Consumer Compact June 2005Electricity Consumption in China Page 4
Happier Workers Pages 5&6
Carrefour Case Study on Food Hygiene Page 8 Auditing Woolworths Australia Page 11
Industry News 3 SGS in the News 10
Standards & Regulations 14
Sign Off 16
International Trade
Quotas stitch up autumn’s fashion An update on recent developments in the global trade in textiles & garments It has not been a smooth ride for the Chinese textile & garment export industry since the removal of the Multi Fibre Agreement (MFA) back in January of this year. Geared up and ready to supply the world, Chinese factories have been hampered in achieving their goal of world dominance by political and economic forces working to protect the older clothing industries of the West. As a result of embargoes to the EU and on-going safeguard restrictions to the US, other devel- oping countries have seen their own clothing industries increase their share slightly from China. Both the US and EU reacted to the dramatic increase in clothing imports from China with WTO-sanctioned safeguards and quotas earlier this year. After a drawn out negotiation, Peter Mandelson, the EU Trade Commissioner achieved agreement between the EU the Chinese Ministry of Commerce. Taking effect on July 12th, it stipulated growth limits in exports of 10 categories of Chinese textiles to a maximum of 12.5% a year until the end of 2008. The textile industries of Europe, their workers and the governments of Italy, Spain, France, Greece and Portugal, though pacified, did not feel the agreement went far enough. Storm in a D-Cup Then in August it was obvious that these growth limits were irrelevant. The sight of 80 million pieces of Chinese garments sitting in ports and ships off the coast of Europe meant that the quotas for the year had already been reached, less than a month after accord. With the trade dispute in the public eye and back on the agenda, the impounded fash- ion lines for this autumn were referred to as the 'bra wars' in the news reports as retailers predicted an impending shortage of bras. Retailers complained loudly, maintaining that many of the garments were ordered before the agreement’s conclusion, had already been paid for and needed to get on shelves while they were still fashionable. They also argued that to block Chinese clothing imports would do little to prop up Europe’s struggling textiles industry. Most importantly the embargo was creating "huge uncertainty" among retailers, who did not know where to place orders for next year's merchandise. In America, where quotas are imposed on Chinese imports to protect textile jobs, retailers there also warned that protectionist measures will not save jobs, and instead mean that consumers will face higher prices this autumn and next year. During the blockade, Mr. Mandelson rushed back to Beijing and re-negotiated to appease the retailers and their shoppers. The essence of the new trade off is that China would count around 50% of the blocked merchandise as part of its 2006 EU export quota. For their part, EU countries would then allow the other 50% onto EU territory. Under the deal, all items blocked in warehouses were released. There are many who disagree with this solution and that by borrowing from next year’s quota will only be delaying the problem and the need for Europe’s clothing producers to cope with inevitable restructuring and job losses. Whatever the position taken, it is evident that retail buyers need to find ways to avoid becoming too reliant on Chinese garment suppliers.
STOP PRESS - Testing & Labelling for Allergens Page 9
Other countries benefit Textile & garment safe- guards against China raised the hopes of increased textile exports from other countries that face less competition, at least while the quotas were in place. In re- sponse, some countries are pursuing a variety of strategies to save their clothing industries from oblivion in a quota-fee world. So far there have been mixed results - yet those with better organ- ised apparel industries already started to re- ceive higher orders for certain products after the quotas were f i rst imposed in March/April.
When the MFA came to an end at the beginning of 2005 it was thought that low-cost Chinese competition would destroy the cloth- ing industry in pricier places such as Thailand and Indonesia, and kill it off altogether in countries like Cambodia, where it had sprung up solely to take advantage of the quota system (and makes up almost 80% of all exports). This has not yet happened. Thailand, for instance, tries not to compete with China on cost, focusing on quality to raise the value of its exports. The govern- ment there wants to turn the country into a hub, where local companies do not just make clothes under contract for foreign retailers, but also design and market products of their own. Indonesia is in the midst of a broad campaign to improve the local investment climate and hopefully reduce the flight of manufactur- ers to more accommodating business climates. Even before the quota imposition on China, both Thailand and Indonesia showed that they are able to hold their own in the face of Chinese competi- tion, respectively reporting a 5% and 15% increase in textile exports in Jan-May 2005 compared a year earlier. India has so far not seen the benefits of less competition from China. Poor infrastructure is a major impediment to industry growth. The Indian government has historically discriminated against integrated textile mills in order to help cottage handlooms - as a result, production in the textile industry is based on a decen- tralised system with small scale operations. Manufacturing capac- ity is not large or flexible enough to meet large orders. But the Indian textile industry has a natural competitive advantage in terms of a strong and large multi-fibre base, abundant cheap skilled labour and operations across the entire value chain ranging from spinning and weaving to the final manufacture of garments. To kick start modernisation the government recently approved the setting up of 25 textile parks to centralise operations and know how. For sure, India has huge potential. When the EU’s borders closed to Chinese-made apparel, it made sense that panicky buyers from European retailers would make urgent phone calls to neighbouring garment-making countries such as Turkey. Turkey's Textile and Apparel Exporters' Associa- tion says sweater orders, for instance, rose dramatically during the blockade. They could rise even further as the import quota for Chinese-made sweaters is full for the rest of this year, and EU importers fear another shortage next year with the quotas still in effect. Accounting for a third of total export earnings, the Turkish textile and apparel industry is sufficiently developed to cope with such short term surges in orders. A Continental Factory Floor The EU’s messy standoff this summer with China over its textile exports has given a boost to Europe's longer-term strategy to defend its own textile industry against surging Asian competition.
