Topics in U.S. Consumer Product Safety Law - gma.org.hk Piper Presentation... · Topics in U.S. Consumer Product Safety Law: Compliance, Enforcement, and Litigation Management Hong

Topics in U.S. Consumer Product Safety Law: Compliance, Enforcement, and Litigation Management

Hong Kong Productivity CouncilHong Kong

Jan. 22, 2010

Kimberly K. Egan

Peter M. EllisGeorge Gigounas

DLA Piper LLP (US)

1

Introduction

The Consumer Product Safety Improvement Act of 2008

Safety Standards

Testing and Certification RequirementsTracking Label Rules

EnforcementEnhanced Enforcement AuthorityState Regulatory EnforcementTrends in Enforcement

Product Liability / Class Actions

Challenges and OpportunitiesCPSIA Part of a Changed LandscapeRisk-Management StrategiesCompetitive Opportunities

2

AGENDA

Chinese imports accounted for 80 percent of lead paint recalls.

3

WHAT IS THE U.S. PUBLIC PERCEPTION?

Chinese imports accounted for 90 percent of all consumer product recalls.

SOURCE: http://schumer.senate.gov/new_website/record.cfm?id=289822

2007

1987to

2007

4

WHAT IS THE CONSUMER PRODUCT SAFETY COMMISSION?

The U.S. federal agency authorized to issue mandatory safety standards that are

“reasonably necessary to prevent or reduce an unreasonable risk of injury associated with a

consumer product.”

SOURCE: 15 U.S.C. § 2506(a); 2051(b) and 2052(a)(1).

5

WHAT IS A “CONSUMER PRODUCT?”

“. . . any article, or component part thereof, produced or distributed

(i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, OR

(ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation . . . .”

SOURCE: 15 U.S.C. § 2506(a); 2051(b) and 2052(a)(1).

6

WHAT IS THE CONSUMER PRODUCT SAFETY COMMISSION?

The Commission can also:

1. develop safety standards for consumer products;

2. reconcile conflicting State and local regulations;

3. investigate product-related injuries;

4. Initiate product recalls;

5. Levy civil penalties; and

6. Seek criminal enforcement.

SOURCE: 15 U.S.C. §§ 2506(a); 2051(b); 2052(a)(1); 2064; 2069; 2070.

7

AGENDA

Introduction


Safety Standards





8

WHAT IS THE CPSIA?

New Safety Standards (Sections 101, 106, 108, 232);

New Certification Requirements (section 102);

New Tracking label requirements (Section 103); and

New Recall Powers and Penalties (Sections 212-22).

9

New Safety Standards (Sections 101, 106, 108, 232);




WHAT PRODUCTS ARE COVERED?

Non-Children’s Products

Children’s Products

Safety standards:Lead;

Third-party test and certify;Tracking labels required.

ATV safety standards;Self-test and certify (Forproducts with CPSC standards)

All Products

New recall powers;Enhanced penalties.

New Safety Standards(Sections 101, 106, 108, 232);








Toys; Phthalates;New Safety Standards(Sections 101, 106, 108, 232);




































10

“Children’s product”

Any consumer product designed or intended primarily for children

12 years old or younger.

How Do I Know?

Does the product represent that it is suitable for 12 years old or younger?

Is the product commonly recognizedas suitable for 12 years old or younger?

Does promotional material state or imply that the product is suitable for 12 years old or younger?

WHAT PRODUCTS ARE COVERED?

11

QUESTION: The tip on ball point pens are made from leaded brass and there is no other source for materials as the lead in the brass is required to machine. Is it ok for children to use ball point pens?

ANSWER: The lead ban is applicable to children’s products containing lead. The term “children’s product” means a consumer product designed or intended primarily for children 12 years of age or younger. Accordingly, to the extent that these pens are general purpose items not being marketed to, or advertised as being intended for use by children 12 years or younger, these pens would not be subject to the lead limits under CPSIA.

SOURCE: www.cpsc.gov: FAQs on Lead

WHAT IS A “CHILDREN’S PRODUCT?”

