The Chief Asia Inspector Blog

The price of quality

Following a recall from 2006 (see the details from the U.S. Consumer Product Safety Commission) , Reebok has just been fined a record US$ 1 Million for their violation of the US Federal Hazardous Substances Act.

The facts are pretty well known (a 4 year old kid died of lead poisoning after swallowing a made-in-china bracelet given away by Reebok), and the manufacturer's efforts to "fix" the issue (a 500,000+ pieces recall), communicate on it and prevent it from happening again seem real.

What is interesting here is that it sets a speaking example of the cost of non-quality (US$1 M for the fine, plus the cost of the worldwide recall, plus the purchase cost of 500,000 bracelets - probably around US$ 500,000). We are talking about a financial loss for Reebok of at least US$ 2 M I believe (and I am not counting the brand image damage).

I guess it makes the relatively small investment for setting up proper quality controls in China worth it...

Total Recall

The list of recalled made-in-Asia products keeps getting longer and longer…

It seems no one is safe anymore: to name only a few , your kids may damage their brain or become comatose when playing with their favorite toys, you can ingest poisonous chemicals while brushing your teeth should you observe basic hygiene rules, or die after eating your daily portion should you be a pet...

You might also learn that your kids’ clothes were actually manufactured by Indian children, some as young as 10.

For more of these pleasant stories, you can consult the US Consumer Product Safety Commission here  (for all products) or here (for toys only), the US Food and Drug Administration here, or the EU recalls list here...

Should we put all the blame on Asian suppliers and stop doing business with them ?

I don't think so; these stories are only a strong reminder that international trade is risky - and that you can not pressure for lower prices on one hand, and not watch out for the quality on the other hand. Finding the balance is what makes it difficult - but this is also where importers can bring value to their clients !

AsiaInspection receives 'E-Business of the Year' Award from Alibaba !

Early September, AsiaInspection was extremely pleased to be rewarded for its successful online platform with the "E-Business of the Year" award from Alibaba.com, the leading online trade platform for global importers.
Out of 1,200 initial candidates, AsiaInspection was eventually selected as one of the 10 winners for the Hong Kong region, and attended the Alifest event in Hangzhou on September,15th.
AsiaInspection's online platform now serves more than 1,200 Importers in 58 different countries.

Jack Ma, Alibaba founder, with AsiaInspection's CEO Sebastien Breteau.

Don't mess up with Quality in China...

These past weeks have seen a number of stories unveiled about quality issues on China productions, mainly on the food & drugs industries - and recently in the Toys industry.
There are stories about this bun maker using cardboards found on the streets in his products, the counterfeit drinking water sold in Beijing, or the infamous use of antifreeze chemicals inside toothpaste...
Finally, these last days, Dora the Explorer returned home, with Mattel announcing a recall for 1.5 million toys made in China (containing excessive lead levels).

The matter is getting very concerning for the Chinese government. The execution of the the ex-Food & Drugs Administration chief Zheng Xiaoyu, after being convicted for bribery charges (he took about 6,5 million RMB to let defective drugs get SFDA approval, ultimately causing the death of at least a dozen patients) will certainly not be enough to restore the reputation of the "made in China".

Figures given by the Herald Tribune sound scary : 23,000 cases uncovered of fake or low-quality food between December & May, only 81% of the food tested in a nationwide survey up to safety standards (improving from 78% the year before),

Chinese government was prompt to react, with the implementation of guarantee seals from the Quarantine administration on all food exported items in next September, the tightening of drugs approval procedures, or the implementation of a daily reporting system on food safety.

The risk that these stories hamper the long expected restoration of the Chinese leadership with the coming Beijing Olympics in August 2008, while the world will be watching closely, is high.

I can't help but insist on the importance of the Quality Inspections on-site, as much for every importer buying from China, as for the manufacters themselves who are willing to establish their reputation and improve.

From China to Europe... by car !

Another step in the cultural exchanges between the West and China : one of AsiaInspection's employees in Shenzhen just told me about how her brother has started with his wife on last July, 12th a 60,000 kms road trip from China to Europe !
They will cross nearly 20 countries, for about 6 months, and keep a diary online to record their story.