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2
It wants to create network of favoured low-cost factories in countries to the south and east, to be bound to Europe by a 41-country duty-free agree- ment. With Turkey, Morocco, Tunisia and others from Iceland to Lebanon, the E.U. is forming a textile-making cluster, free of tariffs. It aims to create a single factory floor for tariff purposes, for complex products. Fabrics made in the E.U. would be made into clothes on the other side of the Mediterranean and then sold back to the E.U. duty-free, securing jobs on both sides of the Mediterra- nean. The same would apply to shoes, appliances and leather goods. This "Pan Euro-Med" partner- ship was planned in 2003 by trade ministers. Turkish knit- ters, for instance, already import much of their yarn from Italy. Cotton-blend weavers in Portugal, Italy and Spain are expecting orders to rise as contracts for dresses and trou- sers rise in Morocco and Tuni- sia in the wake of the re-imposed Chinese quotas. Low-wage workers there and in Turkey, Bulgaria, Romania and Tunisia transform the material into clothes, sew on buttons and package the goods, before selling most of them back to the E.U.
Europe's restrictions on Chi- nese imports are scheduled to last only until 2008. European policymakers are hoping this will be enough time to allow their concept of a Mediterra- nean clothes cluster to grow and persist as a competitor. If it does not, then China will resume its dominance of the textile & garment trade, free of restricted trade practices.
The EU textile and clothing industry has an
annual turnover of US$250 billion and
exports goods worth $45 billion a year.
Imports of textiles and clothing accounted for $85 billion in 2004,
most of it from China.
Main Feature
Battery Technology
Building a Better Battery From The Economist print edition Energy: As portable devices become ever more elaborate and demand ever more power, will battery technology be able to keep up? Just as you can never be too rich or too thin, you can never have a battery that lasts too long. But as mobile devices accumulate new power-sapping features, battery technology has been strug- gling to keep up. This led Yrjö Neuvo, the chief technologist at Nokia, the world's largest handset-maker, to warn of an impending mobile-energy crisis last year. But now several new developments
could be about to come to the rescue. In February, Altair Nanotech- nologies, a small firm based in Reno, Nevada, announced a new kind of lithium-ion battery, the technology that powers many portable devices. Its prototype has three times the capacity of existing batteries and can be fully charged in six minutes. Lithium-ion batteries are so named because during charging and discharging, lithium ions migrate between the battery's positive electrode (anode) and negative electrode (cathode). Altair's trick was to coat the an- ode with lithium-titanate nanocrystals, says Roy Graham, the company's devel- opment director. This enlarges the surface area of the anode from around three square
metres per gram to 100 square metres, increasing the capacity of the battery and boosting the rate at which ions are able to move to and from the anode, which is what determines how long it takes to charge. In June, Altair secured a US$477,000 grant from Amer- ica's National Science Foundation to further its design by using nanoparticles on both electrodes. This could further increase power density and reduce charging time, says Mr. Graham. Hard on the heels of Altair's announcement, Toshiba revealed that it too has developed a battery using nanotechnology that is capa- ble of charging to 80% of full capacity in one minute. The com- pany is still working on improving the stability and reliability of the design, but plans to start selling the new batteries next year. Hiroko Mochida of Toshiba says the initial uses will be in electric cars and power tools, where high capacity and rapid charging are particularly necessary. Toshiba will not go into detail about its new design, but, like Altair's, it seems to use nanoparticles to increase the surface area of the electrodes. There have also been recent improvements to a completely differ- ent kind of battery design, known as “beta voltaic” technology. Such batteries use beta particles from a radioactive source to generate a current in semiconductor material, in much the same way that photons liberate electrons to generate a current in photo- voltaic solar cells. Batteries of this type can run for years, and are used in devices such as space probes and pacemakers, where changing the battery is impractical. Beta voltaics are safe and reliable but are limited by very low energy yields, says Philippe Fauchet of the University of Rochester in New York.
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Now his team has developed a way to increase the power out- put tenfold, by increasing the surface area of the exposed semiconductor. Instead of a flat surface, his design uses a type of porous silicon, the surface of which is riddled with tiny pits. The radioactive gas within the pits is then almost entirely surrounded by the semicon- ductor, increasing the chances of catching the beta particles. The technology is now being developed by BetaBatt of Houston, Texas, which co- developed the new design. There is a growing demand for long-life batteries in medical applications, he says. It all sounds promising. But no matter how hard researchers work to cram more energy into batteries, they are vastly outnumbered by other researchers dreaming up new ways to consume it. © The Economist Newspaper Limited, London (September 17th, 2005)
Batteries of the beta voltaic type can run for years, and are used in
devices such as space probes and pacemakers,
where changing the
battery is impractical. Beta voltaics are safe and reliable but are
limited by very low energy yields.
Industry News
Electricity Consumption in China
A Call to Save Energy A Revolution in Household Appliances: Energy Efficiency Labelling The deteriorating environment is forcing China’s house- hold appliances manufacturers to adopt a revolutionary change in energy-saving technologies. Unscrupulous consumption of energy has increased air pollution and precipitated the rate of ecological destruction leading to soil erosion and desertification. A far greater problem is the lack of energy. China’s demand for electricity is increasing rapidly and at peak periods shortages in the power supply can reach up to 20-30 million kilowatts. Conserving the environment and saving energy is already a hot topic of the global community. Why not in China? Energy-saving labels on electrical and electronic prod- ucts have proved effective in reducing energy consump- tion as well as for quality control – as such they are widely used and accepted by many countries. Consumers consider energy savings as the first priority when choosing electrical appliances. For this reason household appliances must be improved in terms of energy saving - for the sake of the environment, health and market demands. Pioneers in Energy Saving - Energy Efficiency Labelling According to the International Energy Agency (IEA), 37 countries and territories have set up energy efficiency labelling systems, including the EU, USA, Canada, Australia, Brazil, Japan, Korea, the Philippines, Thailand and Hong Kong. The EU Council announced a framework directive on mandatory energy efficiency labeling system in Sept 1992. In 1978, the US Department of Energy set a series of mandatory energy efficiency standards through legislation and a label programme named “Energy Star” was introduced. In 1986, energy efficiency labeling for refrigerators and freezers became mandatory in Australia. As early as the mid 1970s, Korea began a campaign covering over 100 energy-saving activities for end users, with the effort focused on mandatory energy efficiency standards and labeling systems. Asian countries such as the Philippines, Thailand and China are paying more attention to the demands of reducing the energy consumption of electrical appliances. It is expected that the annual
savings from these schemes will reach RMB 800 million (US$99million). With developed countries taking the lead, the world is entering a new revolu- tion of energy efficiency and labeling. What can China do? China consumes the greatest number of household appli- ances in the world. It is esti- mated that there are over 900 million units of major household appliances in China and this will increase at a rate of 10% - 46% each year. However the manufacturers have shrugged off this seemingly big business opportunity, as China’s energy efficiency labeling system for household refrigerators and air conditioners only came into effect on March 1st 2005. All refrigerators and air
Industry News
conditioners that are produced, sold or imported into China must have a so-called ‘green card’, in demonstrating their energy efficiency performance. Taking the initiative, large retailers such as Suning have announced that all air condi- tioners sold in their stores must have energy efficiency labels. Manufacturers are now scram- bling to partner with third part testing and certification companies in a bid to maintain the competitiveness and compliance of their products. SGS provides test certificates which are applicable in key markets around the world.
