Complying with the EU's REACH directive does not seem to be a problem for big enterprises. Smaller makers are waiting until the last minute and may even stop exporting to the EU.
China's large export manufacturers appear to be all set for REACH. This comes as the majority claims to have met the requirements ahead of schedule.
|Yama received ECHA approval for 15 types of SVHC used in its plain pure polyester, printed, gold-stamped and organza ribbons.|
The deadlines for large-volume exporters to preregister all chemicals and register phased-in substances in the European Chemicals Agency system were Dec. 1, 2008 and Dec. 1, 2010, respectively. Not only do suppliers say they were able to comply before due dates, but they did so at their own expense as well.
The REACH directive stipulates that only EU companies can register chemicals in the ECHA system. But most importers and buyers are unwilling to spend time and money, especially since they have the upper hand over China's thousands of manufacturers. As a result, suppliers took the initiative and registered via agencies of EU companies to meet REACH requirements. The cost to do so, including registration and testing, averaged 800,000 yuan ($120,000).
Terry Fang, customer service representative at third-party testing agency Bureau Veritas, said some companies using the same raw materials shared testing fees to save on costs.
Industry analysts believe these China companies are on the right track. Manufacturers need to be more proactive toward meeting the regulation, especially since it is likely other markets will impose similar directives in the future. The unified standard and tracking mechanism could be a helpful tool for other countries and regions to use as pattern in developing a similar system.
Despite the substantial investment in meeting REACH requirements, compliant suppliers are not planning to pass on all related expenses to buyers. Price adjustments, if any, would be minimal and within a range acceptable to clients.
A large supplier of ribbons, Yama Ribbons & Bows Co. Ltd preregistered and received ECHA approval for 15 types of SVHC used in its plain pure polyester, printed, gold-stamped and organza ribbons. The company exports more than 1.2 billion yards of tape and at least 600 million yards of printed ribbons to the EU annually. Yama is said to be one of the first fashion accessory makers in China to have gained ECHA approval, which it received March 2009.
Jiangsu Longliqi Group Co. Ltd is another company that has passed ECHA's SVHC tests. Jiangsu Longliqi is a large maker of skin cream, lotion, soap, detergent, and skin, bath and dental care products. It registered 27 types of chemicals with ECHA.
REACH restricts and limits the presence of numerous chemicals, including phthalates and lead. The former is a plasticizer said to be a hormone disrupter, and cause cancer and birth defects. Lead is used widely in many products, including paint, plastic, ceramics, textiles and garments. It is also said to cause cancer, and can damage the central nervous and immune systems. REACH stipulates phthalate and lead content should not exceed 0.1ppm and 1.0ppm per product, respectively.
While large companies boast having complied with REACH requirements ahead of deadlines, many smaller businesses show reluctance in conforming to the directive. Although there are a few suppliers that are working with their trading company partners to meet the regulation, a large number want to simply stop exporting to the EU. There are also makers that are waiting for the deadline to pass without doing anything. Small makers are supposed to have registered phased-in substances by Dec. 1, 2018.
Dongguan-based Guangdong Friends Knitwear Co. Ltd usually processes orders from its partner trading company. Moreover, only 10 to 20 percent of exports go to the EU. Presently, Guangdong Friends has not taken any action toward meeting REACH requirements. The company will provide information about chemicals used in its textiles if the partner asks it to, but insists the latter should pay for the costs.
Ningbo Jiayu Craftwork Co. Ltd, meanwhile, has opted to shift its focus away from the EU. It would be difficult for the company to have chemicals registered because its raw material suppliers may not want to comply. This is because most of Ningbo Jiayu's providers cater mainly to the domestic market and only a small portion of their output is used on products for export to the EU. As such, it is not worth the significant expense to have the chemicals tested and registered.
Note: This article "China's large makers on course to REACH compliance" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
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