What if your supplier has to close due China’s Ministry of Environmental Protection (MEP) cracking down on polluters?

September 13th, 2017

“More than half of China’s population doesn’t have access to safe drinking water. “

Inspections by the Chinese Ministry of Environmental Protection (MEP) already caused thousands of factories in China to be shut down. The MEP is strictly enforcing pollution regulations as it strives to meet targets on air quality and reduction of contamination of water and soil. The first wave of inspection hit factories in Shandong, Zhejiang, Jilin as well as Chongqing and Chengdu. The audits for factories in the Guangdong province seemed to be scheduled starting from October 2017. The policy itself is not new, the enforcement is. How to check if your supplier is at risk?

Check if your supplier is at risk

The good news is that it doesn’t require a new skill set to figure out if your supplier might be at risk as well. You just need to start asking the right questions and have an opinion about the quality of the answers that you will get, in most cases the answers that you don’t get. It does require determination and the courage to cut ties and find new and better suppliers.

“Almost two-thirds of China’s rural population use water contaminated by human and industrial waste.”

Our factories have BSCI, or any other social audit, so what is this all about?

That is a good point. The key is to ask questions that go one level deeper than: “Do you comply with REACH, or RoHS, or do you have CE?” The answer to those kinds of questions is always a positive yes! You need to ask questions that verify if there is any evidence supporting these positive statements.

For example a factory has or says it has a BSCI or other social compliance approval. This means that they will take care of the safety of their employees, among many other aspects. So now you are going to ask questions about the compliance of the product(s) that you want to buy from them. For example you ask for an (M)SDS or Bill of Substances of the glue or paint that they use in the production of the product; and this question remains unanswered. So how can you take care of the safety of your employees if you don’t know anything about the substances that they use …..

Another example. A factory indicates that they also supply to various famous brands and that they have no problem to comply with their requirements. You ask for a copy of the latest audit report but this remains unanswered …

One more. You ask the factory for an overview of the calibration status of the test equipment that they use during production. I know, no answer. This in fact is the easiest question that a factory can get. If you don’t get an answer you might not be talking to the factory or your trading agent has to step up its efforts. Your responsibilities are changing, can they grow with you?

There are various other questions that you can ask for example when was the last time they have been inspected by the MEP themselves? Or when was the last time they audited their key suppliers. Do you have a copy of their business license? In what name is it? Is this the same company that confirms the order ? That you are paying?

“In 2015, the Chinese Ministry of Environmental Protection issued a report that said two-thirds of groundwater and one-third of surface water was unsafe for human contact.”

Look at the future 

Asking these and other questions via ProductIP is both cost and time efficient and enables buying teams to compare the performance of suppliers so that they can focus on where the first actions need to take place. As it is unlikely that you can influence the way the MEP is operating this will impact your business. If your business is currently based on products with a price tag that is actually too good to be true it might be difficult to find an alternative as these alternatives are in the same risk pool. It’s probably time to take your business to another level. Implementing ProductIP as part of the new standard operating procedure does help. Let us know if you are ready for that step!

Regards,

Caspar ter Horst

co-founder ProductIP

+31 681913315 / caspar@productip.com