The implementation of energy-saving schemes will undoubtedly accelerate the progression from traditional
manufacturing model and adoption of green design and production. This will further bolster China’s forefront position in the
global electrical industry
Industry News
Chinese Factories
Happier Workers Corporations should pick up the bill for social accountability
With the continued march of globalisation and increasing strong commercial competition, it is commonplace to closely follow economic issues such as a company’s ability to innovate, product quality, resource efficiency and speed and model of economic development. The issue of corporate social accountability, by contrast, have been largely ignored, giving rise to a whole series of social problems and creating a certain amount of negative impact on both the industrial world and society. Practices such as falling behind in worker payments, embezzle- ment of employee salaries, overworking employ- ees, unsanitary and inferior working conditions, fires in the workplace, workplace injuries, strikes and the use of child labour, etc. are being too often reported in the media. Only continuous exposure by non-governmental bodies, consumer associations and other organi- sations related to people’s rights will eventually create a trading environment in which interna- tional buyers are unable to avoid issues of corpo- rate social responsibilities in developing nations any longer. In this larger arena, some multinational companies have established their own policies for social accountability and have initiated approval and check systems for social accountability in their supply chains. As a main global manufacturing base since the mid-1990’s, Chinese companies have also become gradually subjected to the supply chain assessment procedures of multinational corpo- rations. This has pushed them to place greater importance on existing social accountability issues and into taking appropriate measures of improvement. Chinese companies must become aware of the nature of social accountability, and must not take the mistaken view that social accountability requirements from international buyers are an excuse to create complications. Instead, they should take a positive attitude by analysing their weaknesses during the develop- ment stage and implementing international standards. This is will help to strengthen their position to engage in reputable and ethical business practices.
The basic nature of social accountability In today’s global society, the existence and development of enterprises based on continu- ous business growth and profit not only requires high product quality and service levels, but it also necessitates increased social accountabil- ity on the part of the enterprise. Internally within a company, this means protecting employees’ rights and benefits; externally, it means playing a positive role in the enterprise’s social accountability towards the environment. Only in these ways is an enterprise able to attract recognition and trust from the general public and its consumers. It may also help improve a company’s competitiveness and brand percep- tion in the marketplace. In an attempt to better respond to pressures from both sides, other international organisa- tions and leading industries have also set related policies for social accountability or have gone even further to create certified standards. Of these, most notable have been the Interna- tional Council of Toy Industries (ICTI) Seal of Compliance within the toy industry, the World- wide Responsible Apparel Production (WRAP) Certification within the textile industry, the Busi- ness Social Compliance Initiative (BSCI) Standard for European Union retailers and the Ethical Trading Initiative (ETI) Regulations in the UK. In addition, most multinational corpora- tions have also set their own internal policies for social accountability. These policies lay out detailed regulations pertaining to issues such as child labour, forced labour, health and safety, freedom of group organisation and collective negotiation, discrimination, discipli- nary action, working hours, salary and benefits, etc., requiring enterprises to adhere to local legal regulations and the requirements of related international conventions. China is an enormous manufacturer of consumer goods. Most of China’s textile, shoe, toy, furniture, exercise equipment and other daily use metal and plastic products are exported to the USA and European countries. The producers of these products, to varying extents, are all conforming to the social accountability requirements of their respective customers or international organizations. For Chinese exporters who utilise intensive labour production, these required social accountability practices are a bittersweet medicine. Exporting enterprises must practise social accountability Mr William Lin, Senior Manager of Code of Conduct Assessment of China and Hong Kong, says: “As one of the world’s largest manufactur- ing bases, China’s enterprises have enjoyed the opportunities and profits brought by global trade. However, at the same time, Chinese enterprises also have to face up to the demands of global customers and consumers for them to practise social accountability. In reality, Chinese workers, consumers and society also hope to see this from their local enterprises.”
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According to companies that verify social account- ability of Chinese exporting enterprises, the main problems that exist within these enterprises are as follows: 1. Illegal employment of children under 16 and il-
legal use of young workers (age 16 to below 18); 2. Collection of guarantee payments from employ-
ees, withholding of employee identification cards;
3. Exceeding regular shift and work hours, no rest day over a 7 day working week;
4. Labour salaries below local minimum wage standard;
5. Overtime payments do not meet legal requirements, not providing legally required benefits;
6. Inadequate or blocked emergency access or exits, insufficient fire safety equipment and training;
7. Unsuitable use and management of chemicals, insufficient worker protection for employees;
8. Effective channel of communication has not been established between workers and management levels.
Given the above, many international buyers are increasingly putting emphasis on the results of the verification process, and making numerous re- quests of their suppliers to issue improvement measures within a limited timeframe, otherwise they may not place purchase orders, may refuse to take delivery of goods or even implement fines.