This trip is actually a big thing, since they will be allegedly the first Chinese couple to drive across Europe; they got sponsored by Volkswagen Shanghai (they drive an Octavia model, which was just released on Chinese market early June), HP, Michelin, ... and will donate a part of the income generated by their story to Greenpeace.

I wish a good trip to these modern heirs of the legendary Zheng He !

10 years of magic

Today, is exactly the 10th year anniversary of the incorporation of my first business in Hong Kong, SEBO : it was indeed launched on the first working day of the China ruling.
At that time I was confident the business environment wouldn't be affected by the China ruling, and I think time has proved me right.

Indeed Hong Kong has gone through hard times (98 crisis, SARS,...) pretty well and has shown an amazing ability to stay ahead of other financial centers in Asia.

10 years ago, lots of people predicted that Singapore or Shanghai would soon take over Hong Kong as a leading financial center but they have been proven wrong big time! The competition with Singapore is no more and the financial core and immaterial economy ( holdings, funds, lawyers,...) is strongly based in Hong Kong and is progressing each year.

The main downside I have seen in the past 10 years is the pollution which reaches some days unbearable levels. I believe it is the duty of the Hong Kong people to allow effective resources and means to tackle it very seriously as it might be the trigger to Hong Kong unexpected decline...

Except this worrying pollution, Hong Kong is still a magic place to do business and, I am sure, will still be in 10 years time !

A great appointment

As you probably know, there has been quite a few changes in France's political life these last weeks. Since last Monday, a new team is in command, under the leadership of president Sarkozy.

AsiaInspection is particularly happy about the appointment of Mme Christine Lagarde, as French new Finance Minister, making her the first woman to hold such a position within the G8 countries !

When she awarded us the Prize of the Best French SME in China last October, I had the opportunity to discuss with her and was very impressed by her presence both charming and highly intense.

After making her way to the top of the famous law firm Baker & McKenzie, she was ranked the 30th most powerful woman by Forbes in 2006 and i believe she will be a great asset to the government as France has too long been governed by people who had absolutely no idea about what a Company or a business is really about. I believe the clarity of her views as well as her 20 years of professional experience abroad will give her the credit she needs to make things change so that business people are welcome again in France !

I warmly wish Mme Lagarde a lasting success in this top job !

Attention all buyers !

I heard rumors these last days saying China was going to cut tax rebates granted to local exporters on a wide range of goods... Today for the first time I read something official here on the matter.

This is big (bad?) news !

From 1st of July (that is, in about 10 days), we are very likely to see Chinese suppliers react drastically and raise their selling prices to maintain profits - apparently we are talking about 5 to 10% increases on some products (clothes, shoes...), which will have a clear impact for AsiaInspection's clients !

So the Chief's tip of the day to all importers would be to hurry and push for shipments before the end of June !

Child Labor : still a long way to go ...

Given the business I am in with AsiaInspection, I can only react to the news of Beijing Olympic Games merchandises being manufactured by Chinese rogue factories employing children...
There is a highly symbolic value to this news, which brings together 2 of the most popular topics, one positive and one negative, when it comes to China. Moreover, the story comes to light, quite ironically, when yesterday was the official World Day against Child Labor.

This is obviously a highly-debated subject, but I still find it interesting that Olympics officials can tell reporters about the factories involved: "They have told us they did not employ child labor at all"... Told us ??

In my opinion, the least they should have done,  when they knew the whole world was watching every of their steps, and when they are supposed to convey positive ethical values through the Olympic spirit, was to order / impose a proper Social Audit program on all suppliers & factories involved...

Direct from the Hong Kong fair !

Completing my previous posts on Canton fair, here is a word from the Hong Kong Electronic & Components fair, where AsiaInspection is exhibiting this year for the first time (after having exhibited at other HK fairs the previous years).

The fair is organized by Globalsources, the leading online platform "connecting global buyers and suppliers", who by the way happens to have the same graphical chart than AI (red, black & grey)!

It takes place at AsiaWorld Expo, a new exhibition center opened in 2006 in Hong Kong, built conveniently near the International Airport and offering an additional 70,000 sqm space for exhibitions to relieve the "old" HK Convention Center located on the Hong Kong island.

After more than 10 years visiting these Asian fairs I am still dazzled by the atmosphere you feel there, and how these events make you sense, in a very tangible way, the 10% economic growth of China !