12

600 ppm

90 ppm

600 ppm

300 ppm

100 ppm

August 14, 2009

August 11, 2011

2008

Lead Paint Lead Substrate

WHAT ARE THE NEW LEAD STANDARDS?

13

Precious gemstones: diamond;ruby; sapphire; emerald;

“any of many minerals and other materials commonly used to make jewelry and other adornments";

Natural or cultured pearls;

SOURCE: Jan. 15, 2009 Notice of Materials That Meet Lead Limits

ARE THERE ANY EXCEPTIONS?

NOT LEAD

14

Other "natural materials”:coralamberfeathersfur untreated leather

Wood

Natural fibers, including: cottonsilk woolhempflaxlinen; and


SOURCE: Jan. 15, 2009 Notice of Materials That Meet Lead Limits

NOT LEAD

15

“Printing inks, materials such as pigments for plastics that become part of an article itself, and materials such as ceramic glaze which become bonded to the surface of a product are not paints . . . .”


SOURCE: Jan. 2001 Lead Paint Ban

16

HOW ARE CHILDREN AFFECTED BY LEAD?

SOURCE: http://www.uhl.uiowa.edu/publications/archive/annualreport/1996/lead2.gif

10

20

30

40

50

100

150

↓= Decreased function

↑= Increased function

TransplacentalTransfer

HemoglobinSynthesis

Colic

Neuropathy

Death

Encephalopathy

Frank Anemia

Nerve ConductionVelocity

DevelopmentalToxicity

IQHearingGrowth

Vitamin DMetabolism

ErythrociteProtoporphyrin

Vitamin DMetabolism (?)

17

Permanently bans “3P phthalates” (DEHP, DBP, and BBP) at levels more than 0.1%;

Temporarily bans “6P phthalates” (DINP, DIDP, and DnOP) pending further study, at levels more than 0.1%;

Advisory Panel named on December 23, 2009

From “children’s toys” or “child care articles” that can be placed in a child’s mouth and that can be sucked or chewed.

WHAT ARE THE PHTHALATE STANDARDS?

WHAT IS A CHILDREN’S TOY?

18

Consumer products used by children:

12 years old or younger;

Intended by manufacturer for use by the child when the child plays;

Does not include musical instruments, art supplies, “sporting goods” or bicycles.

WHAT IS A CHILDCARE ARTICLE?

19

Consumer products used by children:

3 years old or younger;

Intended by manufacturer to facilitate sleep or feeding; or

Intended by the manufacturer to help with sucking or teething.

HOW DO PHTHALATES AFFECT CHILDREN?

20

“Phthalates are animal carcinogens and can cause fetal death, malformations, and reproductive toxicity in laboratory animals . . . The extent of these toxicities and their applicability to humans remains incompletely characterized and controversial.”

“Like all phthalates, DEHP and DINP are ubiquitous contaminants in food, indoor air, soils, and sediments.”

“Scientific panels, advocacy groups, and industry groups haveanalyzed the literature . . . and have come to differentconclusions about their safety.”

SOURCE: Shea KM, Pediatric Exposure and Potential Toxicity of Phthalate Plasticizers, 111 Pediatrics 1467 (2003)

21

CPSC may exclude products from the new rules if there are no lead or phthalates in the product, or if the lead or phthalates in the product:

is inaccessible;

will not be absorbed by the human body; and

will have no adverse impact on public health or safety."

ARE THERE ANY EXCEPTIONS TO THE LEAD AND PHTHALATE RULES?

22SOURCE: Jan. 15, 2009 Notice re Inaccessible Parts

WHAT IS AN INACCESSIBLE COMPONENT?

An inaccessible component is "one that is located inside the product, whether or not such part is visible to a user of the product, and cannot be touched by a child."

23

Requests for a blanket determination that a specific product complies with the CPSIA should be supported by:

reliable test results or other scientific evidence;

based on objectively reasonable and representative testing;

showing that the product or material does not, and would not, under reasonably foreseeable conditions exceed the lead limits.

SOURCE: Jan. 15, 2009 Notice of Procedures for Request for Determination

CAN I REQUEST A RULING ON MY PRODUCT?

