2014-15 Canada-China Business Forum Magazine | Page 80
LABOUR, ENVIRONMENTAL, HEALTH & SAFETY PRACTICES
SUPPLY CHAIN MANAGEMENT
How do you ensure your labour practices or
the labour practices of your partner in China
meet the necessary standards with regards to
local labour regulations, benefits requirements
and your expectations for environmental,
health and safety (EHS)? How do you ensure
compliance with the rapidly evolving standards
in China with regards to these requirements?
How do you meet shareholder expectations for
EHS that go beyond Chinese standards?
If you are sourcing from China,
you need to demonstrate that your
products were made in a way that
is consistent with your CSR policies
and values. That means rigorous
supplier assessments and continuous
improvement of all labour standards,
including EHS. Your supplier’s
quality performance is generally
an excellent indication of EHS
performance and vice versa. If you
spot deficiencies in one, there are
likely to be deficiencies in the other.
•
What are legal requirements in China
for pay, overtime, vacations, bonuses,
benefits and EHS, and what systems do
you have in place to regularly review these
requirements for your operations?
•
What are international pressures for labour
practices and performance in your sector and
what are the expectations from shareholders
and other stakeholders with regards to EHS
performance in China for your operations?
•
Invest in People
Invest in your CSR managers, EHS managers and
inspectors. There are more and more managers
and inspectors experienced in CSR and EHS
standards in China. Independent inspectors
that can be hired are also available.
Paperwork & Documentation
While paperwork may indicate the existence of appropriate
systems, there is no substitute for field inspections and
audits by your own staff to ensure proper implementation.
How can you assess EHS systems,
training and equipment?
•
How are you tracking and communicating
your labour practices and EHS performance
to your shareholders and other stakeholders?
USING AGENTS & INTERMEDIARIES
China is a vast and complicated market.
The bureaucracy is particularly complex with
multiple levels of government and jurisdictions that
often overlap. Engaging a well-respected local law
firm is a critical first step. The CCBC can help.
However, decision-making is not always
transparent, and often it will be necessary to
engage well-connected local agents to help
navigate the rules and regulations as well as to
establish your links to the real decision-makers.
It is critical to recognize that the use of agents
and intermediaries can carry significant
risk of unacceptable behaviour that might
cause legal or reputational problems.
Tips:
Background Checks
Vet your agent carefully for integrity. Information
should be provided that addresses the qualifications and
reputation of the agent. The CCBC, Canadian Trade
Commissioners and private agencies can help with this.
Detailed Contracts
Use detailed and clear contracts with agents.
Specifically list the tasks or services that are
expected and the basis of remuneration.
Do you have qualified
Chinese-speaking staff visiting
and assessing your suppliers?
•
Are you asking the right
questions during these
assessments and do you
know if the answers you are
receiving are accurate?
How are you tracking
supplier performance?
•
Assessments and audits of labour practices should focus
on performance as well as systems in place. Instead of
asking, “what personal protective equipment (PPE) is being
used by workers?”, it is more instructive to understand
and document what PPE training exists for workers, what
corrective measures exist for non-compliance, and the
current state of PPE use and condition during audits.
•
•
Focus on Performance
How can you assess current practices within
your operations, with regards to working
conditions, wages and overtime, benefits, etc?
•
Tips:
What can you expect with
regards to access to records
and official documentation?
•
How can you best assess a
supplier’s environmental
performance?
•
Are your inspectors
adequately trained in assessing
EHS performance?
•
Are your inspectors trained
to deal with physical threats
or offers of bribes?
Set Limits & Parameters
Most important is to list the activities that are
forbidden. Bribery and breach of confidentiality
provisions are major concerns.
Hospitality & Gifts
Gift-giving is part of the business culture but
it has been seriously curtailed by the Central
government. It is suggested that a financial limit be
explicitly stated for any gifts to be presented to or
meal to be taken with Chinese counterparts.
CANADA CHINA
FORUM
BUSINESS
2014-2015 ccbc.com
Tips:
Clarify Your Expectations
List the standards and norms you
expect your suppliers to meet and
describe in precise detail how your
inspectors can verify compliance, and
what deliverables and documentation
are expected to document this
compliance. Insist on the right to
conduct random inspections.
Localize Your Process
for the China Context
If you develop a list of vendor
prequalification questions developed
overseas to be understood or properly
applied in China, you will likely end
up with incomplete or irrelevant
answers. Supplier assessment and
auditing questionnaires should
be developed in partnership with
inspectors who understand what
the CSR performance requirements
are, how they can assess a vendor’s
performance in these areas
and why this is important.
Ask the Right Questions
Your inspection of suppliers
should focus on processes instead
of just results. What systems are
in place to document compliance
with all applicabl