Independent verification of social accountability As a worldwide reputed standard and technical service company, SGS provides high-standard and expert second party and third party verifica- tion services to a wide range of customers from the top 500 enterprises to individual factories. SGS is also recognised as an independent ex- amination organisation for certification from in- ternational institutions such as the Fair Labour Association (FLA), WRAP, ICTI and BSCI. SGS joins Sedex SGS is pleased to announce that it has joined Sedex as a Founding Associate Auditor. Sedex is a secure, web-based system for com- panies to maintain data on labour practices at production sites and make it available to their customers, in order to drive and demonstrate improvements. Current retail/brand users of Sedex include Tesco, Marks & Spencer, Sains- bury and John Lewis Partnership among others and as at the end of June there were over 2500 factory and supplier members from 55 coun- tries. Sedex registration is fast becoming a key re- quirement for UK retailers in an effort to share information about suppliers’ labour practices so as reduce the need for multiple audits. More in- formation on Sedex can be found at www.sedex.org.uk. As one of the Founding Associate Auditors, SGS will work with Sedex to start to drive con- vergence in audit methodologies and report formats and work on improvements to the audit upload process. For more information contact effie.marinos@sgs.com
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Comparison common issues - Asia Pacific
Child labour Forced labour Health and safety Freedom of assoc. Discrimination Discipline Hours Wages & Benefits China 5 17 60 100 100
Phillipines 9 100 9 9 0 27 9 Indonesia 91 16 16 75 83 Thailand 4 8 88 32 24 0 64 24
Comparison common issues - Indian Sub continent
Child labour Forced labour Health and safety Freedom of assoc. Discrimination Discipline Hours Wages & Benefits Bangladesh 3 15 12 4 20 45
India 5 2 85 22 18 10 95 70 Pakistan 2 2 55 5 75 45 Sri Lanka 55 5 71 50
Comparison common issues - Europe and North Africa
Child labour Forced labour Health and safety Freedom of assoc. Discrimination Discipline Hours Wages & Benefits Morocco 3 22 14 20 23 33 Romania 0 0 68 5 0 0 1 5 Turkey 8 10 72 5 0 2 70 60
Comparison common issues - Mexico
Child labour Forced labour Health and safety Freedom of assoc. Discrimination Discipline Hours Wages & Benefits Mexico 3 3 100 3 3 0 15 15
Based on how many audit reports had non-compliances against different parts of the codes. Based on 100 audit reports
Compliance to Audit Codes - Comparison by Region
Industry News
Not to be Toyed With
SGS Partners with Lung Cheong in Quality Assurance for the European Union
After years of development, China has become the biggest toy manu- facturer in the world. “Made in China” toys have walked into nearly 70% of the world’s households, an incredible and proud achievement. Yet quite a few toy Chinese manu- facturers only focus on lowering their prices, whilst ignoring the quality of their products. The EU is China’s second largest toy market and is the pie for which every toy manufacturer vies for a piece. In February 2003, the EU launched the WEEE & RoHS regu- lations, causing ripples in China’s industries, including electronics, electrical appliances and toys and it become a minefield for product compliance. Toys bring us laughter and fun. This is why the toy industry is often referred to as “the happy industry”. But now, with storm clouds gathering, how can China’s toy industry survive? How can it find its way through the upcoming challenges? A Way through the Storm Within the Chinese toy industry competition is fierce, but outside the country global requirements have been raised making it even harder to get a foothold. Yet Lung Cheong, China’s leader in toy manufacturing, has blazed a path through all these challenges. With quality as its first priority, it successfully found its way through all of the EU’s trade compliance hurdles. Senior QA Manager of Lung Cheong, Chen Yuchuan said that the company started off in the 60’s as a small workshop. By the 70’s, it produced remote controlled toy cars. In 2000, it worked with China’s top universities to
develop intelligent electronic products such as remote control devices. Business grew as it focused on advanced, high-end, top-of-the-line quality products. “Winning through high quality, and innovating constantly” is Lung Cheong’s key to success. As EU’s regulations and requirements grew stricter and stricter, the company initiated a series of reforms. It fully automated its production processes, cut costs and actively established business relationships with large suppliers to increase productivity. Most importantly, it requested suppliers to submit valid product testing reports by the end of June this year - ahead of the EU requirement deadline. Armed with materials that have been fully audited, the company is now able to produce its goods in accordance with EU standards. Chen added that working closely with SGS has also helped them increase their product quality and overcome EU and US trade barriers. With more than 100 years of experience in product testing, inspection and certification, SGS was well positioned to help Lung Cheong’s products in complying with relevant EU and US regulations. Additionally, SGS has also organised a series of seminars and training workshops for the company to keep pace with the latest market trends and regulatory re- quirements.
Industry News Page 7
A Case Study in Food Safety for Chinese Consumers
Healthy & Hygienic Food for Carrefour Food Safety and Hygiene: The Heart and Soul of Retail Giants. Nadege Claudel, Hygiene Manager, China Products Depar tment , Carrefour explains. In 2000, when China an- nounced that it was preparing to enter the WTO, international retail giants made every effort to move into the China market and quickly expand their mainland networks of stores. So far, foreign retailers in China number some 300 odd outlets with a retail value of less than 5% of China’s total. Foreign retail multinationals have also revived China’s stag- nant retail market, pushing the mainland’s retail industry up to new service levels, and in- troducing the concept that “the consumer is always right”. Most importantly, the subject of food hygiene and safety has been made a key managerial focus in China, setting new standards for the entire indus- try. Shop Hygiene Inspection and Testing - The “Housekeeper” of Hygiene As multi-chain retailers take a greater share of food sales, food safety and hygiene issues are on the rise and this, in turn, is drawing more public atten- tion.
