing the same anti-fungal chemical previously blamed for causing rashes.

Seems French brands have a serious need to refocus their QC..

See the full story

The global trend of QC Outsourcing is joined by Wal-Mart

While last year's quality problems in China with toys and some other consumer products created awareness among western consumers and companies importing from China - no significant move in the importers' habits happened as a result of this - it seems that the toxic milk scandal occurred a few weeks ago is finally leading to shifts in common practices, both in China and Western countries.

Indeed, while the China Government is leading their programme of quality control certification across a myriad of industries, the world's biggest importer of Chinese goods Wal-Mart has just fired 180 staff from their Chinese sourcing offices, and appointed a third party company for all their QC in China.
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Tainted milk : the Chinese Government must keep up.

It is just unbelievable and scandalous that Chinese dairies - the giant Sanlu ranking first – have been producing tainted products for over a year though they were perfectly aware of the catastrophic damage the consumption of these products may cause !

AsiaInspection welcomes the Chinese Government's plan of setting up 400 testing centers in the coming 2 years, among which 80 will be food safety testing centers.

We have, however, one reservation about the current attitude of the Chinese Government who is still making it very difficult to grant QC companies licences for laboratory testing... Should they want enough capacity to really curb in current issues, we believe it would be smart to encourage entrepreneurs to open more laboratories in China.

US$ 50 for a "fair computer" : still too much ?

Large electronic brands such as HP, Dell, Apple etc... still don't care much about the working conditions of the Chinese factories they use - This is the sad conclusion of an off-site survey called "Hi Tech - No Rights", led by Swiss associations among factory workers in China. The situation is all the more regrettable as producing a "fair computer", enabling the doubling of workers' wages and significantly improving their working conditions, would cost no more than US$ 50 per unit.

Read the whole study