Made in China.. First its your job, now its your safety!

Monday, May 14, 2007 1:53

Following the recent pet food scandal, I have been thinking quite a bit about how this could have occurred, and who is at fault. Then in an earlier post called Want to Source From China?? Make the Effort. I laid out that corporations need to really begin taking responsibility for their supply chain.

Now, I am beginning to see more and more op-eds that basically state that due to China’s lax manufacturing environment that we should all be extra cautious… yet considering 50% of exports from China are actually from a foreign invested enterprise (i.e. an American owned, operated, and managed facility), I find this new scandal be a bit ironic and a tad misleading.

For years, we have (as Americans) known that American companies outsource manufacturing to markets that have lower cost bases, that have lower regulatory hurdles, and at times…. afford a bit of ethical flexibility.

American consumers and corporations have both benefited through globalization, and through their relationships with Chinese suppliers. Many have done so well, they have set up large factories and sourcing offices in China to expand on early success, and anyone in Shanghai, Beijing, or Guangzhou will attest to the numbers of buyers who come into town looking for a deal.


However, surrounding all of these activities are whispers. Whispers surrounding the use of sub-spec materials.. .that are of poor quality.. assembles in poor factory conditions.. by people who have worked forced overtime…. in dimly lite conditions… etc…

yet, they buyers keep coming.. and coming..

It is not like the Chinese government says that XYZ pet food company had to buy from that particular manufacturer, nor that particular spec of dog food. they chose the supplier, they provided the spec, and they bought the goods.

the buyers sent out the RFQ, and made their decision on what I assume was price and quality, and then the P.O.’s flew out the door for containers of dog food.
It was not the role of the Chinese government then, nor is it now, to qualify the suppliers of ingredients, the cleanliness of the facility, or that fillers are not being used rather than protein.

That was the role of the brand… be it IAMS or Purina (Note: I do not know the brands involved here, and IAMS and Purina are to my knowledge not involved. I only threw them in as they are the only two brands I know).
Worse yet…if you believe everything you read… then the use of the substance was an “open secret” in china.

That means EVERYONE KNEW ABOUT IT.

A recent article by Paul Weise ‘Made in China’ now a call for vigilance is a great example of how media needs to begin balancing the roles and responsibilities a bit better:

This episode should heighten safety concerns among consumers and lawmakers. But it shouldn’t come as a huge shock.

If anything, it should underscore safety concerns already posed by consumer advocates as the manufacturing of U.S. consumer goods increasingly is outsourced to China and other Asian countries. Most of these countries lack the tradition of quality control that exists in the United States.

Further:

The majority of commission (Consumer Product Safety Commission) recalls now involve products imported from China, many of them toys, games and kids’ clothes. Nine of the 13 recalls so far this month involve products made in China, including defective shoes, glassware, ATVs, kids’ cell phones, necklaces, toy blocks and gas grills.

Made in China is going to become a hot topic, and with the trade deficit only getting wider (funny how the strengthening RMB has cause the reverse of U.S. political objectives) and tainted food sickening pets across America… the 2008 electoral season is bound to get more interesting.

The quote that I find most interesting:

Indeed, the agency charged with ensuring food safety said it also did not know “how widespread the problem in China might be” nor “what controls are currently in place” to prevent contamination.

The reason I find this interesting is that anyone in China knows that in front of every manufacturer in China stands a little office of 2-3 people called a trading company, and that this trading company acts as the window for the vast majority of goods being exported from China.

Were the buyers on the ground, visiting factories, and working with suppliers directly, then this issue of identifying suppliers would not be an issue. however, my gut feeling is that very few if any of the manufacturers of pet food (who were labeling the cans) had been inspected, and even fewer would have been properly assessed and monitored.

What is my point?

simple, the buyers of the dog/ cat food and the relevant food agencies in the U.S. never visited the factories,never investigated the origins of ingredients, never inspected the containers prior to their leaving the Chinese docks, and apparently never did a full chemical analysis of the pet food being sold.

How do I know this? It’s simple. Had they visited the factories, then identifying the manufacturers would have taken a matter of hours, not weeks.

Had they inspected the factories, and met the factory managers, they would have had the BUSINESS CARDS of the factory managers and CEO..

But they didn’t (at least… that is what is being reported)

Instead, the Chinese government had to sift through paperwork, identify the trading companies, and then get to the source…

So… you wanna know why your dogs/ cats got sick.

It is simply because the entire process broke down, and no one knew about it until pets across American took ill en mass.

If the U.S. government and manufacturers want to REALLY ensure the quality of products made in China, they need to begin Making the Effort. Blaming China for all its woes is not making an effort, it is trying to shift the blame away from manufacturers and agencies that failed to monitor the goods being imported from China.

so, for anyone that is sourcing in China (especially in food & Pharma ingredients), I once again highly suggest you put assets in place to monitor your supply chain. Risking a brand over an investment of an office and a couple staff is bad business, and American brands will beginning to feel the effects soon enough

The time for blaming China is over, if there are problems in the supply chain, it is time to look internally at what went wrong before pointing the finger at others.

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4 Responses to “Made in China.. First its your job, now its your safety!”

  1. China Law Blog says:

    May 14th, 2007 at 4:31 am

    I agree, and in fact, many US companies know this. Since this incident, two of our clients have asked us to perform a “China audit” on their business and I think eventually every company is going to do this and those that don’t will be putting themselves at risk for punitive damages, at least in the US. The time for willful ignorance is over.

  2. rbrubaker says:

    May 14th, 2007 at 8:08 am

    Hi Dan,

    I am going to give you a gold star for number of comments posted!

    I hope that companies start taking more interest in the cleanliness in their supply chains. I see a lot of willful ignorance as people just think that their suppliers can run on auto-pilot.

    and the irony of this is that they have heard the stories, and once something goes wrong, are the first people to blame the suppliers when things go wrong.

    I just heard another story today where the factory set up a second line and is now selling simliar products (not sure they violate patents yet)… and I just kept thinking that had they ramped up visits it might have been diverted. The only silver lining is that they were visiting regularly, and it looks as if they have caught it early, and will be able to take corrrective measures (they apparently read both of our blogs… they are visiting, they have filed patents in China, and their contracts with supplier to protect IP were written and reviewed by a lawyer)

  3. rbrubaker says:

    May 15th, 2007 at 10:58 am

    Here is an article that just poped up on IHT site entitied Meanwhile: Bad medicine, sneaking in, and I recommend everyone read it.

    R

  4. rbrubaker says:

    June 6th, 2007 at 11:27 am

    CLB has just put up a very well written article on how companies can protect themselves.

    I suggest everyone read it!

    How To Protect Your Company From Bad China Product