Personal Responsibility in China Exporting

Great article in the NYT about the current state of Chinese exports and regulations. It’s not much in the way of application but it does detail the current state of affairs here and what to expect.So now that we know what’s going on—heads are literally rolling in China over the violations of Chinese FDA regulations and other export laws—what is going to be the on-the-ground affect of these actions? Or more specifically, that’s the news, but what does it mean for you, the small to medium sized US based importer?The NYT is correct is saying the issues in China are a problem of enforcement not regulation. China often tells the US and the UN that the laws in China are more comprehensive and aggressive than in the US or the UE—and it’s often true. The problem is, as the NYT points out, is that enforcement of these strict laws is so lax that there might as well not be any laws in the first place. China is just too big, with to many suppliers and too many opportunities for small time bureaucrats to be paid off to enforce properly.So it’s a no win situation, right? Wrong. It just means that you have to do the enforcement yourself. The best way to make sure that you get what is legal and exactly what you ordered is to be there—in the factory—and involved in all the processes that affect the quality of your product.This does not mean that you have to move to China or set up your own factory. Quite the contrary. The (lack of) success of JV’s in China is well known. It’s rarely the win-win that it’s touted to be. And setting up your own factory is typically a jump that is just too big for many SME’s to bite off.But it does require that you do a couple of things. First send someone over here to make the decisions that you know you want to be involved in. Maybe this is the raw materials check/purchasing. Maybe it’s the mold confirmations or maybe it’s the sample testing. Whatever your product needs are, make sure that you or someone you trust is involved. It’s way over due that Westerns take responsibility for the quality of the products that they are importing.Second, you can’t be here all the time and you shouldn’t have to. But you need to confirm that everything is done according to the decisions that you made while you were here. Get someone here to be your eyes and ears during the rest of production. There are usually a couple of key points that you may want to be personally involved. The rest of the time you can hire a 3rd party to monitor production for you. You’d think that it should go without saying, but don’t take the recommendation of the factory for your 3rd party inspector.Next, if you’re getting raw material or chemical or other test documents from you supplier in China it is YOUR responsibility to confirm that they are legitimate. If you are concerned enough to request the documentation then should be wise enough to get some independent testing done. There are numerous testing companies that meet international standards and can provide testing for you across multiple mediums and for various Western governments. Remember, if you rely on your supplier to test their own materials you are asking for trouble.What if you are receiving test documents from your trusted Chinese supplier that you’ve used for a few years already. You’ve never had any problems in the past and the documents look legit and you think things really are on the up and up. You have two choices-lit it ride or double check. It’s your call, but why take the chance? Even if it’s a trusted an long term supplier, the recent problems with Chinese exports give you a good face-saving excuse to have a third party check things out for you. Even with trusted suppliers you should be calling for random 3rd party inspections anyway. They’re just an internet search away.One other thing that will help you out is the new regulations that started in July for exporting. The new laws, which limit some of the tax breaks and going forward place some stricter limits on export certificates, should separate more clearly factories of origin and trading companies. This means that the Chinese government is trying to more carefully regulate who is actually shipping things out of China—theoretically making it easier to track down (ir)responsible parties. Whether you’re using a broker or going direct you should be able to request all of your shipping documents to confirm, for your own piece of mind and US customs where things are actually coming from.Basically there is no substitute for personal responsibility. You need to confirm what you are getting and where it’s coming from independently from your suppliers. This won’t take much more work as there are companies (like SRI) set up to do exactly that for you now and will cost significantly less than the bad press that a mistake could cause.