24

a detailed description of the product;

data on the content of the product or materials used in the production of a product;

data or information on manufacturing processes through which lead or phthalates may be introduced into the product or material;

any other relevant information; and

detailed information on the relied upon test methods.

SOURCE: Jan. 15, 2009 Notice of Procedures for Request for Determination

CAN I REQUEST A RULING ON MY PRODUCT?

25

ASTM F963-08 became mandatory on August 17, 2009

Standard is detailed and comprehensive, covers structural, material and performance requirements for many items

Notable exclusions (not defined as “toys”):Bicycles, tricycles ▪ Sporting / athletic goodsModel kits ▪ Musical instrumentsMany art supplies ▪ Furniture.

Small parts regulations are still separate.

WHAT ARE THE TOY SAFETY STANDARDS?

26

1. Certify conformity with all CPSC safety standards.

2. Certificates must accompany the goods during shipment.

3. Electronic certificates (accessible by internet) permissible.

Imported products = importer certifies

Domestic products = domestic manufacturer certifies

WHO MUST CERTIFY?

CHILDREN’S PRODUCTS

Independent Laboratory Certification

USE a third-party accredited testing laboratory:

Product specs: describe product, identify standards

Certification tests: specific protocols, identify laboratory

Testing interval: both “periodic” and with “material change”

Component testing, paint supply, paint composites

Remedial Action Plan: what happens if product fails test?

NON-CHILDREN’S PRODUCTS (with safety standards)

“General Certificate of Conformity”

USE a “reasonable testing program:”


Certification tests: show product meets standard

Production testing plan: describe tests and testing interval

“Reasonable assurance” that all products meet standard


27

HOW DO WE CERTIFY?

CHILDREN’S PRODUCTS

Independent Laboratory Certification

USE a third-party accredited testing laboratory:


Certification tests: specific protocols, identify laboratory

Testing interval: both “periodic” and with “material change”

Component testing, paint supply, paint composites


28

HOW DO WE CERTIFY?

29SOURCE: www.cpsc.gov/cgi-bin/labapplist.aspx

WHAT LABS CAN TEST IN HONG KONG?

www.cpsc.gov/cgi-bin/labapplist.aspx

30

November 10, 2008

Dec. 22, 2008

February 10, 2009

Lead Paint

Self-certification

Third-party testing

Lead Substrate

Self-certification

Third-party testing

Certify all product in inventory or on store shelves.

Feb. 10, 2011

WHEN MUST WE CERTIFY?

Phthalates

Self-certification

Third-party testing

31

Permanent markings on children’s products for products made on or after Aug. 14, 2009.

“Permanent” = product’s useful life

Include:

Name of manufacturer or private labeler;

Location and date of production;

“Cohort information” (batch or run number, e.g.)

WHAT IS A TRACKING LABEL?

32

Record-keeping is essential under the CPSIA. Firms must know who is upstream and downstream in supply chain

Upon request by CPSC, every importer, retailer and distributor must identify manufacturer;

Upon request by CPSC, every manufacturer must identify:Each retailer or distributor to whom they supplied a product;

Each subcontractor involved in production or component supply.

WHAT OTHER INFO DO FIRMS NEED?

SOURCE: 15 U.S.C. § 2065.

33

No tracking label required if “not practicable.”Product is too small to be marked;

Individual pieces of, e.g., a board game;

Bulk vending machine products;

Marking would damage product or its utility;

Marking is impossible (elastics, beads, rocks);

Aesthetics of product would be ruined.

ARE THERE ANY EXCEPTIONS TO THE TRACKING LABEL RULES?

Introduction


Safety Standards





34

AGENDA

35

ENHANCED ENFORCEMENT AUTHORITY

SOURCE: 15 U.S.C. § 2064(c).

ENHANCED RECALL AUTHORITYRapid response for “substantial product hazards”

Previously, mandatory recalls required judicial or administrative rulingsNow, for “substantial product hazards,” the CPSC may

order distributor or retailer to immediately:Halt product distribution throughout supply chainNotify State and local public health officialsGive public notice through all media channelsMail notice to known customers

Most CPSC recalls have been voluntary

substantial product hazards

36


Pre-CPSIAPer violation: $8,000

Maximum: $1,825,000

SOURCE: 15 U.S.C. § 2069(a)(1).

