Regulatory Compliance in China: Questions Importers Must Ask!

Regulatory Compliance in China Questions Importers Must Ask

One of my good friends is a compliance officer in the US headquarters of a major international brand. He is responsible for making sure the products his company imports are safe and meet corporate, market and governmental standards.

He is also the go-to-guy in his company when there are problems with quality and safety issues. He asked not to be mentioned by name, but was kind enough to let me share with you the following insider information about regulatory compliance in China.

Readers of my blog typically have two types of concerns when it comes to compliance:

Import/Customs Clearance and Compliance

Import/Customs compliance into US/EU/AUS to make sure they have all the right paperwork and forms filled out. That’s fairly easy to arrange but the next part is harder…

Regulatory Compliance & Safety

While importers may bring in all sorts of different product, from electronics to furniture, they all have concerns about regulatory/safety compliance. The labs are pretty good at saying “you need to test this product in the following ways to ensure the SAMPLE is compliant”, but these buyers are left in the dark when it comes to how to set up a Compliance Program to ensure that if, God forbid, some customer got hurt and the courts asked the importer to explain their compliance system, the importer would be covered. It’s not enough to say “I sent the sample to the lab” because the lawyers will say “that’s just one sample, how did you confirm there was not a change to form, fit, function that could impact safety of the product when production was taking place at the supplier or even sub supplier level?” So these importers need help setting up a comprehensive system that coordinates documentation, sample collection/testing and monitoring of the Chinese factories.

Regarding Import/Customs Clearance and Compliance

Importer should also make sure they get the legal requirements down to the country and even state level, especially in the US there are many state laws. For example, the product could get in to the country legally, but then be found to be illegal in a certain state.

Regarding Regulatory Compliance and Safety

This side of things is much harder since you have to make sure all the products coming off the production line in China are really the same as the approved sample. And most important, that approved sample need to be compliant!

The easiest option, but perhaps the more costly optional, is having a product certified compliant, that assumes an appropriate certification exists! Certification encompasses the product design (usually you need to provide the product specs and design), testing and also periodic audits and reviews. Again, it will cost more if the category is optional and there are many categories that don’t have any certification at all.

Without certification, the way to tackle it is to make sure you have setup a procedure on how and when products are tested and inspected. From the physical testing/ safety side you’ll want products tested on each design, and from chemical side you’ll want a test anytime the material changes and at a minimum once per year.

If you’re using factories where you don’t have full trust or transparency (meaning you can’t be sure about their material), you’ll probably want to have a product tested each production run at least on the chemical side. If you have full control of the material you’ll want to test in coming material and probably randomly select finished product since sometimes the manufacturing process can add restricted chemicals.

You should also look at how samples get to the lab. If the supplier sends the samples rather than having a buyer representative pick them up, then there is risk that the supplier will send a “golden sample” which is sure to past the lab test, but may not represent the quality of the products coming off the assembly line!

Regardless, at the very least, you need a well-documented process of what you do when, and make sure you follow it and keep all papers. God-forbid there is a recall or legal action, if you don’t have a well-written process, you will find it hard if not impossible to win a court case. This needs to be considered part of doing business, if the buyer wants to be in the import-export game!

How about product recalls?

It’s essential to understand the requirement for a recall. If you do get customer complaints about issues with the product, there are requirements with what you need to do especially if anyone gets hurt. So there should be a process in place for a recall, and you need to have good tracking of all products and where they are in the supply chain.

Any other things we should be asking about in terms of compliance?

One other item to consider is social compliance. Making sure the factories are audited and comply. More and more there are also environmental audits requested by major retailers. So you have to worry about that as well.

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