Chinese firms ignorant of new EU eco-design rules

A Government-backed fact-finding mission to China has found significant confusion and ignorance among electronics suppliers over the requirements of EU legislation restricting the use of hazardous substances in electrical and electronic equipment.1

The study was part of the Department of Trade and Industry's series of short "global watch missions". Its aim was to uncover the quality of eco-design and environmental management in the electronics sectors of China, Hong Kong and Taiwan.

In particular, the mission led by the Surrey-based Centre for Sustainable Design probed the level of awareness of pending EU legislation including the sister Directives on waste electrical and electronic equipment and on the restriction of hazardous substances used in such equipment.

It also asked about the proposed framework Directive on energy-using products and the proposed controls on the registration, evaluation, authorisation and restriction of chemicals (REACH).

The proposal for the mission was built on the back of suggestions that the electronics industry is heading for major problems in complying with the EU legislation given its complex, globalised structure. Friction between the EU's environmental legislation and trade rules is already being addressed (ENDS Report 343, pp 25-27 ).

The mission report points to the structural changes taking place in the consumer electronics, ICT and white goods sectors. Many companies dealing with price-sensitive household goods are now looking to outsource manufacturing to Asia. More firms are becoming "systems integrators" offering supply chain management services to meet customer needs.

As a result, it says, "there will be growing challenges in relation to implementing eco-design amongst outsourced and contract manufacturers and through complex networks of suppliers of components and sub-assemblies."

The mission found a highly variable situation. In general, the level of awareness and preparedness to meet EU requirements was high in Taiwan and Hong Kong but much lower in China.

Its report points to the Government of Taiwan's aim to position the country as a "green silicon island" and observes that most large companies visited knew of WEEE and RoHS and had put in place eco-design programmes. The primary drivers of eco-design in Taiwan, however, are the environmental requirements of Japanese companies and laws.

In contrast, Chinese companies seemed confused about the status of EU and national legislation and the difference between these and European standards. "There seemed to be little recognition that non-compliance with European regulations could mean criminal penalties," the report notes. Even where Chinese firms have acquired European electronics companies - a growing trend - there seems to be little recognition of their inherited WEEE liabilities.

The Chinese government is developing its own version of the RoHS Directive based on the same substances in order to prepare its industry but the State Environmental Protection Agency is said to lack sufficient resources to enforce such legislation.

Some firms appeared to believe that by achieving certification to ISO14001 this would bring them into compliance with EU laws. The report notes that "there are question marks over the extent to which companies in the region fully adhere to ISO14001 requirements when the spotlight is off."

In addition many firms had overlooked ISO14001's direction to consider the environmental impact of their products. Little eco-design activity was in evidence in China.

One of the mission participants, David Burrell of electronics design and supply firm Plextek, concluded: "Over the last two to three years there has been a massive shift of manufacturing to the Far East....But the whole of the EU electronics industry could suffer if they get to 2006 [when the main WEEE and RoHS provisions come into effect] and realise that their suppliers are just not ready to meet the requirements."

He pointed out that awareness had to be built among SMEs in the EU before it could be passed down to their suppliers, given the many links in typical electronics supply chains.

But another participant, Joy Boyce of Fujitsu, pointed to a "tremendous desire" among firms in China to learn more about EU demands. The report concludes that there are considerable opportunities to export skills and knowledge to the region.

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