CPSIAPer violation: $100,000

Maximum: $15,000,000

CIVIL PENALTIESSubstantially increased

37


SOURCE: 15 U.S.C. § 2070(a).

CRIMINAL PENALTIESFelony for knowing & willful violations

Possible jail time up to 5 years in prison

Criminal fines

Individuals: up to $250,000

Companies: up to $500,000

Asset forfeiture, possible disgorgement of profits

38

Streamlined public disclosure of reported injuries

Public Consumer Safety Database creation

Online, searchable public access to all injury reports


SOURCE: 15 U.S.C. § 2055.

PUBLIC ACCESSGreater public access to product hazard information

39

“No manufacturer, private labeler, distributor, or retailer, may discharge an employee or otherwise discriminate against an employee with respect to compensation, terms, conditions, or privileges of employment… [because the employee reported a CPSC violation].”

Protects those who report violations or alleged violations through any channel.


SOURCE: 15 U.S.C. § 2051.

WHISTLEBLOWER PROTECTIONEmployees cannot be disciplined for reporting alleged problems

40

Violations affecting State’s residents

Products not complying with CPSC standardsSelling recalled productsFailure to provide certifications

Can determine “Substantial product hazards”State AGs likely to be

aggressiveIllinoisConnecticutCalifornia


SOURCES: 15 U.S.C. § 2073; 36 BNA PSLRptr 40.

STATE ATTORNEYS GENERAL “DEPUTIZED”Can sue in federal court to stop violations of CPSC standards/rules

“What good is a recall [if the product is still for sale in the secondary market]?”

41






SOURCES: 15 U.S.C. § 2073; Conn. AG PR, Feb. 6, 2009.


“My office will take whatever steps are necessary to ensure that this phthalate ban is enforced.”

42






SOURCES: 15 U.S.C. § 2073; Cal. AG PR, Nov. 17, 2009.


"These products must be removed from store shelves at once to protect our kids from toxic lead exposure."

Introduction


Safety Standards





43

AGENDA

44

STATE REGULATORY ENFORCEMENT

STATE PRODUCT REGULATION INCREASINGStates see consumer product regulation as “health and safety” issue

45


SOURCES: Cal. Health & Safety Code § 25249.5, et al.., § 108935; 17 C.C.R. § 93120, et al.

CALIFORNIALeading State on consumer product regulation

Proposition 65Most popular enforcement vehicleFocuses on exposure, not productCurrently, 829 chemicals listed

Lead, 5 phthalates, formaldehyde

Requires warnings for exposuresAG or “private attorney general”Injunction, penalties, attorneys fees

AB 1108 – Phthalate banSimilar to CPSIA, but retroactive

Formaldehyde ATCMApplies to composite wood productsTesting and certification like CPSIAPhased in compliance

46


SOURCES: 410 ILCS 45/6; 410 ILCS 46/22, 23.

Lead Poisoning Prevention Act Amendment

Effective January 1, 2010Warning labels for lead contentChildren’s jewelry, child care articles, toysStricter than CPSIA: Warning if lead content (total or component)>40 ppmState AG claims CPSIA does not preempt

Mercury-Added Product ProhibitionApplies to cosmetics, toiletries,

fragrancesProhibits sale or distribution in state

ILLINOISConsumer product regulation

WARNING: CONTAINS LEAD. MAY BE HARMFUL IF EATEN OR CHEWED. MAY GENERATE DUST CONTAINING LEAD.

47


OTHER STATES / LOCAL GOVERNMENTSConsumer product regulation more frequent

Introduction


Safety Standards





48

AGENDA

Border AuthorityEnforcement LagNew ResourcesFuture Development

STRONGER ENFORCEMENT AT PORTS OF ENTRYCPSC border authority is strong in theory

TRENDS IN ENFORCEMENT: PORTS OF ENTRY

Import Surveillance DivisionCreated March 2008Joint programs with CBP

New certification requirements

Substantial product hazard listBy characteristics or classes

E.g., children’s hooded sweatshirts with drawstrings

CPSC may target shipments and refuse admissionAdministrative challenge will be

narrower, more difficult

49

TRENDS IN ENFORCEMENT

SOURCES: U.S. GAO 09-803 Consumer Safety, August 2009; 15 U.S.C. § 2064(j)


STRONGER ENFORCEMENT AT PORTS OF ENTRYCPSC border enforcement lags other key agencies


50


SOURCES: U.S. GAO 09-803 Consumer Safety, August 2009

“CPSC’S staff resources supporting border surveillance… may not be adequate to prevent

unsafe products from entering the United States.”

