devised a supply chain strategy to reduce their raw material costs while also promoting sustainability in the United States. Do Chinese suppliers care about sustainability?
Sustainability and Chinese Suppliers: Extracting Greater Value Through Sustainable Raw Material Sourcing
This Chinese supplier finances EPS (extended polystyrene) compression equipment in the United States for small business owners. Next, the supplier sets up purchasing agreements with those small business owners. Because used EPS (Styrofoam) is often thrown out as garbage in the United States, recycling collection points need to only identify large users and setup up collection agreements (Home Depot, Walmart, etc.). Next, this Chinese supplier purchases the EPS and ships it to China. Because bulk shipping TO China is much cheaper than FROM China (empty containers go back to China from USA), the costs to ship the used EPS and use it as a raw material in the Chinese supplier’s manufacturing facility is cheaper than buying locally in China. Moreover, they have a consistent and controlled
raw material supply source. Pretty cool!
The EPS is often used as packaging for raw fish, food, and other products.
Learn more about EPS recycling: http://epsrecycling.org/
Not everyone cares though….
The following day, we visited a small factory that had a fire burning right outside their production center. When we asked if anything was wrong, the factory manager told us that the factory real estate manager just burned all the trash from the factory or dumped it in the neighboring empty lot rather than paying the trash collection fee. The fire burned 24 hours a day and was only a few meters from the work site……
This story validates a number of observations I have had about China, sustainability, and Chinese suppliers:
After we visited these suppliers, I had several discussions with some clients about sustainability and Chinese suppliers. Clearly, pollution from factories is a major problem in China. While we were in Shanghai, we read reports about Beijing air quality and saw stories about dead pigs in Shanghai. (http://www.cbc.ca/news/world/story/2013/03/10/wrd-china-shanghai-river-dead-pigs.html). Clearly, environmental safety is not a major priority for many companies in China.
From those discussions, our client asked me:
My responses were:
I think it is a difficult problem to solve, but what do you think? How important is sustainability for your sourcing strategy? Is it something that most importers give lip service to but actually place less importance on compared with pricing? Would you import from a Chinese supplier that had 10% higher prices, but a more environmentally conscious sourcing strategy or production facility?
Hammersourcing.com is a trade services business based in Shenzhen, China. You can reach us at firstname.lastname@example.org