What European Importers

Need to Know about

Compliance: Q&A With an
Expert
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Fredrik Gronkvist is a co-founder of Chinaimportal, a company that helps small

businesses import from China through supplier identification & verification services.
A part of Fredriks offer is to help importers understand what regulations and standards
they need to comply with. in this Q&A he is sharing his experience about the European
Unions requirements.

Q: Importers who buy products from China

want to be in compliance. What does this
involve?
A Compliant product adheres to all applicable, mandatory, and safety standards,
regulations, substance restrictions, and labelling requirements. This is a very broad
topic, but from a buyer perspective, ensuring compliance involves the following:
1. Confirm applicable product safety standards and substance regulations. These
factors must be considered:

Which standards/directives/regulations apply? In almost every case, there are far

more than one regulation to consider especially for companies trading in
multiple markets.

Is testing mandatory?

What documentation is required? Often, a test report is just an attachment. It is

not the only required document (that is a common misunderstanding).

Are any labelling requirements part of the regulations? (e.g. CE mark, Country of
Origin Labelling, Warning Symbols, or WEEE.)

2. Verify the manufacturers existing track record (i.e. their papertrail) in ensuring
compliance with the applicable, or related, regulations. As you may know, a suppliers
ability to ensure compliance with American and European safety standards shall never
be taken for granted.
3. Communicate all applicable regulations to the manufacturer, and implement a
compliance testing/verification strategy.
4. Develop all graphical labelling files (i.e. country of origin label), user manuals,
and relevant compliance documents (i.e., Circuit Drawings and Risk Analysis).
5. Submit pre-production and/or batch samples for third party compliance testing.
From the suppliers side, the following steps are involved:
1. The engineers must understand the specific technical standards to which a product
must be compliant. For example, LVD and EMC refer to specific IEC standards, to which
a product must comply.
2. The supplier must purchase materials and components from organised
subbcontractors. An electronic component is not RoHS compliant by accident, for
example.

Q: Have there been changes over the past

few years? Are European authorities
getting stricter?
Yes. The EU has, as explained by Compliance and Risks in this article, moved from the
information phase to stricter enforcement. While I dont sit on official statistics, we do
see more and more reports of goods everything from samples to container shipments
being refused entry by the Customs authorities in the EU. Many issues (often very
serious) are discovered only at a later stage, after the products have entered the market.
Attitudes are also changing. Just a few years ago, most procurement managers, even
those working for big retailers, had a very vague idea about what product compliance
involves and what sort of documents they should request from their suppliers (in the
case of a retailer, the suppliers are often importers rather than overseas companies).
Today, these same procurement managers are far better educated on compliancerelated matters. The stakes are too high to ignore that topic. However, Chinese suppliers
have a lot of catchup to do. Importers are stuck between, on the one hand, strict
regulations and the constant threat of recalls and fines, and on the other hand suppliers
in Asia who barely understand the basics or EU and US product compliance.

Q: Where can a European importer find the

information he needs on this topic?
There are plenty of sources online, including official European Union online databases.
However, apart from that there are various company blogs covering compliance topics:

CEmarking.net

ChinaImportal.com/blog

Complianceandrisks.com

Some information is also provided online by the large product testing companies,
including Intertek, SGS, Bureau Veritas and TUV.
Additionally, there are also paid services, for example ProductIP.com.

Q: Are there lessons to learn from some

recent cases of batches that got seized or
recalled?
Yes. Balance scooters. 15,000 units recalled in the United Kingdom during the first week
of December. That recall was made out of a total inspected volume of 17,000 units,
which leaves us at a total non-compliance rate of 88.2%. As I wrote above, there is no
such thing as accidental compliance.
About one week later, Amazon.com pulled almost all models of balance scooters. They
requested all Balance scooter sellers to produce documents proving compliance with
various UL standards. Hence, Amazon has essentially made UL compliance mandatory
for all importers of electronics. All of this happened after numerous reports, from around
the world, of exploding batteries and chargers lit on fire.
These importers ignored product safety by assuming that the suppliers in China had
them covered. They dont. Chinese suppliers are not, and cannot be expected to be,
experts on EU and US product safety standards and compliance requirements. If these
companies had been pragmatic, instead of making assumptions, they would not have
faced this situation to begin with. But I guess that can be said about many things in
business and life.

