China is well-recognized as the world’s manufacturing hub. As a retailer, regardless of your size, there’s a good chance you get some, if not all, of your products from this manufacturing powerhouse.
In recent years, consumers and retailers have become more aware of working conditions for people in China. Buyers want to know if the person who produced their goods received fair wages and was treated well. Often, this will affect their final decision.
How Did China Become the World’s Manufacturing Hub?
According to shieldworksmfg.com, the term “Made in China” first appeared in the 1940s after World War II led to a manufacturing boycott with Japan. However, while it existed for decades, only in the relatively recent past have Chinese-produced goods become widespread worldwide.
How Has China Maintained Its Grip on Manufacturing?
Investopedia lists five main reasons why China is the world’s factory:
- Low Wages:
With a population of about 1.41 billion people, China has a massive workforce. More people willing to work means manufacturers can offer lower wages. - Business Ecosystem:
China’s business ecosystem has evolved to accommodate manufacturing on a large scale. The country is now skilled and productive in manufacturing thanks to the business ecosystem that supports it. - Low Compliance:
Historically, China hasn’t enforced the kind of strict rules and regulations that control manufacturing in the West. Regulations aren’t just in the form of workers’ rights but can also cover intellectual property rights and environmental and ecological concerns. - Taxes and Duties:
Chinese products aren’t subject to VAT or import tax. This makes products cheaper again. - Currency:
China maintains a check on the value of its currency, the yuan. This strategy keeps prices low for other countries.
What Are the Ethical Issues with Manufacturing in China?
Low wages and low compliance levels are clearly a concern when it comes to ethical purchasing.
Environmental and Ecological Issues:
Also at the forefront of ethically-minded retailers’ thoughts. Lack of proper compliance laws can lead to aggressive resource extraction and poor ecological and environmental practices in manufacturing.
Intellectual Property Theft:
Also an issue of intellectual property theft, also known as counterfeiting and knockoffs. Buying knockoffs takes money from the legal owners of the design or concept and usually means you’re receiving an inferior product.
How Can Responsible Retailers Overcome Ethical Manufacturing Concerns?
Certifications:
There are a number of international certifications that manufacturers can obtain that confirm they practice ethical manufacturing.
One example is the SA8000 standard. This certification program is available to organizations worldwide. To receive SA8000 certification, the factory must confirm that it treats workers fairly and maintains the highest social standards.
Some industries have specific certifications:
- The clothing industry has WRAP All Producers Code of Conduct
- Toy manufacturing has ICTI Code of Business Practice
- Electronics manufacturing has EEIC Code of Conduct
Finding the Right Manufacturers:
If you’re looking at manufacturers, try to find companies that offer open-door policies to show their ethical manufacturing. They should be able to answer questions about their practices and ethical standards.
Using a Sourcing Agent:
Identifying certified and ethical manufacturers can take time, which is why it makes sense to work with a sourcing agent if you’re planning to import goods from China.
A good sourcing agent will take care of and do all this work for you. They’ll have existing connections that can shorten the process of finding an ethical factory and arranging a contract with them.
At Epic Sourcing, we have teams in China as well as Australia and New Zealand. Ethical manufacturing is important to our business and our clients, which is why we’re very careful with the manufacturers we recommend.