Chinese Exporters Making Right Move To Shed "Made In China" Taint

China manufacturing

Excellent article in today’s Christian Science Monitor, entitled, Chinese exporters seek to shed taint: To keep their catfish in US markets, some of China’s top producers seek independent ratings. Article highlights a group of Chinese catfish farmers getting together to arrange to use SGS Group, a very well known and highly regarded Swiss inspection, verification, testing and certification company, to test and certify their catfish.

Mr. Ford asked my opinion on it and I said I thought it to be very smart:

This branding exercise “makes complete sense,” says Dan Harris, an attorney with Harris Bricken who advises small and medium companies doing business with China. “It is very smart. They are recognizing the reality.”

Mr. Ford’s interview with me actually came only a few hours after a long discussion I had with a large seafood importing client who had sat in on a US FDA initiated telephone announcement regarding its new rules requiring FDA plans to test of 100% of all catfish, shrimp, eel, basa, and dace from China.

My fish importing client sees these new rules as unfair and blatantly political and believes these rules will multiply until, as he puts it, “China starts buying airplanes only from Airbus.” My client also insists (and I have known this client long enough to believe him) that the processing plants his company uses to process its fish in China “are at least the equal of fish processing plants anywhere in the world.”

At an FDA initiated industry teleconference mapping out the new seafood restrictions, the FDA stated that if a Chinese company has a long record of shipping product to the United States without incident and if it can get its product certified as safe in China by a reputable third party testing agency, it would be exempt from 100% testing of its product upon arrival in the United States. Someone at that conference then asked the FDA to provide names of qualified testing agencies in China and the FDA admitted it knew of none.

I would guess SGS will qualify under the FDA’s “standards” for third party testers and, as this article makes clear, it will be better for these Chinese catfish companies to sell product at lower profit margins than not to sell it at all. I suspect other Chinese fish producers will follow the lead of this group of Catfish producers. It also would not surprise me to see individual Chinese companies in various industries start using third party/third country certification companies so as a marketing tactic.

My advice to foreign companies involved in securing product from Chinese companies with third party certifications is to make very sure their certifications are completely legitimate and not themselves a fake. I say this because our China lawyers often are provided fake certifications when they are conducting due diligence on Chinese companies.

8 responses to “Chinese Exporters Making Right Move To Shed "Made In China" Taint”

  1. China currently has offices of a number of the foreign vessel classification societies such as American Bureau of Shipping, Det Norske Veritas, Bureau Veritas, Lloyd’s Register, et al., who also perform (either through themselves or their “for-profit” affiliated but separate and independent entities, inasmuch as certain vessel class societies are non-profits) rigorous testing and certification for non-marine items. These societies are extremely active in China, and their reputations are generally stellar. You can see their plaques displayed in various emporiums in China, next to the goods which they have certified, such as plumbing, bathroom and kitchen fixtures just to name a few. Their services should be explored by Chinese exporters to a much greater extent, as their certifications carry much weight.

  2. I’m more skeptical about this certification thing. As much as reputable third party certification and inspection companies may increase the credibility of the plaques hanging up there, they only speak for the certified company’s capability to meet standards, not the actual quality of their products. Chinese are masters of pulling together a great show for inspectors. Yet once the inspectors leave, strong cost-cutting incentives would lead to compromises in the quality of actual products.
    I sense there’re simply not enough entrepreneurs in China who aim at building a lasting brand. Most are in for maximized short-turn returns that’ll be enough to keep themselves, and maybe their immediate heir rich. Even the current shift to hightened focus on branding is not about branding itself. The trend is forced by a difficult marketing position and there’s little real long term thinking in it. It’s all about keeping profits, now.
    You’d say, all businesses are just about profits. That’s right. But an eclusive focus on raking in profits NOW makes producers brazen cheaters.

  3. Dan you make a good point about checking the validity of the test certificates. We had a case out of India where we required an SGS certificate for some iron ore from the seller. We received it OK, and went back to verify the details with the local SGS office. The certificate was authentic, but the party arranging the inspection was not the owner of the goods.
    Also, as is pointed out above, testing is not a one-time thing and needs regular reviews.

  4. “My advice though to foreign companies involved in securing product from Chinese companies with third party certifications is to make very sure that the certifications are completely legitimate and not themselves a fake.”
    China (as well as other “developing” countries) have full blown industries that create fake certifications. Everything from ISO to MSCE to Cisco. All shiny stamps and holographic ink included.
    Dan, as for your client and his “anti-protectionist” rant about FDA inspections, I suppose your client doesn’t care how many people are poisoned by the product he pitches. Let him know this American inquires about the source of his food at the grocery story, the department store and at the restaurant. Made in China = no purchase.

  5. Handan —
    I certainly agree that too many Chinese companies are looking to short term profits, but many foreign companies working with the Chinese companies are doing exactly the same thing. If the standards set relate to quality, then the certifications also relate to quality. What I am talking more about though are companies that literally test product and then certify them. For example, Surefish is very well known in the fish business. They test product. Now, I am guessing they don’t test every single fillet in a container, but they know enough of what they are doing so they can test a statistically valid sample.

  6. Jeremy Gordon —
    Well that’s another question and one we are constantly having to deal with for our clients, particularly on real estate purchases, and not just in China.

  7. Anon —
    Your comment is nonsensical. My client is actually hugely concerned about the quality of the product they get and that is why they spend so much on their quality monitoring. He is just smart enough to realize that even if 25% of Chinese fish product is bad (and I am completely making this number up), there is still 75% that is not.

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