China can't improve product safety alone

By Guy Montague-Jones

- Last updated on GMT

Related tags: Product safety, Regulation, China

Companies outsourcing to China need to go well beyond price and
delivery terms to ensure that their products are not toxic, warned
the Investor Environmental Health Network (IEHN) as trade talks
between the US and China kicked off in Beijing.

Product safety is high on the agenda after scares such as the discovery of dangerous counterfeit toothpaste and toys around the world raised concerns about imports from China among consumers and policy makers alike. The question of product safety has already been brought to the table at the US-China trade talks this week with the two countries promising to work more closely together on the issue. China also promised to strictly supervise those businesses that have been found to produce tainted products with the results of regular safety checks being passed on to the US authorities. As the two countries fought out trade agreements, the IEHN gathered several high profile speakers for a series of interviews tackling the question of product safety. The webcasts warned that US-China trade agreements on product safety will not be sufficient to stem the tide of toxic goods from China. While the focus of the interviews was on Chinese product safety, the IEHN also criticized US regulatory standards and raised the alarm on the use of chemicals in cosmetics that are banned in Europe. The role of US companies ​ Commentators said the speed of economic growth in China coupled with the absence of established legal structures casts doubt on the government's ability to guarantee the safety of products that leave its multi-layered supply chain. "Getting adequate regulatory systems in China will take years, especially at the furthest reaches of the many-layers-deep Chinese supply chain,"​ said IEHN director Richard Liroff. The IEHN, which advises investors on reducing portfolio risk related to toxic chemicals, said US companies must develop close partnerships with Chinese suppliers to avoid product safety scares. The organization advised companies to play an active role in China and invest in training and technical support for their trading partners. Mislabeling of bulk chemicals is common in China, with a fast changing and many layered supply chain making it difficult for the government to clamp down on product scares overnight, said Melissa Brown, the director of the Association for Sustainable and Responsible Investment in Asia (ASRiA). "It took two decades for the United States to develop its current regulatory system, and even in the best case it will take years if not decades for China to establish an adequate regulatory system to control the issues of product safety deep within the multilayered supply chains of China,"​ said Brown, who has worked for 20 years on equity and supply chain issues in Asia. She said the real solution lies in developing closer partnerships with suppliers in China otherwise there is a risk of pushing the reality of unsafe products underground. Boston Common Asset Management spokesperson Lauren Compere said companies with toxicity issues in China rarely tackle the problem and instead let other companies farther down the supply chain, where there is less scrutiny and regulation, pick up the dirty work. Picking the example of a business which moved from battery production, to cell phones and then hybrid cares in the space of five years, she said businesses tend to outsource the dirty work as they grow. The example also gives an indication of the speed of business development in China and the challenge facing authorities seeking to keep up with the change, added Compere. Product safety standards in the US ​ The issue of Chinese product safety has hit the cosmetics industry in particular this year with the counterfeit Colgate toothpaste scare making headlines around the world. Stacy Malkan, author of 'Not Just a Pretty Face: The Ugly Side of the Beauty Industry', said toxic products are also manufactured in the US where the regulatory system is too weak and lacks investment and firepower. "The US laws on chemicals are some of the weakest in the world,"​ said Malkan. "So we find double standard examples all over the pace, products that are banned in other countries but sold in the US." ​ The author said the EU has banned a number of chemicals for use in cosmetics that remain on the market in the US, most notably certain phthalates.

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