Some retailers even suggest that food safety in supermar- kets has become a core com- petitive strength. For supermarkets, the key factor in food safety manage- ment is spot management. But as supermarkets expand, they open more shops, making spot control and management more difficult. When the retail giants first entered China, the coun- try’s immature retail market posed many challenges. Where food safety and hygiene control is concerned, interna- tional retailers such as Carrefour, Metro and Auchan, as well as food chains like Kentucky Fried Chicken and Starbucks Coffee have long been subcontracting manage- ment and control of food safety and hygiene to independent third parties. This has not only made their quality manage- ment systems more complete, professional, efficient and impartial, but it has also short- ened the system building cycle, creating a better organisational structure while reducing man- agement and operation costs. The second largest retailer in the world is French giant Carrefour which ranks first in terms of its global footprint. Its sales value tops the list of China’s foreign retailers. Since Carrefour opened its first superstore in China in 1995, it has increased its outlets to 61. To ensure that all food lines – which number in the tens of thousands – remain fresh, hygienic and safe for consump- tion, cleanliness inspections of the shops have become a Herculean task. This includes shop hygiene condition in- spections and improvements, food sampling and testing, staff hygiene and operation skills training as well as other aspects.
Such challenges did not prompt Carrefour to lower
its standards, just because it was China.
Instead it adhered to its
global operational vision and implementation
strategy by contracting
its hygiene inspection out to a third party; to act as its ‘superstore hygiene house- keeper’. Carrefour’s China Hygiene Manager Nadege Claudel says, “In Europe, Carrefour has been working with SGS for some time now. When we came to China, we were also very pleased to let SGS assist in our superstore hygiene inspections and sample testing; at the same time the auditors did their best to know the idiographic standards and requirements, so that our hygiene manage- ment systems are more effec- tive for China.” Supplier Inspection: the Guardian of Retailers’ “Lifelines” A safe and efficient supply chain is, without doubt, a retailer’s “lifeline”. With typically thousands of companies supplying a retailer, evaluating and inspecting them requires an enormous and complex system. Food needs to be fresher and has to comply with an ever- increasing number or hygiene and safety standards. Some retailers may even go as far as to check on a supplier’s social responsibility. In Carrefour’s China stores, 90% of all food products are sourced from Chinese produc- ers. To manage its numerous suppliers, Carrefour has ap- pointed SGS to carry out sup- plier inspection. Nadege Claudel says, “Supplier inspec- tion is an important aspect of our working relationship with SGS. As a third party, SGS provides professional and effective services, which have helped Carrefour set up a first line of defence in food safety and hygiene right at the source. SGS also helps improve the structure of suppliers. They conduct comprehensive, impartial and stringent inspections on the supplier’s food safety and quality systems according to international standards such as HACCP, GMP and BRC, in addition to their broad experi- ence in food safety and hygiene. SGS’s services have also helped us reduce and avoid risks.”
New EU regulations come into effect before the end of 2005 improving consumer awareness of allergenic substances through stricter product labelling. Your eyes itch, your nose is running, you're sneezing, and you're skin has erupted in a rash or worse, blisters. The enemy known as allergies has struck again - and all you want to do is curl up into a ball of pain. Allergies are abnormal immune system reactions to things that are typically harmless to most people. When you're allergic to some- thing, your immune system mistakenly believes that this substance is harmful to your body. Allergic reactions can be mild, like a runny nose, or they can be severe, like having difficulty in breathing. An asthma attack, for example, is often an allergic reaction to something that is breathed into the lungs of a person who is susceptible. That some detergents and certain food products have the potential to create allergenic reactions in some people is not news. What has always been needed is proper labelling of potential allergens to improve consumer understanding and , it is hoped, reduce the incidence of unbearable allergy moments. In Europe, the incidence of an allergic reaction exists amongst one child (under the age of ten) in four. From research it is estimated that 2% of Europeans are allergic to perfumes and perfumed products with a higher susceptibility amongst the old and the young. Such disturbing allergenic prevalence is on the increase. The response from legislators, manufacturers and distributors is a common goal: To achieve greater transparency, traceability, security and protection for consumers through better risk manage- ment for both health and the environment. The immediate, most practical solution is stricter product labelling and legislation to ensure its implementation. Affected Products Sweet smelling molecules such as terpenes, aldehydes and certain alcohols commonly used in cosmetics and detergents are frequently responsible for causing allergies, either through inhaling or through contact with the skin.
Food allergies are also critical for some people. In this case. proteins (gluten, soya, etc) are often the cause of pain and occa- sional lead to respiratory prob- lems. For those susceptible to such negative reactions, the only solution is to avoid eating food products contain- ing certain ingre- dients. Having an understand- able label detail- ing potential allergens is thus essential reading.
In the wash From November 8th of 2005, detergents will be under the scrutiny of regulators, enforcing labelling requirements accord- ing to directive 648/2004/CE. The need to define and label for risks of allergenic side effects is stipulated, yet the regulation goes further, insisting on proper analysis to measure the environmental effects, especially biodegrad- ability. Not just peanuts Peanuts are known to cause nasty allergenic reactions in some people. The 2000/13/CE directive which comes into effect on November 25th 2005 covers more than just peanuts. The quantity and type of ingre- dients added to food during processing, preparation or during distribution needs to be stipulated on the label, regard- less of the quantity remaining in the end product. There are a total of 12 allergenic ingredi- ents defined in the annexe of this directive, helping to provide traceability to avoid contamination and achieve label conformity. Food products which do not meet these criteria are not allowed to be put on sale after this date. Cosmetics add to the list Cosmetics, as they are regularly applied to the skin have long been covered by regulations for proper labelling. 26 allergenic substances were identified in the 7th amendment to the 2003 EU directive on cosmetics. Four additional substances have recently been added to this list, the presence of which above a certain concentration requires that they be mentioned on the label. Whether testing for either food allergens or other, the tech- niques used vary greatly, necessitating different chemical testing methods depending on the type of molecule under scrutiny. Our laboratories in France, accredited to Cofrac, are capable of running all allergenic tests on cosmetics, food products or detergents. Our recently published techni- cal bulletin on this latest directive is available on our SafeGuards website. Click here.
