The Chief Asia Inspector Blog

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 !

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.

Direct from the Factory - episode 5

After a short period of silence (for which I apologize - business is business...), I give you a new episode of our Factory Inspections !

We are in Chengyang, Shandong, and our inspector was brought to the "packing line" where he found working conditions and processes not exactly up to the client' standards !

Although we see conditions in factories globally improve in major industrial areas, remote areas seem slow to catch up...

Direct from the Factory - episode 4

This new episode of our Inspections video brings us in Linyi, Shangdong province.
The so-called factory was actually nothing more than a shed, with the courtyard used to store and dry the products... Unsurprisingly, the Inspection result was Failed !

Direct from the Factory - episode 3

Another episode of our Inspections videos series, gathered around China. This time we are in a Glass Factory, located in northern China (Shangxi province), where, as you can imagine, there have been some arguments about working safety conditions...

Secrets, lies and sweatshops...

Read this interesting article on Business Week about how American companies handle their corporate responsibility when dealing with suppliers in China.
If the article tends to say, quite rightly, that Social Audits are more about image than actual improvements on site, I can not help but argue, from AsiaInspection experience, that it still contributes to educate and send a strong message to the factories.

Direct from the factory - Episode 1

Ever wondered what a factory inspection in China really looks like? I have asked some of our AsiaInspection inspectors to send in videos and photos from their trips throughout Asia. In a series of video clips from real inspections, get a behind-the-scenes look at quality control in the works. Check out this first episode and stay tuned for more!

Quick-fire backfire

                                                  

It is debatable what the EU is trying to do by imposing quick-fire textile quotas on China, now that the restrictive Multi-Fibre Agreement is no more. According to this Guardian article, if it wanted more jobs at home, it is likely to fail.  If it was also trying to look out for its own little guys - developing countries such as Morocco and Tunisia - I would suggest that it is likely to fail in that too. Who looks like the big winner, the guy making all the sweaters now that the dragon’s claws have been ever so slightly dulled? Not the weak or vulnerable, but instead: that other racy Asian economy - India.

AsiaInspection’s tours have shot up like a lunar rocket in India: we made eight times our usual number of inspections there this year. Not that China seems to be suffering too much (at this stage); inspections there have increased threefold.

If you imagine the Asian economies are rising like dough (go on, do it just for a moment), it’s funny how if someone tries to squash a bit back into its pan, another bit puffs out somewhere else. In fact, it seems that all the EU has managed to do is irritate their own importers, retailers and inflation rates. Whoops!

La zone d’ombre de la corruption

L’article suivant sur la corruption en Chine n’est pas dénué d’intérêt. Notez que selon ce qui y est dit, le phénomène serait plus courant lorsque des fonctionnaires de l’administration sont impliqués (pour une surprise, ça c’est une surprise !). Certains actes relèvent évidemment de malversations. Mais à quel moment pouvons-nous dire que la simple politesse ou l’hospitalité deviennent inconfortables ?

Les entreprises de contrôle qualité sont parfois confrontées à des situations de corruption. Lorsque les fournisseurs demandent aux inspecteurs de fermer les yeux en échange d’argent ou de cadeaux, par exemple. Bien évidemment, il existe toujours une zone d’ombre. Y a-t-il corruption lorsqu’une usine envoie un véhicule pour passer prendre l’inspecteur ? Ma société répond par l’affirmative.

Nous demandons à nos inspecteurs de ne jamais rien accepter de l’usine qu’ils auditent, qu’il s’agisse d’un repas, d’une course en taxi ou d’un trajet en voiture. Nous leur allouons bien sûr le budget nécessaire pour couvrir leurs dépenses. Nous signifions également très clairement aux usines que nous n’avons aucun pouvoir de décision, la décision finale étant toujours prise par le client, et non par nous. Nous sommes leurs yeux dans l’usine. Nous avons par ailleurs d’autres secrets en interne qui permettent de protéger nos inspecteurs de divers types de pressions malhonnêtes – ces procédés pèsent peut-être sur le portefeuille mais ils ont le mérite d’être efficaces.

Ce n’est pas en offrant des pots-de-vin à nos inspecteurs que les fournisseurs audités auront l’assurance d’obtenir l’aval des clients. En outre, nous gardons un œil sur nos inspecteurs en organisant des audits internes impromptus au cours de missions d’inspection. Nous disposons également d’une base de données qui nous permet d’avoir accès aux résultats établis par les inspecteurs à la suite d’un audit et d’identifier les bons, et les mauvais, inspecteurs. Leur travail est évalué par des superviseurs chargés de noter les éventuelles bizarreries constatées ou de rechercher les informations qui n’apparaissent pas comme elles le devraient dans les rapports des inspecteurs. Enfin, c’est évident, nous payons bien nos inspecteurs, nous les traitons bien et nous faisons en sorte qu’ils soient fiers du travail qu’ils accomplissent.

