Another boring kinda sorta doing business in China post....


American companies buy lots of things from overseas.   Wine, dogfood, your girlfriends’ underwear, etc.  And a lot of that stuff comes from places most of us will never visit.   Places like Bangladesh, India, and of course China.

As these global supply chains become longer and longer, accidents occur.   People die.  Companies, in particular American companies, receive lots of bad press.  They look bad.  Very bad.  And as such the “Compliance Industry” has taken off.   

Nearly every big American company has a group of people dedicated to this dark art.   One would think they are the modern day Masters of the Universe.   They have the tough job of insuring a supplier or group of suppliers are adhering to the self imposed standards of the company buying all that product from overseas.

I deal with these folks everyday.    And it’s briefly what I want to talk about.

Every firm is different.  Every one.   They all have a different focus.

Some want to know about “labor practices”.

Others about “environmental practices”.

It’s a quietly understood game, between customer and supplier.

And it is soundly within the favor of the supplier.

As a quality control specialist feels he is isn’t doing his job unless he “fails” something, a global compliance analyst feels he or she isn’t doing their job unless they “raise” a red flag about something.

Only a few weeks ago, just as I was nearing completion of an annual quality certification with a supplier, one of their personnel suddenly asked out of the clear blue if my supplier had a pest control certification.  I reached out to my supplier, the one actually doing the work.   They said “No we don’t and this is the reason why”.    I felt that was a fair reason and I passed it on to the customer.

The customer then came back and said to the effect, “all suppliers are required to have this cert, otherwise you will not be able to remain a qualified supplier”.

My response was simple;

“Could I get a copy of your cert?  I’d like to base our cert off of yours.”.

Silence.

I knew damn well this customer itself had no such certification, yet had the gall to ask me for mine.    

I also knew I had the advantage.

What’s the customer gonna do?  Cancel the contract?  And then what?  Buy it from somebody else in China?   Somebody they don’t know?  How long would it take to find a supplier for this product, let alone start over from scratch certifying said new supplier?   You got time for that before your shelves run bare?  Didn’t fucking think so.

Kinda putting your job at risk, aren’t you? 

You see, these global compliance initiatives that many companies take are mainly fraudulent in one very key aspect:

The companies almost NEVER allow their staff to travel and visit the supply base.  These customers care so much about “compliance to our internal and governmental and legal standards oh wait we’re too fucking cheap to actually send our staff over to China or Nepal or wherever to actually look at the suppliers we are demanding so much of…..yeah!!!!!”

 You don’t think the companies being audited don’t know that? 

A day passes.  Silence.  The company obviously doesn’t have the certification themselves they are requesting from the supplier.   I can tell their internally trying to come up with an answer to my question, without looking bad.

If I’d simply told them “the supplier would need 3 months to get certified for pest control”, or something like that, my customer would have come back and said something like,

“Ok, we’ll put you on probation for 3 months until you get certified for that.”

Problem is we didn’t want to be on probation. So I simply went back to my supplier and told him to create a new policy document for pest control.  Then I went to sleep.   When I woke up I had the policy in my inbox.    Kinda silly to create a policy overnight isn’t it? 

I sent the new policy to the customer.   The supplier also forwarded accompanying pix, which I deliberately held back from the customer.  

Customer face intact, they ignored the fact we’d simply created a policy out of thin air, without a record of enforcement or anything.  All they wanted was a document to cover their ass.  I delivered.  We were approved to continue being a supplier that same day.   

This is how global compliance in a multi billion dollar corporation works folks.  All over the world, every single day.

Just give them the paperwork required.  And rest safe in the fact many of these corporations are simply too cheap to willingly fly their own employees over to eyeball a factory. 

True, many conglomerates have teams of local staff on the ground, conducting audits everyday.   And in the view of the customer, that simply takes away the need for an American to have to go there. They’ll simply take the word of the local auditor they employ. These are one to two day affairs.  Problem is each year a different team of auditors shows up, and alas, a new set of problems occur.  

There is little to any standardization.   

And quite often, the product being bought is so niche oriented, the auditing customer will always find a way to “pass” somebody.  I find it more an exercise in hiding behind paperwork than anything else.    A quiet understanding to “give us something close to what we want” to get through this.

I applaud Wal-mart and all the other large companies investing lots of money in hundreds of auditors, and most of the work is quick, legit and straight forward.   But sometimes that’s not the case.  And sometimes key questions are left unanswered.   Or even asked.

Wood for example.

Did you know that China has banned the logging of many types of wood?   Good for China! 

Not Russia.

Russia, a country with an area three times the size of either China or America, has lots of wood.  Lots and lots and lots of trees.    And the Russians, to fill a demand caused by China’s sudden shortage of wood, are literally mowing down whole forests to meet demand.

And who cares?

Does the final customer care?  Does the final customer even know?  Does the final customer feel any responsibility for this?  People think most American furniture comes from North Carolina.  Well, a lot of it comes from Russia, which is imported into China for final processing.  Then exported overseas.
Do the furniture stores in America care?  Nope.  And if they did know that entire forests are being cut down for Sally and Johnny’s table and desk would they be forced to care? Not at all.

The world’s company’s only care that your China supplier has an anti pest policy in place.   They don’t care how your supplier’s supplier’s supplier destroys the environment thousands of miles away from that China factory.


Comments

  1. it's happen even in Indonesia, but nobody care

    ReplyDelete
  2. Really? No surprise I guess. I think it's alot more common than we wish to believe. This is perhaps why trading companies and the 3rd party testing companies that audit the trading companies are so popular today....it's all about credible denial.

    ReplyDelete

Post a Comment

Popular posts from this blog

The hidden cost to marrying a Chinese girl

KFC in China and who the Hell is Chick fil A?

Logic of the Chinese "gold digger"