Industry News Page 9
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A new global competency centre will provide a coordinated pool of technical tools and expertise Quality expectations and the range of safety requirements customers must satisfy become more complex every day. To keep up with the volume and density of regulations, testing methodologies and technology advances has necessitated a better optimisation of resources to define the right solution. The aim of the Global Competences Support Centre is to optimise existing and new technical support resources for the benefit of both SGS clients and personnel. It will continue and further improve the very high standards of technical and customer support that have come to be expected from SGS. The structure of the Global Competences Support Centre (GCSC) consists of a core team of 20 technical specialists drawn from the numerous product sectors that Consumer Testing Services (CTS) serves around the world. Additional expertise is drawn from the many CTS laboratories within the SGS global network. Carrefour has already experienced the benefits of this compe- tences centre. Carrefour’s head office is at the heart of a complex network of both out-sourced manufacturing and retail operations. It is here that the process of sourcing uniform non food products for multiple, but distinct markets is harmonised. Probably the most global of retailers, Carrefour operates as a local retailer, marketing products which meet local legislation and standards so that they are safe and meet quality requirements. Specifically Carrefour needed to collect the individual product requirements for eleven different countries. The specialists of the GCSC were able to provide them with technical datasheets per product and by country listing applicable national legislation and explaining requirements according to legal requirements for safety and quality compliance. This case study is an example of the GCSC’s ability to pull on the right skill to provide assistance to technical performance challenges, regardless of geographical location. The GCSC frequently updates test protocols throughout the SGS network, ensuring a consistent and characterised approach to all variety of product testing. This massive task is achieved through working technical committees, focused on product categories – Toys, Candles, Textiles, Food and the General Product Safety Technical Committee. These commit- tees and their peripheral participants offer a huge amount of technical knowledge that is used for research and development in these fields as well as providing SGS laboratories, sales personnel and customer service expert technical aid for their customers. The Global Competences Support Centre functions as a coop- erative structure of specialists spread all over the world. By coordinating technical support and knowledge amongst our network of nearly 100 CTS laboratories and 5,600 CTS employees, we are able to deliver the right solution to your technical issue. Email the Global Competences Support Centre at gcsc@sgs.com
Wireless Technology
Ring of Compliance SGS Japan unveils first accredited testing lab for GSM phones & equipment Japan’s mobile phone net- work works on the less com- mon CDMA standard as used in N. America. This has not prevented Japanese handset & equipment designers to continue to innovate and develop for the more popular GSM protocol used by 70% of the world’s mobile phone networks. In the past such development was hampered by the need to send prototype models and engineers to Europe for con- formance-testing and pre- testing, a time consuming ef- fort which lengthened the product development period and time to market. Investing in the expensive equipment to conduct such tests in SGS Japan was not enough to meet client and local regulatory need; it was also necessary to achieve various certifications including ISO17025, GCF, PVG, and PTCRB to be a qualified test house for this business. The realisation of such ac- creditation has taken over a year of conformity & process planning. It has put SGS Ja- pan in the unique position of having the only accredited mobile phone laboratory for testing of GSM/3G devices in Japan. Subsequently a first conformance-testing project has already been com- pleted for a major Japanese telecommunication manufac- turer. This advanced mobile phone testing laboratory joins the existing network of Taipei, Shanghai and Seoul to pro- vide an SGS ‘ring of compli- ance’ around North Asia, sharing resources, experi- ence and the most sophisti- cated testing equipment avail- able. All this located right in the global centre for the development and manufac- ture of mobile technology.
SGS in the News
Physically Better A number of our US-based laboratories have undergone expansion and upgrading to meet ever demanding physical testing requirements
Tulsa, Oklahoma According to the National Fire Protection Association (NFPA), most house fires occur in the bedroom of the home. The major source of fuel for these fires can be blamed on mat- tresses and box springs. Preventing this fuel source from contributing to a fire is vital to prevent loss of life and property. A recent regulation in California (California Technical Bulletin) requires that mattresses be sub- mitted to a full scale open flame test, measuring the Heat Re- lease Rate in kilowatts. Heat Release Rate is a function of the amount of energy released from the test specimen as a function of oxygen consumption. If the mattress exceeds 200 kW or 25 MJ in the first ten minutes, the mattress does not comply and cannot be sold in the state of California. Only a few laborato- ries in the US are capable of running Heat Release Rate tests.
We have one of
systems available, and have gone yet
a step further
The most exciting piece of equipment recently acquired is an Infrared Thermal Imaging camera. The benefit of using this camera is in the failure analysis of a mattress. The camera only sees the heat signature of the particular sample being tested. If a mattress is on the road to failure, the test room could quickly fill with thick black smoke. A conventional camera recording the test event only sees the smoke and not what is happening to the mattress itself. The thermal imaging camera sees through the smoke and highlights the hot spots and possible modes of failure for the mattress. This thermal camera provides us much needed infor- mation about why and is ex- tremely useful in failure analysis. Rancho Cucamonga, California SGS CTS opened a new 25,000-square -foot testing laboratory to provide textile, packaging, fire technology, and building products testing services. The new lab, Rancho Cucamonga, is located about 40 miles east of downtown Los Angeles. The laboratory provides advanced instrumentation and technology in a modern and open design concept that maximizes work- flow and staff resources. In the fire technology area, the Rancho Cucamonga labora- tory provides extensive small and large scale flammability testing services to many in- dustries and product catego- ries including aircraft and aerospace components, paints and coatings, plastics and composites,
furniture and upholstery components, textiles and industrial fabrics, and building products including roofing, wall coverings, window cover- ings, insulation, floor cover- ings and other components used in construction. Spe- cialty equipment and capabili- ties include the Steiner Tunnel (ASTM E 84), roof classifica- tion apparatus (ASTM E 108), aircraft cargo liner burn apparatus, smoke density chambers, toxic gas analysis capability and radiant panels.
Fairfield, New Jersey Our physical testing laboratories Fairfield, New Jersey have also been upgraded. The expanded materials laboratory features a new 55,000 pound Instron Uni- versal Testing Machine. In addi- tion to performing strength tests such as adhesion, compression, flexure, tensile and shear, advanced features include cycle testing, stress relaxation and creep testing. All of the above tests can be performed in multi- ple control modes including stress, strain, load and d i s - placement. We also conduct a variety of other tests including s m o k e densi ty and
ignition properties.
