Product Compliance Strategies in Asia: Comparing 4 Different Industries

Source: ChinaImportal

Most manufacturers in China, and other developing Asian countries, are unable to ensure compliance with overseas product safety standards and substance regulations. As such, a supplier’s ‘compliance track record’ (i.e., previously issued certificate and test reports, held by the supplier) is a key signal when selecting a manufacturing partner.
However, in many industries, very few suppliers can provide said documentation, therefore leaving foreign buyers with little information to judge a supplier’s technical capability and expertise. In other industries, the number of suppliers with extensive compliance track records is larger – but still requiring buyers to apply comprehensive testing strategies. In this article, we explain how you can assess manufacturer capabilities and manage compliance strategies in four different industries; Apparel & Textiles, Watches & Jewelry, Electronics and Toys & Children’s Products.

Apparel & Textiles

Importers generally only deal with the apparel manufacturer, on the surface of the supply chain. The apparel manufacturer in turn purchases fabrics and components (i.e., buttons and zippers) from subcontractors. Nothing unusual here. However, most apparel manufacturers are unable to produce any compliance documents whatsoever. Our conclusion is that most test reports are held by buyers, and fabrics suppliers. That said, don’t expect the apparel manufacturer to share information about either their subcontractors, or customers. As a result, the buyer is, as usual, left guessing. The truth is, that many (especially small) apparel manufacturers don’t know if their fabrics suppliers are able to provide compliant produce.
There are of course exceptions, but most apparel manufacturers are unwilling, or unable, to present more than a few test reports. Even in a ‘best case’ scenario, buyers shall not expect that the supplier is able to provide test reports matching the specific standard to which they must ensure compliance.
To us, any substance test report is of value. An apparel manufacturer’s ability to ensure compliance is entirely dependent on the material subcontractors they normally work with. A supplier that is able to ensure compliance with REACH (EU), is therefore quite likely to be able to ensure compliance with California Prop 65 (US). Hence, buyers must be flexible when making a selection. Still, Apparel and textile buyers must be ready to implement a ‘hands on’ compliance strategy, and never assume that manufacturers can provide test reports for their specific SKUs. Because that simply doesn’t exist.

What Apparel & Textiles Buyers Must Know

• Relevant documents: Substance test reports, textiles performance test reports
• What you can tell: The supplier is likely focused on western markets, and purchase fabrics and components from ‘compliant subcontractors’
• Relevant testing standards / directives: REACH, California Proposition 65, OEKO Standard 100, AZO, Formaldehyde, Phthalates (Coated fabrics), Heavy Metals
• Compliance Strategy A: Submit material samples for compliance testing (before and/or after production)
• Compliance Strategy B: Select and verify a fabric supplier that provides materials to the apparel maker
• Risk Level: Low / Medium (Fabrics made for the domestic market may not by default be non-compliant. Heavy Metals, Formaldehyde and other restricted substances are increasingly rare. Hence, a fabric must not be custom made to pass testing).

Watches, Jewelry & Accessories

Watch and Jewelry Manufacturers can, at best, produce a few substance test reports. Most cannot. The dynamics are largely identical to the Apparel and textile industries, and the same substance restrictions apply. Therefore, there is nothing else to add, but the summary below:

What Watch, Jewelry & Accessories Buyers Must Know

• Relevant documents: Substance test reports
• What you can tell: The supplier is likely focused on western markets, and purchase materials and components from ‘compliant subcontractors’
• Relevant testing standards / directives: REACH, California Proposition 65, Heavy Metals, RoHS (Quartz Movements)
• Compliance Strategy: Submit material samples for compliance testing (before and/or after production)
• Risk Level: Medium (Metallic components in Watches and Jewelry may contain excessive levels of nickel and other restricted substances. Compliance is therefore not to be taken for granted, and certainly not when buying from suppliers focused on the domestic market).