How Technology Will Support

Quality Control [Infographic]
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A few months ago we showed how the QC inspector job would get easier with the help
of a mobile app.
Today we want to show how the right technology will allow quality control
departments to be better organized and to cut lead times.
image
There are several ways technology helps.

Streamlining the booking process

Most procurement offices exchange emails and phone calls with factories to confirm the
dates of upcoming inspections. Then they update an Excel file and share it (more or
less) among their team.
The most efficient is to link inspections to suppliers in other words, to force them to
book inspections. Thats what all big importers do, from my observations. If your
suppliers are not cooperating, another solution is to pull the data directly from your ERP
(or an IT solution that helps you

Optimizing the allocation of inspectors

What I saw in most quality departments is an Excel file that lists inspections (usually
based on bookings from suppliers, as I wrote above). Inspectors are allocated based on
their location and (usually) on their competencies.
Ideally the QC manager would assign inspectors with a view over their workload
(spreading the work more evenly among the team). He would also ensure inspectors are
rotated this is important to keep all parties careful and on guard.
The solution is to give a clear dashboard that displays this information visually. It would
require several pivot tables in an Excel sheet, so it is seldom done.

Assigning the right checklists and

specifications
A common problem is poor dispatch of information among the team. Design &
engineering changes are common, rendering many files obsolete. Chinese
manufacturers seldom have good document control, hence the need to be very vigilant
on recent changes in specifications.
A good IT system keeps track of changes in documents and ensure only the latest
version is available to everybody. It also standardizes checklists and defect lists based
on product types, for a gain both in efficiency and in reliability.

Communication between field staff and office

staff
In my experience, phone calls to inspectors result in misunderstandings at least 10% of
the time. Using Wechat is an improvement, but the ideal is for the office staff to be able
to see what inspectors are doing in real time to see the photos they have taken, the
comments they have written, etc.

This is possible once inspections are done on a tablet, with real-time synchronization of
data. Add to this a simple messaging system, and inspectors become much easier to
manage from a distance.

What Chinese Factory Managers

Dont Understand
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Have you ever been in front of a Chinese manager who has misconceived notions, yet
wont change his mind? It happens to us all the time.
Here are a few examples of concepts that are foreign to 99%+ of Chinese factories:
Buying expensive automated equipment is very risky. The failure rate (of a big
machine that cant be made to work properly) is much higher than their
manufacturers will admit. For example, setting up an automatic welding machine can be
daunting and can take 6-12 months of trial and error.
The we fix machines when they break approach is fine when processes are
relatively simple. But it can drive a factory out of business. Imagine a CNC machine with
a tool that gets used and makes out-of-specification parts for a few weeks these
parts often have to be sold as scrap (at a steep discount). Then that machine breaks
down and it takes a week to get the replacement part. Multiply this by 20 CMC
machines it can eat up all the margin of the operation!

Tolerating a high staff turnover rate is bad business. Factory owners usually see it as
a fact of life since it is the same all over the industry in this area. But an employee who
leaves costs the company about 3 months of his/her salary in lower quality and
production, hiring costs, and training costs. And there are many ways to keep
employees for longer without paying more.
Most managers also believe that paying operators by the piece is the best way to
motivate them. The problem is, it is very bad for the company as a whole. Quality is
often sacrificed. And everybody wants to over-produce. (I wont mention the folly of
paying QC inspectors by the piece We have seen it in a few factories!)
And of course, they think producing at a higher quality level will cost them more
money. They see this from the wrong angle increasing inspection and testing,
reworking and scrapping more pieces because of the tougher quality standard, etc.
What they are not aware of is the positive impact of improving their processes I am
talking aboutimprovements both in quality and in costs.
We have recently written an e-book about these myths and a few others. We tried to
keep it simple and to the point.