The 40% Problem: Why Retailers and Brands are Struggling with Social Compliance in China

[3BL Media]

Many of the most transparent retailers and brands report that 40-50% of their factories are either in remediation or considered medium risks. Moreover, this has not changed much over the past three years. Why has this proven to be such a challenge?

The principal goal is to protect the brand from disclosure that its suppliers and factories may not be trading ethically. Protecting the brand is an immediate problem. Human rights in developing countries is an aspirational goal. Unfortunately, retailers and brands have put in place “comply or die” policies and a monitoring and enforcement program which seek to drive immediate adherence to aspirational goals. The notion that a factory, relatively immature in its development, from a completely different culture can at the snap of the fingers honestly comply is unrealistic.

While there has been progress under this model, we are at a point where its usefulness has hit a plateau. In fact, the model is probably contributing to a lack of transparency as companies falsify records to comply and save their customer relationships. The reality is the 40-50% of factories non-compliance may actually be much worse.

It is often the case that large companies create, test and implement new management models, which over time are adapted and adopted by smaller companies. Looking at social compliance, the largest retailers and brands have purchasing leverage, capital to invest in monitoring and enforcement and staff, as few as they may be, to bring to bear on the issues. If the most committed retailers and brands are struggling, what hope do smaller companies have in achieving social compliance with their factories in China?

To explore these issues and a new approach for going forward, INFACT Global Partners will host the fourth in its global seminar series, the China Social Compliance Leadership Series. Led by Ian Spaulding, this seminar will provide a framework for a new approach. Mr. Spaulding has been a long time advocate of reality based compliance seeking complete factory transparency, building capacity to comply and continuous improvement to weave ethical trading into the fabric of the business.

This one-day immersion will take place at the Institute of Directors in London on February 17, 2010. Benefits of the seminar include:

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Understanding the key social compliance issues in China and how best to address them
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Improved factory performance
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Better communication with brands and retailers as well as factories on compliance matters
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Improved supplier relationships and lower churn
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Better visibility into your supply chain capacity
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Networking with peers and customers

For more information about this seminar, you can download the brochure here.

Please contact Holly McHugh at [e-mail] with questions or visit the INFACT web-site at www.infactory-solutions.com.

About INFACT Global Partners

INFACT Global Partners is a China-based corporate social responsibility and manufacturing solutions consultancy. Working directly with factories in China, INFACT helps advance corporate social programs through the development of pragmatic operational and productivity solutions. Collaborating with retailer, brands and organizations, INFACT helps implement cost effective strategies to increase CSR performance.



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