I can't feign ignorance any longer - I just finished The China Price - The True Cost of Chinese Competitive Advantage by Alexandra Harney and while my eyes might have been wide shut before, they aren't anymore. I am constantly telling anyone that will listen that you can't buy an $8 shirt and feel good about it or that the cost of RTA furniture has gotten so ridiculously low that it has no chance of having a real useful lifespan so that they need to think more about dollars per hour of use and the cost of disposal hassle when purchasing versus the actual cost for real use or the design (or lack thereof.) But Harney has shown the nuances to the China Price that one could never understand without years on the ground and forensic research. I have done buyer factory audits all over the world and thought I knew the lay of the land, but she has really taken her in depth journalism from the broad to the personal and shown...
how intricate the corruption, the desire for advantage and business/economic development, and the government and multinational involvement is in a world that is systematically destroying the environment, the social structure and the lives and livelihood of a generation of Chinese people while ironically undermining the Chinese government, the NGOs, the unions and most importantly the integrity of the multinational retailers and manufacturers that own and operate there. Too many of these Western companies are practicing "plausible deniability" with their required codes of compliance but have no intention of doing anything that raises prices in the end.
Is this going to be the case with LACEY and CARB compliance? Are you going to pass the compliance problem down the chain to the manufacturer and leave them holding the bag and bearing all the costs? If this is the case, I strongly urge you to read this book before you bury your head back in the sand. Let's consider the real cost of compliance at your end...
You tell your suppliers you want certified wood that has low VOCs that meets or exceeds the CARB standards. You require a paperwork trail and as Ms. Harney states in her book, "companies will be rewarded that in fact are not the best in price or quality but are the best in corruption." Those that can be sure to meet your compliance paperwork trail day in and day out - green and yellow factories. After getting the work though and complying with all your paper trail, they have to stay in business, so "the Chinese manufacturer raises profit margins by gradually lowering the quality of the materials without telling customers."
For example, let's take a simple bookcase. You insisted on certified wood and although they may have a harder time getting around this issue unless they are really corrupt, they could easily try a lower grade of particle board or MDF without your knowledge (after all veneer or laminate covers the outside, you may never see the board itself) - but the lower grade wood makes the shelves weaker and more flexible with a bow of 3mm originally to up to 1" now when fully loaded with books. You don't know until there are all sorts of returns from your customers or worse liability issues due to injuries. The real price of your low China cost might be a recall or a product safety scare. If this is a CARB non-compliance - it could be Mattel all over again.
Another example is what the industry calls the "golden sample," a sample that is made just for your approval or for testing. Afterwards hardware, brackets, hinges, edge band, resins, veneers and anything that they can substitute is "value-engineered" into lighter duty and lower cost items for the full production run. Very little of these substitute items are ever tested or disclosed. Imagine it this way - you are buying from Furniture manufacturer X who is contracting from Chinese factory A. Chinese A makes the original sample and gives US X the price they ask for to get your business and then they figure out how to make it profitable for their factory when you give US X the purchase order. US X does not have vertical investment control of Chinese A to stop them from doing whatever it takes to be profitable. The US Xs of the world sometimes do not even catch onto the bait and switch until something fails in the marketplace unless they have both design and quality control staff trained to look for just these kinds of things each and every day at each and every factory.
In Wal-mart's own 2006 Report on Ethical Sourcing (the 2007 report should be out this month), they stated that only 5.4% of Wal-mart factories worldwide were good enough to earn a green rating. A green rating is not even a factory with no violations, it means they have only minor violations, but are not a risk factory. If Wal-mart with all their inspectors and an entire division in China devoted to inspections and educating non-performing factories has trouble raising this percentage, what is going to happen with those of you importing furniture directly with factories uninformed on all the confusing Lacey and CARB regulations? Do you have quality control staff to monitor and check both the compliance and material integrity? Does your staff even know enough about furniture, hardware and materials to spot the differences? Those in the US companies are struggling to understand how to comply and QC, especially when not all the regulations have been announced yet. Go into China and import for yourself and you might just find yourself in the middle of the China Syndrome with the cost of failure to educate being significant product liability and not just non-compliance. Are you prepared for the educational needs and quality control that will be required of you?
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