Electronics

The situation in the Electronics industry is, on the other hand, very different. Buyers of electronics products are required to ensure compliance with a variety of safety standards and directives. The supply chain as a whole is also far more sophisticated. All large component suppliers make, albeit not exclusively, RoHS compliant parts – and the assembly manufacturers can normally present a rather extensive list of compliance documents. Hence, buyers in the industry have much more to act on, when selecting a supplier.
Still, buyers shall not expect manufacturers to offer catalogs filled with ‘compliant SKUs’, ready to hit the assembly lines. As always, a compliance track record indicates capability and expertise. This is further explained below:
a. A product certificate / test report is only valid for one or more (listed) SKU/s, not all ODM products in a supplier catalog. Most suppliers can only provide documentation for 5 to 20% of their product catalog.
b. Electronics are normally within the scope of two or more standard / directives. It’s very common that a supplier can present compliance documents for one such standard, while being unable to do so for others. For example, it’s very common to find products, compliant with the EU EMC (Electromagnetic Compatibility) Directive, while lacking compliance documents for RoHS and LVD (Low Voltage Directive).
c. If any components or subsystems are changed, previously issued documents are invalid.
Even when dealing with ‘high end’ manufacturers, buyers therefore find themselves in one of the following situations:

1. The SKU is not compliant with any applicable product standards / directives
2. The SKU is partly, but not fully, compliant with all applicable product standards / directives
3. The SKU is fully compliant. However, design and component changes make previously issued compliance documents irrelevant.

What Electronics Buyers Must Know

• Relevant documents: Product certificates, test reports and technical documentation
• What you can tell: The supplier is likely focused on western markets, and purchase electrical components (i.e., ICs and subsystems) from ‘compliant subcontractors’. They also have ‘in house expertise’ to assemble products in compliance with overseas standards and regulations.
• Relevant testing standards / directives: Low Voltage Directive, EMC Directive, R&TTE Directive, RoHS, FCC Part 15, UL Standards
• Compliance Strategy A: Limit product selection to SKUs with a complete set of compliance documents
• Compliance Strategy B: Submit final pre-production prototypes to a third party for compliance testing and certification.
• Risk Level: Very High (An electronics product that is not designed and assembled specifically in compliance with applicable directives and standards is very unlikely to pass compliance testing. EU buyers must also ensure that their product is made using RoHS compliant components).

Toys & Children’s Products

Toys & Children’s Products are, for obvious reasons, strictly regulated in most major markets. American buyers, in all states, must ensure compliance with CPSIA, while EU buyers must ensure that their imported items are EN 71 compliant. These are framework regulations, which scope includes the following:

1. Substances (i.e., restrictions on heavy metals and phthalates)
2. Mechanical Properties (i.e., buttons, drawstrings and seams)
3. Certification Procedures (i.e., CPSIA Children’s Product Certificate)
4. Batch Testing Requirements and Exceptions
5. Labelling Requirements

To ensure CPSIA compliance, American importers are generally required to issue a certificate using their domestic, US, company name – and provide test reports valid for the imported batch. Hence, ‘ready made CPSIA compliant’ products are non-existent, and buyers must look for other signals when selecting a manufacturer.

What Toys & Children’s Product Buyers Must Know

• Relevant documents: Substance test reports, Physical property test reports
  What you can tell: The supplier is likely focused on Western markets, and purchase components from ‘compliant subcontractors’. They also have ‘in house expertise’ to ensure compliance with regulations and standards concerning physical properties of Toys and Children’s Products.
  Relevant testing standards / directives : ASTM F963, EN 71, REACH, California Proposition 65, Phthalates, Formaldehyde, Heavy Metals
  Compliance Strategy: Submit final pre-production prototypes to a third party for compliance testing and certification.
• Risk Level: High (A product that is not made specifically in accordance to the requirements set by, for example, CPSIA or EN 71 cannot pass testing.)

Conclusion

Regardless of industry, American and European buyers are forced to work ‘hands on’ with compliance and certification procedures. Relying on the supplier to do the work for you is not realistic. There are no shortcuts, and it will take many years, if not decades, before Chinese, and other Asian, manufacturers are able to implement procedures ensuring a more seamless experience for overseas buyers.

No.636 Jln BPJ 3A/18 

Bandar Puteri Jaya

08000 Sg Petani Kedah

Tel: +60126694217

Email: alveolegame@gmail.com

Importing Watches from China – A Complete Guide

Source: ChinaImportal

In this guide we explain what you must know about importing watches from China. Keep reading, and learn how your Startup or Small Business can develop custom designed and private label wristwatches. Also learn about customization options, tooling costs, regulations and quality assurance.

