Earlier this week, I got a few questions from a European importer who has positioned his brand as “socially and environmentally responsible”.

They asked me how they could make sure their productions are done in conditions they would approve of, and how to check the factories use the right types of materials. Ideally, they would like to know everything about their supply chain.

Traceability of materials and processes

If a buyer wants to discover and control his whole supply chain, it will always be difficult in China. First, let’s say he wants to know the factory that takes care of final assembly. This is not as obvious as it sounds. Suppliers are not producers, and many producers sub-contract the manufacturing in the purchasers’ back.

Let’s also say he wants to know the material suppliers, the dying house, the printer, the accessories suppliers… (see the illustration on this page). That will be a lot of work. A Chinese manufacturer will not disclose the names of its sub-suppliers easily.

Why? Because they want to be able to switch from one to the other (let’s say, to save on price, or because of personal connections) without the buyer’s authorization. Transparency is not in the manufacturer’s interest.

It is POSSIBLE to identify and qualify all these different companies, but it will be a lot of upfront investment in research and auditing. And, if your volumes are small, the suppliers will not accept all your demands gladly.

Social compliance

This one is maybe an ever tougher nut to crack, if the importer’s demands are not realistic. A poorly-designed monitoring policy will have undesirable perverse effects.

In China, less than 1% of factories respect the labor law fully. The most common violation is to work over 40 hours a week. You can try to select factories that are not in severe non-compliance, but you will have a hard time finding one that is 100% in compliance!