August 24, 2010

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By Product Safety Letter staff

Citizens in big economies like the U.S., EU, and others view China as a product safety risk. For years, the growing consensus has been, “Fix China and we fix much of what’s wrong with product safety.” Indeed, problems with Chinese-made toys were one of the catalysts for the CPSIA, and those problems are the targets of some of the more challenging aspects of the law, including the looming testing and certification provisions. Elsewhere, the EU has a special sub-system of its RAPEX program called the RAPEX-China System in which the EU’s DG-Sanco and China’s AQSIQ communicate about steps taken to address problems raised in RAPEX reports involving Chinese-made products.

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However, China’s working class is becoming a middle class, meaning the cheap-labor attractiveness of outsourcing there is starting to wane.

Our premium sister-service Product Safety Letter earlier this summer reported the situation thus:

Companies soon will be facing shifts in production to nations like Bangladesh, Cambodia, Indonesia, and Vietnam, due to rising cost-of-living and wages in China, CPSC Chairman Inez Tenenbaum and Commissioner Nancy Nord heard June 17. This often will mean repeating basic safety education – more basic than most people in industrialized nations realize, explained Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong. He illustrated the point with a story of Chinese five-star hotels a few years ago hiring maintenance managers despite their never having seen indoor toilets.

Such workforce safety education also will have to go beyond the immediate production to all aspects of the supply chain. For example, explained Andre Leroy, marketing director of Modern Testing Services (Global) and chairman of the chamber’s textile and apparel committee, fabric can become contaminated from the exhaust of leaded gasoline during transport.

“The learning curve is just tremendous,” Vuylsteke said, explaining that the shift from China is ready to occur and is slowed mainly due to lack of port readiness.

Meanwhile, in CPSC’s recent 2011-2016 Strategic Plan, the agency acknowledged this coming challenge, and underscored the shift with a bar graph that showed Chinese-made products fell as a portion of all U.S. recalls for the first time in a decade in fiscal 2009. The agency wrote:

A shift is underway in the countries that generate the greatest volumes of global trade. Over the last five years, the rapidly industrializing nations of India and Thailand joined other developing nations such as China, Mexico, Brazil, and Malaysia on the list of the world’s top 25 exporters. Countries fortunate enough to benefit from explosive growth in export volumes also face the challenge of implementing quality control systems that can keep pace with production. Where those systems are lacking, and where domestic regulation is not effective, product safety can suffer. The CPSC uses its authority to encourage importers to ensure that their suppliers implement those practices necessary to develop safe products. It also provides training and guidance to foreign manufacturers to help them meet U.S. product safety requirements.

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One of the ways the CPSC can reduce the number of unsafe imported products entering the U.S. marketplace is by strengthening its bilateral and multilateral relationships with foreign regulators and manufacturers. According to the Organization for Economic Cooperation and Development’s (OECD) 2008 Report on Consumer Product Safety, bilateral engagements successfully facilitate the exchange of information on consumer product safety issues and serve as a mechanism for coordinated actions against unsafe products. Similarly, multilateral consumer product safety engagement encourages the sharing of lessons learned among a broader group of nations to improve the effectiveness of product safety oversight.

Of course, it would be unwise to view the situation as a problem of either China or other nations. China is a huge manufacturing economy. It will continue to be a source of a large portion of products for years to come. The proper reaction is not to move focus from China to the emerging manufacturing economies, but to realize that there is a growing need for a broader focus that encompasses more and more nations.