Global retailers are increasingly coming under pressure from consumers who demand safe ethically-sourced products. Sourcing products from low-cost countries is today’s obvious choice. But how can retailers keep track of numerous distant suppliers and their factory practices? How can retailers monitor product quality and manage the ethical impact while growing product lines and improving speed-to-market? How can the buying teams be sure suppliers use safe materials and comply with ethical policies and standards consumers expect? And how can retailers have the piece of mind knowing they can prove compliance if need be?
One of the biggest issues that large retailers have to deal with when sourcing products from China is managing and monitoring all of the suppliers and factories in their supply chain. Visiting factories in China can be inconvenient if they are located in remote areas of the country making it unrealistic for retailers to continuously track their operations by regular visits to ensure they are complying with ethical labour practices. Retailers ultimately need to establish reliable supply chain systems for auditing their suppliers to ensure compliance, which can be time consuming and costly.
Ensuring product quality while also maintaining ethical standards is a balancing act for retailers as they try to expand their product lines, increase speed of production while also keeping costs low. These demands can transfer the ethical concerns from the manufacturing stage to the sourcing of raw materials stage. Leading to concerns whether the raw materials are safe for consumers and do not cause damage to the environmental. Retailer buying teams need to verify with their suppliers that their raw materials are free from harmful chemicals and meet the ethical standards their customers demand.
The value in sourcing ethically manufactured products and having a ethical supply chain is lost if retailers cannot prove this to consumers, regulatory bodies and advocacy groups. This means that retailers need provide transparency thought implementing tracking systems, regular audits and maintaining clear documentation that supports their adherence to ethical practices that they can present to stakeholders if concerns regarding their sourcing practices arise.
Retailers that are sourcing from China are investing in Ai and blockchain technologies to monitor their supply chains while also partnering with third party auditing firms to help audit their suppliers. Maintaining good long term relationships with all parties involved in the supply chain is vital to mutual accountability and transparency.
China’s Competitiveness & Ethical Sourcing Advantages
Despite these challenges of ethical sourcing in China, China remains as the preferred manufacturing source due to factors such as its well established manufacturing infrastructure, the ability to scale on demand and the ongoing efforts by manufactures and government backed entities to improve compliance inline with international ethical standards.
Advanced Manufacturing Infrastructure
As previously mentioned China’s manufacturing infrastructure is well established which allows manufactures to produce goods cost efficiently and at scale. Chinese factories often have decades of experience in mass production with the latest technology and with a labour force that makes them competitive in both of cost and speed. Chinese manufacturers are keen to implement infrastructure that supports systems for tracking labour practices, raw materials and production processes.
Economies of Scale and Cost Efficiency
China’s ability to mass produce goods at large scale enables retailers to keep costs low in comparison other countries. Tracking and ensuring ethical sourcing can increase the overall operational man manufacturing cost due to audits, certifications, and higher labor standards. However as Chinese factories are able produce goods at such a large economy of scale the additional costs can be absorbed more effectively, making it more feasible to maintain a competitive pricing advantage while ensuring ethical sourcing practices.
Chinese Government Incentives and Policy Shifts
The Chinese government has taken very serious steps to improve its workforce labor conditions and reduce the impact on the environment from manufacturing. Under global scrutiny the Chinese government has revised and improved labour laws, set guidelines and environmental regulations that are stringently enforced making it easier for retailers to comply with international standards. Whereas other countries regulations may be lacking of poorly enforced by authorities.
Adaptability to Global Market Demands
Chinese manufacturers are keen to remain competitive and known for their ability to quickly adapt and respond to changes in the market. As retailers and their consumers demand more supply chain transparency of ethical standards, Chinese manufacturers have been quick to adopt and implement the required changes that allow for efficient third-party auditing and other sustainability checks. This agile flexibility allows manufacturers to quickly make changes and ensures retailers can meet their ethical sourcing goals without sacrificing on speed and the ability to remain competitive.
Availability of Skilled Labor
China has a large skilled workforce that is capable of manufacturing products at various levels of complexity. As ethical sourcing often requires the manufacturing process to adhere to precise standards and production techniques, China’s skilled manufacturing workforce has the skills and experience to meet these standards.
Other countries may seem to be competitive on manufacturing costs but later struggle with a shortage of skilled manufacturing labor or insufficient training which can be disruptive to the ability to meet quality and ethical standards required by retailers.
