China Suppliers Up Ante on Product Safety

Following a series of tighter consumer protection laws, makers are emphasizing product safety while contending with the high cost of compliance.

Faced with stricter safety regulations in key export destinations, companies in China are allocating more resources to product testing and emphasizing high-quality materials despite the pressure these are putting on manufacturing outlay.

For most suppliers, adopting complicated and far-reaching directives is not the main challenge, but the high expense of compliance is.

Many of the new safety standards require makers to conduct more tests on a greater number of chemical substances. As a result, certification fees for some products have risen by as much as 50 percent, and even doubled in a few cases. CPSIA evaluation for toys, for example, can cost up to $1,000 per model depending on the complexity of the design.

The average toy company now spends $60,000 to $100,000 on examination fees every year. One of the biggest toy makers in China pays more than $2.9 million annually on testing, much higher than the yearly revenue of small suppliers.

Lamp specialist Heshan Mingkeda Industries Co. Ltd spends about $3,000 for SAA certification alone, which takes one or two months to acquire, according to the company’s sales manager Mini Yip.

In many instances, fulfilling safety requirements involves replacing infringing materials with compliant substitutes.

Suppliers of food-grade products, for instance, have already stopped using BPA, an organic compound found in many plastics. In a range of consumer goods, further modifications include the shift from PVC to POE, and from PC to phthalate-free PES, glass and nontoxic silicone.

Battery makers are striving to develop or source safer anode and cathode materials. Some have begun to replace conventional lithium cobalt oxide formulation with lithium iron phosphate, an alternative with lower environmental impact. Other efforts are aimed at improving protection against overcharging, discharging and heating.

But in most instances, “safe” alternatives are costlier than the originals. 3P PVC for instance, is 30 percent more expensive than regular PVC but is 30 percent cheaper than 6P.

Similarly, A5-grade melamine goes for $2,200 per ton, three times as much as the same volume of the A1-grade variant at about $735.

In some cases, imported materials, which invariably cost more, are favored over domestic equivalents. Imported PP, for instance, is 20 to 30 percent higher than domestic versions, at $1,800 to $2,100 per ton. Overseas-sourced organic fabrics, likewise, are 20 to 30 percent more expensive than local variants.

Despite the high outlay, some companies prefer to source abroad for consistent quality. Foshan Geuwa Electric Appliance Co. Ltd sources 80 percent of materials and components for its blenders and juicers overseas, while the rest are purchased locally.

Besides higher raw material expenses, makers have to contend with increases in indirect costs, particularly those related with monitoring the supply chain to ensure that all manufacturing inputs meet specifications.

According to Tim Corrigan, president and CEO of the Quality Assurance Institute, “The root cause of the problem (of product quality) is control of the raw material, application contaminations and subfactories. To fix this requires an overhaul at many factories. The solution calls for significant transparency, diligence and dedication.”

Generally, material vendors are able to offer third-party certification. But for those that cannot do so, companies need to send their own QC staff to supervise the production at the material suppliers’ factories.

More exporters are now limiting their sourcing to suppliers that can provide certified inputs. Still, collection and documentation of every component utilized requires time, effort and money.

In addition to testing and materials quality, manufacturers are also enhancing their in-house QC facilities.

Lai On Products (Industrial) Ltd, a Hong Kong-owned maker of crayons, modeling clay and paint has set up a microbiological laboratory at its factory in Shenzhen, Guangdong province. Certified by the China National Accreditation Service for Conformity Assessment, the lab is comparable to a chemical-testing facility. The supplier also sends its products to third-party agencies to ensure compliance with ASTM D-4236 and F963, Toxicological Risk Assessment, EN 71, CPSIA, California Proposition 65 and REACH requirements.

Some baby stroller factories are now equipped with wheel performance, dynamic durability and drop-testing facilities. At the same time, many stuffed toys and children’s garments makers are purchasing more needle detectors.

Any measure to comply with safety regulations undoubtedly adds to the cost of production. Suppliers estimate material and certification expenses have risen about 10 percent in recent months. Many companies try to absorb the additional expenditure, but this is not always feasible.