USDA Food Safety & Inspection Service95 staff; 150 facilities; 35 points of entryUSDA Animal & Plant Health

Inspection Service≈1800 inspectors (w/CBP);139 points of entryFDA

≈700 staff; 297 points of entry + CBP helpCPSC: 9 inspectors at 7 ports

CPSIA requires CPSC to growAt least 500 full-time staff by 2013

CPSC plans to grow at bordersRequested 10 more staff for 2010Predicts 50 staff within few years

Money?


STRONGER ENFORCEMENT AT PORTS OF ENTRYCPSC is receiving more federal funding for enforcement


51


SOURCE: CPSIA § 202(c)(1) and (2).


52


SOURCE: http://www.ombwatch.org/node/10211.


STRONGER ENFORCEMENT AT PORTS OF ENTRYCPSC actions will emphasize border enforcement


Rule implementationCertification requirementsSubstantial product hazard list

Increased inspection/seizureMore effective methods

Risk assessment methodologyBetter advance shipment dataUpdated cooperation with CBPImporter Self-Assessment Product Safety Pilot Program

More port-stationed staffParticulary on Pacific Coast

53


SOURCES: U.S. GAO 09-803 Consumer Safety, August 2009.

0 500 1000 1500

2008

2007

2006 616

748

1,171

54

TRENDS IN ENFORCEMENTTRENDS IN ENFORCEMENT: MORE ACTIONS

Civil ActionsCriminal ActionsState ActionsNon-US Defendants?

MORE CPSC ENFORCEMENT ACTIONSRecalls and civil penalty actions may increase

CPSIA rules facilitate recallsMandatory recalls easier to forceMore standards to meetPenalty hike encourages voluntaryPublic reporting databaseTracking labels make recalls easierState Attorneys General

Implementation lag?

CPSC likely seek more penaltiesHigher rewardHigher profile recoveryPossibly delayed for rule-making0 50 100 150 200

2009

2008 162

41

U.S. Toy Recalls

SOURCE: Plastics News, “Governments Urge Keeping Focus on Toy Safety,” January 13, 2010.

55

TRENDS IN ENFORCEMENT: MORE ACTIONS


MORE CPSC ENFORCEMENT ACTIONSStronger criminal penalties may encourage more prosecutions

Criminal suits likely still rareReserved for most egregious casesResource intensive

Felony rating may attract DOJConvictions would be high-profileIndividual criminal penaltiesPursuit could have deterrent effect

State attorneys generalCould be more aggressive in some states

56



State law enforcement benefitsPolitical benefit – “hometown hero”Penalty recoveries are state fundsLocal sensitivitiesState court advantages

Proposition 65 enforcementSustained resurgence in consumer products“Private attorney general” statusBreadth and ease – copycat laws?

No “local face” to the companies

MORE STATE ENFORCEMENT ACTIONSMore and stronger state and local laws have consequences

57



“Consent to jurisdiction” toolU.S. government studied itCPSC does not favor it

Without consent, many hurdlesSufficient contactsFair notice

Trending?Two Hong Kong companies settled CPSC enforcement actions in 2009

MORE CPSC ENFORCEMENT ACTIONSEnforcement against foreign companies – it could happen!

CPSC OutreachChina/HK RegulatorsPotential Impacts

U.S. / CHINA / HK REGULATORY COOPERATIONStrong indications of closer future regulatory relationship

CPSC office in BeijingBetter cooperation with companies and government

Outreach / training events3 events each year 2008-2010

China Program PlanOverall strategy, updated annually

Cadmium problem - exampleTenenbaum’s first statements

58SOURCES: U.S. GAO 09-803 Consumer Safety, August 2009; CPSC 2010 Perf. Budget Request; et al.