Product Specifications

Watch Case

The biggest price factor is the watch case material. You have two options: Stainless steel or Zinc alloy. The latter is only used in low quality watches, retailing for less than $50. Watches sold for above that price are almost always made of Stainless Steel, if exclude other less common watch case materials, such as plastic and silicon.
As for the case design, you also have two options, as explained below:

• ODM = An existing watch case design, based on a ‘ready made’ mold.
• OEM = A custom designed watch case, requiring the supplier to open a new mold.

Most Watch manufacturers can provide an extensive list of existing ODM products, which can also be modified (i.e., custom logo, back case engraving, custom designed hands and crown). However, if you intend to have an entirely new case design made, you need to provide one, or more, of the following:

• CAD file
• 2D design file (ISO or ANSI standard)
• Physical prototype (i.e., 3D printed replica)

Movement

The movement is the essential component in a watch. Most Chinese manufacturers offer both low cost Chinese made movements, and the more common, Citizen Miyota movements. Some Watch brands prefer other movements, for example Ronda movements. However, it tends to be quite hard to find suppliers that can provide such high end movements, thereby forcing the buyer to arranging the movement purchase from the maker itself. That being said, most movement makers have representative offices in Hong Kong or in Mainland China.
Buyers based in the European Union must also ensure compliance withRoHS (Restriction of Hazardous Substances Directive), which restricts heavy metals in electrical components. Quartz movements are electrical components, hence covered by the RoHS scope. Most brand name movements, including Citizen Miyota movements, which are RoHS compliant, thereby making it easier to ensure compliance. I am, however, not aware of the same applies to low cost movements, from smaller manufacturers.

Design Customization Options

When importing watches from China, OEM refers to custom designed watch cases. ODM, on the other hand, refers to factory standard watch cases (i.e., cases for which a mold is already made). In addition the watch case, there are various design elements and components, that can be customized:

Clock face

• Plating
• Logo
• Indexing
• Print
• Hands

Glass

• Sapphire
• Mineral

Other

• Back plate engraving
• Crown
• Wristband
• IPX Standard (i.e., 10 ATM)

However, customized components require additional tooling (i.e., injection molds), which are without exception paid for by the buyer.

Straps

Most watch suppliers don’t manufacture straps ‘in house’, but purchase wristbands from specialized subcontractors. The Minimum Order Quantity (MOQ) requirement (50 to 200 pcs) for straps tend to be lower than the Watch MOQ, when buying factory standard straps. However, custom designed (OEM) straps results in a higher MOQ, often set at 500 to 1000 pcs. If you intend to purchase OEM wristbands, you need to prepare the following to the supplier:

• Bill of Materials (Component list, material specifications)
• Design drawings
• Dimensions and size table

Product Packaging

Product packaging is also subcontracted to specialized packaging suppliers. Not manufactured by the Watch supplier. ODM packaging, i.e., a standard gift box with the buyer logo, tends to be offered with a lower MOQ (500 – 1000 pcs per design) while OEM packaging requires the buyer to purchase 2000 to 3000 pcs per design. The Watch manufacturer can mostly offer a number of standard ODM designs for the buyer to select, thereby reducing the need for OEM packaging.

Tooling Costs & Prices

The tooling cost is based on the number of custom designed components. Every custom designed component, be it the watch case or the hands, require new tooling, which is, with very few exceptions, paid for by the importer. Below follows a few reference prices:

• Watch Case Mold: $200 – $300
• Crown Mold: $120 – $200
• Custom Hands: $80 – $150
• Custom Clock Face: $40 – $100
• Custom Back Plate Engraving: $20 – $40

The tooling cost for OEM watches is, in relative terms, very low. However, the tooling production time must also be factored into the cost calculation. The waiting time for new tooling can be up to 45 days, and that’s only for the first batch. When considering the, very likely, revisions, the total prototype development time can easily run up to 2 to 3 months.
However, customization has a small impact on the unit cost, which largely depend on the materials and components, rather than specific design elements:

• Stainless Steel Case w. Ronda Movement: $19 – $24
• Stainless Steel Case w. Miyota Movement: $16 – $22
• Stainless Steel Case w. Noname Movement: $14 – $20
• Zinc Alloy Case w. Miyota Movement: $6 – $8
• Zinc Alloy Case w. Noname Movement: $4 – $5

There’s no right or wrong when selecting materials and components. However, most Watch manufacturers consider it unwise, and rightly so, to combine a Stainless steel case with a low cost movement – or even vice versa. Zinc alloy watches rarely retail for more than $50, while a Stainless Steel watch, costing just a few dollars more, can retail for $200 to $300. Hence, a small investment in quality can vastly improve your profit margins. That being said, in the end, it’s all about the price segment your company wants to target.