While investment in facilities can be recovered in the long term, the same cannot be said about testing fees. When order quantities are low, as in the current environment, makers are often unable to recover money spent on certification of specific models. Shorter product life cycles due to fast-changing customer preferences also give manufacturers a narrower time frame to recoup compliance outlay.

Some suppliers try to negotiate bigger orders or ask buyers to shoulder the cost for certification. But clients are averse to both options in view of the current economic conditions.

Typically, tier 1 manufacturers are able to comply with regulations more seamlessly due mainly to their stable financial resources.

“Enterprises that cater to major OEM customers likewise have the easiest time adjusting to the new rules as they have better access to information,” said Cody Wang, chemical testing deputy general manager at Intertek. “They are usually able to make the necessary changes months in advance of enforcement deadlines.”

But for small and midsize factories that have less capital to invest in equipment and prohibitive testing fees, conformance can be a daunting task.

Testers can also be partners

The professional testing industry is booming amid the rising safety trend. With the increased need for product evaluation, the past few years have seen an influx and expansion of third-party laboratories in China, including SGS, TUV, BV, Morlab and Pony Test. These organizations also provide free training on the latest regulations, and inform companies on which merchandise needs testing and how.

Regulatory agencies in the US and the EU have likewise been active in helping suppliers get up to speed.

Workshops on the new EU Toy Safety Directive have been organized, with the support of the EU-China Trade Project and the Directorate-General for Enterprise and Industry of the European Commission.

In October 2009, the third CPSC-AQSIQ Summit was held in Wuxi, Jiangsu province. With a theme of “promoting best practices by Chinese manufacturers and US importers to maximize product safety”, the summit was attended by CPSC chair Inez Tenenbaum.

In her keynote address, Tenenbaum reported that in fiscal year 2009, toy recalls went down to 40 from more than 80 in the preceding period. The information exchange between the CPSC and AQSIC about recalls of China-made goods was emphasized, as well as the need for frequent training sessions.

The AQSIQ has been educating China toy makers about safety requirements in the US and on strengthening quality controls. The CPSC has arranged to set up an office at the US embassy in Beijing to help promote compliance with US standards among local suppliers.

Local governments and trade organizations are also vigorously pushing companies to bolster the image of “made in China” products.

At the Canton Fair last fall, the Ministry of Commerce distributed export quality and safety manual to exhibitors.

Organizations such as the China Council for the Promotion of International Trade have been sponsoring seminars for business owners and local government officials on product safety in Southern China.

Regulations getting tougher

The safety bar that China suppliers must hurdle is getting higher by the year as new international and domestic standards are put into place.

In December 2009, the European Chemicals Agency announced the addition of 15 chemicals to its candidate list of substances of very high concern (SVHC) under REACH. Among the inclusions were diisobutyl phthalate, a commonly used plasticizer, and lead chromate, a coloring agent.

REACH has wide-ranging impact in the EU as it requires disclosure of information on hazardous substances contained in every product. The directive is on top of specific regulations such as RoHS for electronic goods, EN 71 for toys, and Regulation 1905/2004/EC for materials that come in contact with food.

For toy makers, the CPSIA/HR4040 in the US and the EU’s New Toy Safety Directive or 2009/48/EC amend existing rules substantially and impose greater restrictions on suspicious chemicals. The latter regulation limits 19 metallic elements. It also bans 55 fragrant substances and warns against a further 11 types.

Other baby and children’s products and toys must pass the standards for EN 71, CE, WEEE and EMC in the EU, ASTM-F963, CPSIA, FDA and UL in the US, AS/NZS/ISO 8124 in Australia and New Zealand, and ST2002 in Japan.

Following the US and EU’s lead, Japan, Australia and even Malaysia are modifying their existing toy safety regulations, particularly on flammability and the use of phthalates and lead.