Page 11 SGS in the News
Faster Toy Development
SGS and IQB - A successful partnership improving response time and service to clients Brazil is not only the biggest Latin America toy manufacturer; it is also one of the most concerned with the safety and security of children, both locally and globally, that may ultimately use domestically produced toys. From a period of stagnation in the 90’s, The Brazilian toy industry continues to restructure. Joint ventures with large international companies have boosted the exposure of Brazilian toy products on world markets. Today the sector consists of 300 companies and a labour force of 22,000. The significant improvement in the quality of toys manufactured locally has meant that the Brazilian toy industry turned over US$ 336 million during 2003; a 75% increase compared to 1996; it is still growing. SGS Brazil’s toy testing laboratory is able to undertake about 90 different toy tests. Their evaluation is rigorous and binding for both national and imported toys, which are both tested and audited before receiving the stamp from the Institute for Quality Control on Toys (IQB) and the certificate by Inmetro, granted by IQB along with SGS. To improve response times, SGS Brazil installed an ‘Attendance Office’ for IQB within its facilities to have a permanent, necessary presence from the IQB and allowing testing turn around times to be dramatically reduced.
In such close proximity with an IQB office, SGS Brazil has been able to develop more customised services. In the last year the "Express Job" was introduced - a differ- ent speed of service which reduced the usual turnaround time by 50%. “Express Job” has been well received by clients - speedier jobs that do not comprise SGS’s ethics, transparency and methodology. Companies like Pepsico, Faber-Castell and Sonae choose this service option for faster product development. "The major advantage of the partnership with SGS was the excellent support to clients who seek product certifi- cation requiring prompt answers, the right methodolo- gies, analysis and provision of documents", affirms Mr. Mariano Bacellar Netto, Technical Director of IQB. SGS represents an important part of customer’s working routine, adding value to the its services. Contact: rosemary.vianna@sgs.com
UK Laboratory Testing of Toys
Crash Testing Toys
SGS UK Pioneers new Toy Crash Test In November 2004 an amendment was published for the European Toy Safety Standard EN 71 Part 1 mandating a significant change to the method for testing ‘sit on toys’ during a dynamic strength test. This test involves loading the toy with a mass equipped with two articulated arms and driving this into a 50mm high step at a steady speed of 2 metres per second. The amendment required that the mass had to be suspended just after impact to stop it falling back on to the toy which could cause further damage to the object. This requirement has implications requiring redesign of the test rig used for such impact testing to incorporate this small but significant change. SGS UK has worked with a UK-based precision engineer- ing company called Retrac Productions to produce a workable design for the rig which incorporated an overhead running track with an upward curve at the point of impact which lifted and stabilised the toy and mass after impact. The test rig underwent several modifications initiated by SGS UK Toy technicians before a feasible design was produced. SGS UK took delivery of the first rig of this design in March 2005 and a week later this was nominally approved by the United Kingdom Accreditation Service (UKAS). This is the first of many rigs of this design which will be marketed worldwide by Retrac. Contact: nigel_beaumont@sgs.com
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SGS Australia
The Fresh Food People Woolworths Australia nominates SGS to Audit Private Label & Fresh Food Suppliers from Overseas Woolworth’s is Australia’s leading retailer with the largest network of over 700 supermarkets and serving more than 13 million customers nationally every week. Woolworths Supermarkets Australia is part of Woolworths Limited which includes other retail operations such as Dick Smith Electronics, Tandy, Big W and BWS Liquor. Woolworths Ltd (Australia) has no affiliation with the other retail operations of the same name around the world. To reinforce Woolworths “Fresh Food“ strategy the Woolworths Quality Assurance Program (WQA) was developed to ensure that the best quality fresh merchandise is available to Woolworths customers. Woolworths works with and sources product from quality assured suppliers who are dedicated to producing goods that meet Woolworths WQA standards. Certification to the WQA standard is a condition of trade for all suppliers of fresh food including but not limited to poultry, meat, produce, seafood, small goods, bakery, deli and all suppliers of Woolworths Branded products. Together, Woolworths and its Trade Partners have a responsibility to protect consumer trust. Product safety and quality are essential in continuing to protect that trust, and the integrity of Woolworths brands. As a result of SGS Australia’s successful performance in supplying auditing services to the Woolworths Quality Assurance program locally in Australia and because of the strength of SGS Food Assurance services globally, SGS was also appointed for the Woolworths Austra- lia Private Label International business. Approximately ten percent of Woolworths Branded product is currently procured from International Trade Partners. SGS international auditors are key stakeholders in ensuring that products sourced internationally continue to conform to the Woolworths Quality Assurance Standard and all relevant statutory and regulatory requirements. The Woolworths Brand is one of the top 5 most trusted brands in Australia. The value of the Woolworths Brand and the protection of the brand are the key drivers for the rollout of WQA into the international market. For more information how SGS can help you with quality assurance throughout your food supply chain get in touch with Joanne Milton at joanne.milton@sgs.com.