Prototype Development

The role of the watch supplier is to purchase and assemble components, not to assist with design. It’s your job to ask ‘the right questions’, concerning the suppliers’ production capabilities and customization options, and to provide the information required by the supplier to produce an OEM or ODM sample:

	ODM	OEM
Watch Case	1. ODM SKU 2. Photocopies	One (or more) of the following:1. CAD file 2. 2D Design Draft (ANSI or ISO) 3. 3D Printed Design / Reference Sample
Clock Face	1. Indexing 2. Plating 3. Logo file (.ai)	1. Indexing 2. Plating 3. Logo file (.ai)
Back Plate	Engraving Logo File (.ai)	Engraving Logo File (.ai)
Strap	1. ODM SKU 2. Photocopy	1. Bill of Materials 2. Design Draft (ANSI or ISO)
Crown	n/a (standard crown on selected SKU)	CAD file
Hands	Select from cataloge	Design file (.ai)

As in every industry, it’s critical that you provide the supplier with clear, and consistent, product specifications and files. Don’t assume that the supplier will spot errors, fill unspecified gaps or report conflicting information. Vague information on the product specification can result in misunderstandings, and thereby cause severe quality issues later in the process.
Lead times are, as mentioned, another critical factor to consider whether to custom design the watch case and other components. Below follows a basic lead time comparison:

(Days)	ODM	OEM
Tooling	0	30 – 45*
Sample	10 – 15	10 – 15
Production	25 – 45	25 – 45
Total	35 – 60	65 – 105*

*Excluding additional mold revisions.
Notice that the listed lead times don’t take price research, additional sample revisions, contract negotiation, lab testing, quality control and shipping into consideration.

Applicable Standards and Regulations

Buyers based in the United States and the European Union must ensure compliance with various product safety standards and directives. Below follows an overview:

Market	Regulation	Description
US	CA Prop 65	Regulates more than 800 substances in consumer goods. Compliance is when selling in, or to consumers in, California.
US	CPSIA	CPSIA compliance is mandatory for Children’s products sold in the United States. Hence, CPSIA applies to children’s watches.
EU	RoHS	RoHS restricts heavy metals in electronic components, and metallic parts in contact with said components. Hence, RoHS compliance is mandatory for both the watch case and the movement.
EU	REACH	REACH regulates substances in consumer goods. Compliance is mandatory in all EU states.
EU	EMC Directive	The EMC (Electromagnetic Compatibility) Directive is applicable to all electronics products.
EU	EN 71	EN 71 is mandatory for toys and certain children’s products sold in the EU.

Compliance testing can be carried out in China, by a third party company, such as SGS, Asiainspection or Bureau Veritas. However, I advise you to hire a quality inspector to collect batch samples, rather than letting the supplier do it for you. There’s always a risk that they send a ‘compliant sample’, in order to pass the test.

Quality Control

A Quality Inspector can offer much more than just batch sample collection. The only way to avoid high defect rates is by inspecting the cargo on site, prior to balance payment and shipment. Below follows a standard Quality Inspection Protocol, for watches:

Part	Checklist
I. Visual inspection	1. Scratches 2. Damages 3. Plating 4. Logo 5. Engraving 6. Glass 7. Strap 8. Movement
II. Dimensions	1. Case Diameter 2. Case Thickness 3. Strap Width 4. Strap Leangth
III. Functional	1. Movement 2. Battery
IV. Packaging	1. Logo print 2. Dimensions 3. Material Weight 4. Damages / Dirt 5. Export Packing
V. Physical Properties	1. Water Resistance 2. Glass Strength

Watch & Clock Trade Shows in Mainland China and Hong Kong

Hong Kong Watch & Clock Fair

• Location: Hong Kong
• When: 8 – 12 September 2015
• Website: Click here

Canton Fair (Phase 2)

• Location: Guangzhou
• When: 23 – 27 October 2015
• Website: Click here

China Watch & Clock Fair

• Location: Shenzhen
• When: TBA (2016)
• Website: Click here