Lithium battery exporters have to comply with UL1642 for cells and UL2054 or FCC for battery packs in addition to EMC and RoHS. Designs shipped by air are also obligated to undergo UN38.3 testing. In markets where FCC, UL and RoHS approval are not necessary, passing the UN38.3 is sufficient.

For products that come in contact with food, companies have to comply with assorted standards such as UL, CB, CE, GS, ETL, CCC, FDA and LFGB. Most EU countries recognize Germany’s LFGB because of its stricter requirements.

Aside from international regulations, suppliers have to follow domestic guidelines for a number of goods.

Garment trimming makers, for example, need to comply with three sets of requirements for cords and drawstrings to be used in children’s clothing. Issued by the General Administration of Quality Supervision, Inspection and Quarantine, and Standardization Administration, the GB/T 22702-2008, 22704-2008 and 22705-2008 are based on US’ ASTM F 1816-97(2004), the UK’s BS 7907:1997 and EN 14682:2007, respectively.

In addition, some existing national standards for trimmings have been revised and now have provisions that monitor and prescribe allowable levels for harmful substances that are even lower than European regulations. The GB/T 17592, for example, keeps azo content at 20mg/kg whereas it is 30mg/kg in the EU’s EN 14362.

Likewise, the China government issued a new standard for melamine-formaldehyde products used as food containers and packaging materials. This comes after several foreign markets banned low-end models due to potential chemical leaching.

The regulation seeks to ensure safety by prohibiting the use of urea formaldehyde resin as the main material. A1 and A3-grade melamine dinnerware pieces, which contain 70 to 90 percent of this substance, tend to melt at high temperatures and may cause a health hazard.

To ensure compliance with the safety code, the government has required suppliers to obtain a production license from the General Administration of Quality Supervision, Inspection & Quarantine.

General Wholesale – Great Tips For a Newbie in Establishing a General Wholesale Clothing Business

Many entrepreneurs online are tired of making affiliates as their major source of income. They want to venture more on a lucrative business having great benefits for them. They are now interested in establishing business online where they can sell their own products. That is why most of them engaged in having their own general wholesale clothing business. Plus, they also acquire reliable dropshipping services because this is very helpful for their business. According to them, dropshipping is the most secure and profitable option for their business. If you are not a member in this kind of business, but still you can get many help and facilities online. The advantage of a wholesale clothing business is that you have your own brands and own products to sell online. In general wholesale, you can select from few good options such as ladies wear, children’s clothing, maternity clothes, and many other more niches of clothing products. In addition to that, you can also purchase clothing accessories which will be very useful for your business plus, it can generate good income for you. So, if you are looking for a good business, then the best one to start with is establishing a general wholesale clothing business online.

First thing you need to do is storing all good information about your different clothes you are selling online. These information needs to be factual and that will greatly persuade potential customers to look and purchase your products. You can also put graphical presentation or pictures of your apparels in order to grab the interests of you customers. This is one way of greatly increasing your sale because it is a fact that once buyers like what they see, they will get it. You can also categorized your general wholesale products in to the different sub niches of wholesale clothing in order for your customers to easily look for the kinds of clothes they want to buy. Plus, if you have your own dropshippers, then it will be really easy for your business to grow.

Once you started with this, there will be no stopping to it. General wholesale business is not as easy as it looks but if you know your way in your business and follow helpful tips, surely your business will progress in no time.

Commercial General Liability Insurance – How to Get the Right Coverage

Commercial general liability coverage is a complex subject depending on the business to which it applies. Examples would be a small retail store that requires third party liability to cover a slip and fall type exposure only or right up to a large manufacturing firm that requires a wider range of liability coverage to cover its completed products and operations.

Any situation where a person attending at or using a service provided by the business or purchasing a product from the business can claim that the product, service or advise caused them financial or physical injury or harm. A single claim can literally wipe out years of hard work building up a business. Even if you have done absolutely nothing wrong and your product has worked exactly has it was supposed to, the cost of defending an action against your business can run into the tens of thousands of dollars. It only makes sense to make sure that you are protecting the business that you work hard daily to build. Despite this many small businesses are operating without any commercial general liability coverage and many are doing so because they are under the mistaken impression that the cost of the insurance is too high to warrant paying it. Having seen first hand the consequences of not carrying proper coverage I would not recommend that to anyone.

