In June 2007, the European Union launched a new regulation, REACH (Registration, Evaluation, Authorization and Restriction of Chemicals). REACH is a process designed to protect human health and the environment by controlling risks that result from the use of unsafe chemicals in manufactured products. It affects consumer product manufacturers exporting to the European market. What is REACH all about? How is it relevant to manufacturers in China?

In case you have not completely grasped the essence of REACH, think of the examples of the food, cosmetics or pharmaceutical industries. Would it be acceptable to you if you went shopping and picked up a pack of biscuits or a medicine and read on the label, “Consume with caution – 20 percent of substances unknown”? The answer is no because we have been conditioned to expect full transparency where in substances in these products are listed in the ingredient list.

With the enactment of REACH, manufacturers and importers will need to provide full transparency of substances in their EU export goods. In other words, these manufacturers need to know what chemical substances are in their products and if the substances are safe for human health and the environment. The key determining factors are: (1) whether the substances are intended to be released, (2) whether the substances are Substances of Very High Concern (SVHC), i.e., dangerous for human health and the environment.

How are these REACH rules translated into layman language? Let’s take an example from the toy industry -- Mr Chan, who runs a toy factory producing color drawing pens for a European retail chain store. Mr Chan must advise his clients (EU importers) what are the substances in his products, the quantity and if the substances are intended to be released.

Most important of all, the substances may need to be pre-registered by the importer or Mr Chan between June 2007 and the December 2008 deadline. To determine this, he needs to identify the substances that make up the color drawing pens (inks, dye, filament, plastic, cap, packaging, etc), then determine if these substances are intended to be released. Finally, he must calculate the consolidated tonnage volumes of each. Assuming that pre-registration is required, he will need to do this to protect his business and be compliant with the law. If he does not pre-register and the substances in his products are found by the regulators not to be pre-registered, he will need to take his products off the market.

It is possible Mr Chan does not know what exact chemical substances have been used in producing his color drawing pens throughout the production chain. In this case, he needs to mobilize his supply chain team systemically to build: (1) a bills of materials (BOM) -- a list of the individual components that make up his product (ink, filament, cap, plastic etc), and then (2) a bill of substance (BOS) -- the individual substances (dyes, solvents, chemical compounds) that make up each of these components.

Mr Chan will need to calculate the weight of these individual components as REACH requires him to calculate the percentage of individual substances in a product and how much he places on the EU market.

The second step is to indicate whether the substance is intended to be released from the products. Intended release refers to those releases which are essential for the end use function of the product. Without the release of the substances, the product would not work sufficiently.

The color drawing pen is a good example of intended release as it has to be released to make the pen function. Product substances intended to be released will be higher risk because these chemicals will be exposed to consumers and the environment, so it is necessary to understand what they are. Other intended release products include bubble solutions, candles, fragrant and scented products to name a few.

Mr Chan will also have to specify the name of the individual chemical substance which will have a Chemical Abstract Services number, which is an international classification/identification code. Knowing the identity of a substance will enable him to determine if it is a SVHC classified as either carcinogenic, mutagenic or toxic for reproduction. If it is, the usage and quantities in products must be restricted.

There are a few examples of chemicals quite commonly used in toy manufacturing which may contain SHVCs. Here are three examples:

1. Cadmium: Used in electroplating, paints, pigments and plastics to enhance the color. Excessive levels could cause health problems such as kidney damage, bone disease, anemia and cancer.

2. Benzene: An important industrial solvent precursor in the production of plastic, synthetic rubber and dyes. Excessive levels can cause health problems such as anemia and cancer.

3. Toluene: Usually used in adhesives and spray paints as a thinner. Excessive levels can cause health problems such as cancer and disorders effecting the nervous system and kidney.

If Mr Chan uses any of these chemicals in his products, he will need to advise his importer and determine who shall be responsible to pre-register with the European Chemical Agency (ECHA).

Upon pre-registration, Mr Chan will need to register the solution in order to be REACH compliant, deadline depending on the volume of export.

While putting in place a system for REACH compliance may seem daunting to a lot of manufacturers, the ultimate benefits that it brings to the community, in the EU and other countries is well worth the investment. Manufacturers in China need to work closely with their customers and suppliers to build a knowledge database to identify and control the use of the chemical substances in their products. Achieving REACH compliance will help manufacturers protect and grow your EU business.

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