TRENDS IN ENFORCEMENT: COOPERATION



US-Sino Product Safety Summit

Hong Kong visit, August 2009More formal relationship with

Hong Kong Customs Information sharing and

enforcement cooperation

Chinese law revisions / AQSIQ

Information sharing / MOUEuropean Union experience

59




Foreign facility inspections

Foreign country equivalencyMajor hurdles, not likely

Preapproval requirementsFDA examplePossible for problem products

60


“It is no longer really practical to undertake enforcement on a national or

even regional level.”Meglena Kuneva, European Union’s Commissioner for Consumer Protection

Introduction


Safety Standards





61

AGENDA

What is it?Can I be sued?Trends in litigation

WHAT IS A PRODUCT LIABILITY LAWSUIT?Individual or class action that can generate major liability

Lawsuit by individual or classTypically state lawTypically tried to a jury

Harm caused by “defect” in a product

Design defectsManufacturing defectsWarning defects

All in the manufacture and distribution chains can be liable

“Strict liability” possiblePunitive damages possible

62

PRODUCT LIABILITY / CLASS ACTIONS



Personal jurisdiction for foreign companies

Minimum contacts, systematic and continuousReasonableness

Foreign defendants – factorsDesigned/marketed for U.S.?Control over distribution

Service on foreign entitiesHong Kong lawChinese law

Enforcement of judgments

63SOURCES: U.S. Dept. of State; Froland v. Yamaha Motor Co., 2003 WL 22971360 (D.Minn. 2003), et al.




More product liability litigationHand-in-hand with more regulationPublic access databaseToxicology science developmentsGreater media focus

More foreign defendants suedMarket maturationGreater domestic regulation

More risk for foreign defendantsSupplier contractual indemnityPublic perception / jury hostility

64


Introduction


Safety Standards





65

AGENDA

66

CPSIA PART OF A CHANGED LANDSCAPE

GLOBAL FOCUS ON CONTENT & MANUFACTUREGreater scrutiny on manufacturers is here to stay

Public perception of risk

Pressure to strictly regulate

Importer / retailer demandsPermanent spotlight on China / Hong Kong product manufacturers


Recognizing the Risk

A recent Study - 'Managing Supply-Chain Risk for Reward' – sponsored by ACE and prepared by the Economist Intelligence Unit, concluded that, "while businesses claim supply-chain risks merit a high priority at board level, many still underestimate the potential impact of these risks and face a challenge in terms of expertise in this critical area of risk management…."

68


The world’s attention is on China and Hong Kong product manufacturers

Media coverage dramatically upPublic disclosure built into new regulationsToxicological understanding is advancing

Regulators active from China and abroad

Retailers pushing harder to move risk and cost to manufacturers

Contractual and legal liabilityA new set of commercial, social and political

expectations

GLOBAL FOCUS ON CONTENT & MANUFACTUREGreater scrutiny on manufacturers is here to stay

69

RISK MANAGEMENT STRATEGIES

Immediately assess all products currently in inventory, on store shelves or on order, to determine whether any of your products are subject to the new requirements.

If you have not already done so, begin testing products for compliance with the new standards.

Consider whether it would be appropriate to request a determination that your products do not contain lead or phthalates and/or will not result in human lead absorption.

TAKE ACTIVE MEASURES TO MITIGATE RISKProtecting your company in a difficult business and legal environment

70


TAKE ACTIVE MEASURES TO MITIGATE RISKProtecting your company in a difficult business and legal environment

Your customers are preparing, so should youImporters are highly conscious of minimizing liability

and maximizing protections under the CPSIA.