Each business must be assessed as to the exposures that their particular industry presents. Your broker must take into consideration your operations, your product, the source of your materials or products if obtained from a different supplier, where that supplier is located, whether you have alternative suppliers or do you depend on a single outlet, whether you manufacture your product of wholesale it only. Do you repackage the product and sell under your label or do you retail under someone else’s label. Where do you sell your product or service and what is the amount of gross sales in each area. How many employees do you have and do they need to be added as additional named insured. Do you own the building where the business is located or are you a tenant renting the location. Do you offer a warranty on your product or are there warranties offered by the original supplier.

Each individual industry has it’s own inherent liability exposures and your broker must address all of them in order to place the proper coverage. Endorsements such as completed products and operations, limits for equipment, stock and electronic data equipment, boiler and machinery coverage, installation floater, employee benefit liability and non-owned auto liability coverage are but a few of the coverage’s that need to be considered.

Certain industries also need to look at Professional Liability coverage. This is often referred to as Errors and Omissions Insurance. Many service oriented businesses such as hairdressers and beauty salons, home inspectors, general insurance brokers and other professional service providers require this type of coverage due to the nature of advise that they render to the clientele.

When you compare premium rates for commercial general liability insurance it is important to make sure that you are comparing the coverage provided by each policy and that the coverage being provided is appropriate for your business.

Yours truly,

Kenneth R Greig CFP. CAIB. RIBO.

10 Qualities of Successful General Managers

General managers play an important role within an organization. Whereas a manager is typically responsible for one department, the general manager typically leads the strategic planning and direction of a company. It’s a critical role and one that requires a person with exceptional qualities. Here are ten of the qualities that all successful general managers share:

1. Optimism: A positive attitude is infectious in the same way that negativity can be contagious. Approaching each day, each employee, each challenge, and each project with optimism communicates a sense of confidence and dependability. Genuine optimism boosts morale and naturally leads to happier employees, increased productivity, lower turnover rates, a better product, and more satisfied customers.

2. Creativity: It is the indefinable quality of successful general managers and the spark that ignites their employees to do great things. Approaching business challenges in new and creative ways can lead to unimagined results that propel the company forward.

3. Conflict-resolution skills: As important as it is for general managers to be seen as part of the team, employees also look to them to resolve disputes quickly and fairly. An effective general manager can spot conflicts before they get out of hand and have the ability to resolve unforeseen conflicts as they arise.

4. Curiosity: Having a natural curiosity is another important quality of successful general managers. In addition to acquiring as much knowledge as possible about their industry and products/services, they ask their employees a lot of questions to see what makes them tick and how they can be better managers.

5. Action-oriented: Successful general managers think and react quickly to situations in the workplace. Being flexible and inclusive in decision-making demonstrates a respect for all opinions and decisive action inspires employees to get behind the desired goal.

6. Ability to remain calm: General managers face many different challenges and decisions on a daily basis. One of the fastest ways to lose the confidence and respect of employees is to have a quick temper and to make rash decisions without having all of the facts. Subordinates need to believe their leader has a plan-even in the direst of circumstances.

7. Ability to coach: The most successful general managers are also good coaches. They recognize and reinforce the talents of employees and, at the same time, observe areas of improvement which can be addressed in both informal and formal coaching sessions.

8. Listening skills: The importance of truly listening to employees is often overlooked. Being a good listener means taking the time to give employees their full attention, communicating their understanding of the situation and/or their needs, offering a possible solution, and encouraging continuous feedback.

9. Communication skills: Successful general managers have to wear many hats and effectively communicate with people in all areas of the organization, from their direct subordinates and bosses to front-line employees and clients.

10. Sense of humor: You can’t underestimate the importance of levity in the workplace. A good boss who is able to joke around with employees and generally create a fun atmosphere will help reduce stress, improve morale, and boost productivity.