Sébastien Breteau

The grey area of corruption

Interesting article here on corruption in China – note that the article says it’s most common where government officials are involved (surprise, surprise). Some actions are obviously corrupt, but when does mere politeness or hospitality become uncomfortable?

Quality control companies can face bribery issues such as suppliers promising money or gifts to inspectors for closing their eyes. Of course, there is always a grey zone. For example, is it corruption when a factory sends a car to pick up the inspector? My company says yes.

Our inspectors are told never to accept a lift, a cab or a meal from the factory they are auditing. Obviously, we provide them with a budget to cover these expenses. Also, we make it very clear to factories that we don’t have any decision-making power as the final decision is always made by the client and not by us – we are their eyes in the factory. Other internal secrets help shield our inspectors from various types of corrupting pressures – these processes may be hard on the wallet but they’re very effective.

Bribing our inspector is not a guarantee that the client will approve the production. Secondly, we watch the watchers – we organize unannounced internal audits during inspections, and we can track inspection results by inspectors on our database, which allows us to identify good and bad inspectors. The work is assessed by supervisors who will note any curious findings or missing information on inspectors’ reports. And finally, and most obviously, we pay and treat our inspectors well, and give them pride in what they do.

Who's paying for your discount?

Following on from my last post, contrary to the conspiracy theorists, most multinational companies do take public opinion to heart and pay close attention to their supply chains, rather than wasting energy on “cover ups”!

Note Apple’s acknowledgement (albeit after a fairly responsible bit of reporting brought the problem to light) that some workers at its iPod factory were working more than 60 hours per week. This is common practice in China – hell, it’s common practice on Wall Street – but it breached the company’s own code of conduct.

Inside the factory

• A major multinational company recently asked us to audit one of their supplier’s China factories, and our Auditor found two workers just shy of their 16th birthdays on the factory floor. The legal working age in China is 16. The client’s immediate response:

• Business with this particular factory has been suspended.
• Both supplier and factory have been asked to correct the problem and to put measures in place to ensure it doesn’t happen again.
• A second follow-up audit is to be carried out, at the supplier’s expense.
• The factory must offer a job to the kids' family members to ensure no loss of revenue for the household.

These issues -especially now when any whiff of social irresponsibility, negligence or exploitation can be devastating for their image. Although child labor is much more common in countries like India and Bangladesh than in China, it should be noted that the legal working age in some countries is 15 rather than 16 and that the notion of apprenticeship muddies the waters. Even in France, the legal working age was 14 until well into the 1960’s.   

Small tip for quick action (but not a replacement for a solid policy): ask the factory to create an HR file which contains a copy of an id for each employee with a record of starting and leaving date. In the long run, multinational companies will be judged by their ability to put social auditing processes in place and by how swiftly the respond to nasty surprises.   

“Sweatshop” Propaganda Wars continue

This slickly made ad lampoon attributed to French satirical TV show Les Guignols is doing the internet rounds (and here), suggesting Nike factory conditions in Asia leave something to be desired, to put it mildly.
Several points:
• Horror stories do deserve exposure. But beware: there are plenty of non-altruistic reasons why like to people start throwing dirt around, even if it doesn’t stick (e.g. über-brand Apple is facing the ignominy of answering the question “Are iPods really evil as people believe?” - read more here).
• But in my experience – which includes inspecting literally hundreds of Chinese factories per year – the majority of Chinese factories aren’t any less (or more) pleasant than factories elsewhere. The news is not all bad! For light-hearted confirmation, for example, click here.
• Overall, factory conditions in China have vastly improved over the last decade – in part due to a labor shortage. As I have pointed out before, workers who are in demand have power.
• Implying that “made in China” necessarily means “made in Sweatshop” is false and counterproductive to improving factory conditions. How? Duped “ethical buyers” who buy the stereotype may just avoid anything China-made instead of learning to discern between one Chinese manufacturer and another. The key - of course - is to have keen eyes and ears on the ground (which is of course our expertise).
Could this barbed video just be a case of Gallic jealousy about the success of China (and of Nike – i.e. a fabulously successful American company)? I believe China Law Blog may have said something on the subject not so long ago!