SGS Turkey Lab Accreditation
Safely Stitching Our main textile testing labora- tory in Turkey has recently been accredited to UKAS standards In the bigger scheme of world textile trade and due to the quotas placed on Chinese gar- ment exports, a few traditional clothing producing nations have seen increases in their exports. Turkey in particular is one of the most important textile and clothing producers and exporters in the world and
is seeing a gradual increase in its share of this global trade. In terms of clothing shipments, the country is ranked 6th in the world. The production value of the textile industry, which includes mainly yarns, fabrics and home textiles, was US$8 billion in 2004. Of this, US$6.8 billion worth of textiles were exported in 2004. The sector comprises 20,000 manufactur- ing companies and employs 360,000 nationwide. SGS Turkey Consumer Testing Laboratory was opened in 2004, with the capacity to meet per- formance and quality needs of all textile and other consumer products manufactured in Turkey. In August, this state of the art laboratory was accredited by UKAS (United Kingdom Ac- creditation Services) Certificate according to the standard ISO/ IEC 17025: 2000 General Requirements for the Compe- tence of the Testing and Cali- bration Laboratories. For more information please contact: Rose Aysegul Gokkaya
Page 13 SGS in the News
Sudan & Para Red Colourants Due to its potentially carcinogenic effects the EU does not allow the use of Sudan red or Para red as food additives. However those colourings were recently found in a lot of foodstuffs like all types of spices, sauces, pastes and meat products. The first alert is situated in 2003 where Sudan red was found in chilli products. In February 2005 again Sudan red was detected in chilli-powder and led to the largest recall in the history of Britain. In May of this year Para red was found in spices leading to withdrawal from sale by the concerned companies. For more about this family of risky colourants, click here
Ban on Phthalates in Toys The EU parliament voted on 05 June 2005 in favour of a permanent ban on six phthalates in toys and childcare articles. From now on three phthalates DEHP, DBP and BBP are totally banned for use in any toys or child care ar- ticles. The second group of DINP, DIDP and DNOP af- fects toys and childcare articles which children could put in their mouths whether or not they are intended for this use. This is different from the former decision where products intended to be placed in the mouth were banned. The ban also applies irrespective of the age categories. For more on this important toy regulation go here
EU General Product Safety Directive In the EU, the General Product Safety Directive (2001/95/EC) is a framework directive. The aim of the Directive is to ensure safe products are placed on the market. The Directive applies where no specific provisions exist within Community regulations concerning the safety of products. If products satisfy more specific legislative requirements in the field of product safety, such as the Toy Directive, then the General Product Safety Directive will only apply to risks not covered by that specific Directive. Where the specific Directive does not cover a risk, enforcement can prevent the circulation of the product based on the General Product Safety Directive. For more information on what type of products are covered click here
Standards & Regulations
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RoHS Directive Manufacturers have to ensure that their products (and also components of these products) comply with this regulation. Manufacturers may not place new E&E equipment containing named substances in exceeding amounts on the market in the EU. All types of products are covered including household appliances, IT, telecommunication, consumer, lighting, electrical and electronic tools, toys, leisure and sports equipment. Equipment containing Lead, Cadmium, Mercury, Hexavalent Chromium and flame retardants Polybrominated Biphenyls (PBB) and Polybrominated diphenyl ether (PBDE) over the given limits are banned. For more detail go here
New Test Method for Azo Dyes According to the Directive 2002/61/EC several Azo dyes which can be split into 22 aryl amines are banned in the EU. Analytical methods have been established in the laboratories for a long time. The limit for each of these aryl amines is 30 mg/ kg. Until now, three different methods have been used for this analysis. These methods are based on the type of dyed material and on the availability of Azo dyes by extraction. However, using these methods only 21 out of the 22 banned aryl amines can be detected; they do not detect the presence of 4-amino azobenzene. Click here for more.
ECO Labelling People are more and more concerned about chemicals used in manufacturing processes. For that, several eco labels exist dealing with restricted and/or hazardous substances. Eco labels are voluntary and widely used by several organisations and companies. Different labels exist all over the world. As a market-based instrument, the primary function of an eco label is to stimulate both the supply and demand of products with reduced environmental impact. The objective of providing guidance to consumers has considerable implications with regards to economic efficiency and the flow of information. It reduces costs to consumers, manufactures, and retailers by lowering the time and effort needed to obtain or provide reliable information on life-cycle considera- tions and green product. Overall eco labelling has been moderately successful with individual consumers. Click here for more.
WEEE: EU extends the interpretation on defining Producer While the first execution deadline for WEEE was on 13 August 2005, there are still a number of practical issues open for clarifications. Both the European Commission (EC) and Technical Adap- tation Committee (TAC) of the EU Environmental division meet frequently and release additional information. The EC has published a clarification statement on 15 June 2005 to align and harmonize the understanding of the definition of producers among the EU member states, and the implementation of producer responsibilities in order to avoid unnecessary financial burdens to the industry. Click here for more.
Standards & Regulations
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PAH and Benzo(a)pyrene in Food Products On 1st April 2005, EU Regulation 208/2005 (amended from EU Regulation 466/2001) came into effect, imposing maximum levels for benzo (a)pyrene in different food products. Benzo(a)pyrene is used as a marker for the pres- ence and effect of carcinogenic Polycyclic Aromatic Hydrocarbons (PAHs) which are a group of different organic compounds, each of which contains two or more aromatic rings. Many of these organic compounds are considered to be carcinogenic and genotoxic and benzo(a)pyrene itself also demonstrates carcino- genic effects. For more go here
Wembley HA0 1WU
Tel: +44 (0) 20 8998 2171 Fax: +44 (0) 20 8997 9723 E-mail: ukenquiries@sgs.com
Middle East SGS SGEKS A.S.
Abide-I Hurriyet Cad. Gecit Sk. No.10
Sisli Istanbul, Turkey
Tel: +90 212 225 00 24 Fax: +90 212 296 47 82
E-mail: sgs.turkey@sgs.com
SGS Hong Kong Ltd.
5-8/F & 28/F, Metropole Square 2, On Yiu St, Sui Lek Yuen, NT
Hong Kong, SAR
E-mail: mktg.hk@sgs.com
Tel: +1 973 575 5252 Fax: +1 973 575 1193
E-mail: Marketing.CTS.US@sgs.com
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© 2005 SGS SA. All rights reserved. This newslet- ter is a publication of SGS SA although certain con- tents have been submitted by third parties or have otherwise been licensed for use by SGS SA and all copyrights in such third party contents remain vested in such third parties. Contents identified as being from third parties reflect solely the positions of such third parties and SGS SA neither endorses nor disapproves of said contents. This newsletter is intended to provide general information on a par- ticular subject or subjects and is not an exhaustive treatment of such subject (s). Accordingly, the information in this newsletter is not intended to constitute consulting or other professional advice or services. This newsletter is provided “as is” and SGS SA does not warrant that the information con- tained therein will be error-free or will meet any particular criteria of performance or quality. The information may not be quoted or referred to in any other publication or proceeding without the prior written consent of SGS SA.
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