Think before importing non-compliant M&E from China

They say importing M&E from any foreign country is always challenging, but caution that certification is a critically important step that is routinely neglected by local importers.

When acquiring M&E from the US or EU it’s the manufacturers responsibility to ensure compliance. However, China is different and this is where local importers regularly get it all wrong.

What makes things worse is the fact that the overwhelming majority of Chinese manufacturers are either unaware of, or unable to comply with US and EU product certification standards.

In many industries, as few as 5% of Chinese suppliers can provide previous test reports that shows some kind of indication that the supplier is able to comply with standards such as CE, RoHS and FCC.

In addition, it is not the responsibility of the Vietnam government to enforce compliance.  It would simply be too hard for government authorities of any country to enforce compliance on Chinese imports.

This puts the weight of responsibility squarely on the importing local company’s shoulders.

Sourcing certification compliant suppliers in China

Price matters when importing from China, otherwise local companies probably wouldn’t bother. However, it’s pointless, say the experts, to negotiate a price with a supplier that is unable to manufacture certification compliant products.

The first question a local company should ask a Chinese suppler is whether or not their products are industry compliant. The second question should be whether or not the supplier can provide a previous test report that proves compliance with industry standards.

In addition, the local importer must send at least one sample from their order to a laboratory for testing prior to accepting delivery of the shipment of M&E and most definitely prior to payment.

There are several international labs with a local presence in China such as SGS, TUV and Bureau Veritas to name only a few.

Local importers should also be aware it is not possible to sidestep the whole manufacturing process and buy certification compliant products straight from a Chinese supplier’s warehouse.

Certification compliant products are simply not mass produced and stored for future buyers in China. Although there are wholesalers in China that offer buyers ‘ready-made’ products from a warehouse, these products are in almost all cases manufactured for the Chinese domestic market and are not US or EU industry compliant.

Bad things happen when importing non-compliant products

The Ninh Binh Fertilizer Plant is a prime example of what can go wrong. The company has suffered losses of US$121 million (VND2,700 billion), resulting from importing non-compliant M&E from China.

Thai Nguyen Iron and Steel Joint Stock Corporation hired a Chinese contractor to install equipment in its production facilities at a cost of US$363,123 (VND8.100 billion). It turned out the M&E was defective and as a result the plant was forced to shut down.

The instances where local importers have been damaged as a result of importing defective noncompliant M&E from China are endless in number and infinite in variety.

Dr Pham Si Thanh from the Vietnam Institute for Economic Research and Policy (VERP) has affirmed the cost to local businesses of importing noncompliant M&E is exorbitant.

Substantially all imported M&E from China is not industry certified compliant with either US or EU standards, says Dr Thanh. If a local importer acquires M&E from China and the product is defective they stand to lose all of their investment with little recourse against the supplier.

Whereas if they purchased the M&E from the US or EU they would have adequate legal and other remedies for redress, says Dr Thanh, noting that’s why these companies shouldn’t neglect product certification when importing from China.

According to statistics from the General Department of Vietnam Customs, in the seven months leading up to August, China continued to be the largest provider of M&E to Vietnamese companies with an import value of US$5.81 billion.

Last year, local companies imported machines valued at US$9 billion from China.