Typical advice to importers:Maintain independent testing consultant to audit

certificationsContractually require exporters to comply with all

applicable U.S. safety and quality standardsGet a good lawyer in exporter’s jurisdictionRequire exporter to carry recall and product liability

insurance

71


PREPARE FOR CUSTOMER’S COMPLIANCEImporters and retailers placing major priority on compliance

Source dependable materialsFrequently updated network of dependable, efficient

suppliersTransparent system for supplier QC

Document manufacturing process and QC

Develop relationship with accredited labsMaintain several optionsDifferent labs have different testing capacity

72

Demonstrate capacity for complianceFlexible material sourcing

Knowledge regarding material content

Laboratory relationships

Organized documentation system

Specific, knowledgeable compliance point person(s)

Proactive inquiry regarding customer compliance concerns

COMPETITIVE OPPORTUNITIES

COMMUNICATE COMPLIANCE ADVANTAGEImporters and retailers placing major priority on compliance

73

Know the CPSIA requirements, even if customer is ultimately responsible

Key requirements:Standards applicable to product/material?Testing protocols and requirementsCertification needsTracking label issuesDocumentation and record-keeping


COMMUNICATE COMPLIANCE ADVANTAGEImporters and retailers placing major priority on compliance

74

Proactive communication with customersKnowledgeable, effective point person(s)Establish expectations regarding CPSIA compliance

responsibilitiesDemonstrate supply chain QCWork with customers in advance regarding:

Problematic materialsTesting protocols and planCertification expectationsLabeling issues

Know cost consequences of compliance optionsAnticipate and communicate production delays for

compliance issues (consider back up plans)


EXECUTE COMPLIANCE STRATEGYOngoing compliance initiative maximizes competitive advantage

75

Tremendous opportunity for market shiftThe analysis is simple…

Non-compliance creates significant risk that customers may not want to incur

Compliance creates opportunities to distinguish as industry leader


Firms With Strong Compliance Principles Will Gain Market Share


THE CADMIUM CONCERNFirms with strong compliance principles will gain market share

SOURCE: AP 2010.


DEVELOP MARKETING STRATEGIES FOCUSED ON COMPLIANCE

Marketing campaigns should communicate Marketing campaigns should communicate compliance advantage and minimized risk to compliance advantage and minimized risk to customerscustomers

Emphasis on benefits and pride of complianceEmphasis on benefits and pride of compliance

Highlight company investment in complianceHighlight company investment in compliance

Cost is important but may not be customers only Cost is important but may not be customers only concernconcern


BECOME AN INDUSTRY LEADERTake Advantage of the Change In Landscape

• Standardize, Streamline and Establish Best PracticesStandardize, Streamline and Establish Best Practices

•• Oversee the Development of New TechnologiesOversee the Development of New Technologies

•• Improve Collaboration with Business Partners and Improve Collaboration with Business Partners and SuppliersSuppliers

•• Collaborate, Share and Join Industry Consortiums (You Collaborate, Share and Join Industry Consortiums (You Are Not Alone)Are Not Alone)

•• Embrace the Changed Landscape and Remain FlexibleEmbrace the Changed Landscape and Remain Flexible

79

“We now expect companies to implement proven best practices, such as factoring misuse into design, strict controls on components and other inputs, and enough sampling and testing to ensure that all of the product coming off the line is safe for consumers.

“CPSC and AQSIQ will push companies to build safety into the product at every stage of the production and the distribution chain. Suppliers and importers need to understand that this is now our expectation.

“AQSIQ, for its part, will hold Chinese suppliers responsible for implementing best practices in manufacturing. This way safety – and compliance with export market requirements – is built into the products they are making or for which they are supplying materials.”

Chairman Tenenbaum, CPSC-AQSIQ Summit, October 2009


THE MESSAGE IS CLEARMeet The Challenge

80

“For all the emphasis on Chinese businesses and their role in export markets, those companies who have truly separated themselves and built their own autonomous brands in export economies are extremely rare”


THE ROAD LESS TRAVELED

SOURCE: Shobert, “’Made in China’ Gets a New Gloss,” Asia Times Online, Jan. 15, 2010.


From China and Hong Kong’s perspective, the time is right to reach out and try to speak directly to American (and the world’s) consumers, reminding them not only of the benefits they enjoy from their Chinese-made products, but the true interconnectedness of business and the world’s reliance on Chinese manufacturing

Chairman Tenenbaum

THE TIME IS NOW!

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Topics in U.S. Consumer Product Safety Law - gma.org.hk Piper Presentation... · Topics in U.S. Consumer Product Safety Law: Compliance, Enforcement, and Litigation Management Hong