CHINA ESQUIRE

Rich Brubaker at All Roads Lead to China made an interesting post yesterday that I think deserves some comment, especially in light of my stance towards a buyer’s responsibility and the new criminal liability cases that have been filed against companies dealing with China imported products.

He writes (emphasis added):

Last summer, then Lead pain Barbie and Toxic Tommy the Tank were all the rage, and popular media was focused on the role of governments in trade, I was hammering away at fact that the ultimate responsibility for assuring quality rests solely with companies. sure, government agencies, standards, and advocacy groups play a role, but this summer highlighted that what was really missing from the equation was good old fashioned common sense quality control and assurance leadership.

Now.. I want to take this a bit further, and highlight the fact that through all of this, there is probably no more important person in this equation that the buyer. typically the person that identifies potential suppliers, the person responsible for developing the RFQ, responsible for developing the assessment framework for the program, and the person whose opinion/ expertise will provide the greatest amount of weight when CEOs/ Directors make final decisions, the buyer role carries a huge amount of responsibility.. and it is here that I am afraid that we are a bit lost… and it is here that I think the greatest room for change can occur.

and when I see that firms like Disney are still.. STILL … having labor problems that are really elementary in China, I get pretty burned because they are having problems for no good reason other than trying to “save” money… but more than Disney, or McDonald’s who is again.. AGAIN.. in trouble for failing to pay their staff properly, we are starting to see that the failures that occur at the supplier level could have been prevented if the buyer had invested more fully into the system that they are seeking to exploit.

One of the most interesting cases that I can point you towards is the just released Nike study of their own suppliers where readers are given what I think is the best window into the problems.. and some of the solutions.

Unforuntaltely, in the world of textile, take denim for example, you will have a buyer send out a RFP with samples to 30 potential suppliers. there is little or no ownership in the process, and essentially a reverse auction process begins where bidders will win if the have the best lead times… and more importantly the best pricing. It is a process that many in the industry is known to create/ promote poor working conditions at poor pay.

Where buyers are important in this picture is that they hold all the cards. Prior to closing a deal, it is their inspection of a factory that provides the basis for future RFQs, and were they to begin considering the social aspects of the process, perhaps factories would be forced into cleaning up. When problems do arise, it is also the buyer (not the social auditor) who would have the most power in addressing the problems constructively.

I have no doubts that buyers are in the best position to ferret out and deal with problematic factories, quality fade, unsafe products, etc. No one else is going to take the blame for the buyer/importer who actually brings this stuff into the U.S. and other foreign nations. Sure, there is always a Chinese factory to blame. But guess who is in the best position to do QC and due diligence? The buyer. This was something that Rich stated in his first paragraph, which I had to emphasize. If you cannot do your own diligence and QC, then hire an able third party consultant who can!

Unfortunately, it isn’t just common sense that will enforce these ideas. It is the lawsuits. If you happen to import something deadly, expect it. Plaintiff’s lawyers love these headlines because it means there will be a payday for some of them. (disclosure: I once summered for a nationally prominent plaintiff’s side lawfirm) But even worse, we now have 2 cases where criminal liability ( pet food and toothpaste) was charged against companies importing dangerous products.

This means that you as the buyer/importer have the responsibility whether you like it or not. I wish I could say otherwise, but that’s the reality of the situation.

Whereas Rich is saying that common sense means you need to be careful about your business, I am saying that it is both common sense and liability for civil and criminal lawsuits that should make you careful about your business.

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