1,200 Shenzhen Toy Makers to Bear Brunt of Mandatory Certification Starting June 2007

As China is going to implement the China Compulsory Certification (CCC) scheme on toy makers in June next year, many export enterprises thought the new rule would only apply to those factories producing for the domestic market and that toys produced for export in Shenzhen are not subject to CCC. However, during a briefing held recently in Shenzhen on publicising the implementation of CCC in the toy industry, the officials and experts present clarified that CCC applies not only to enterprises producing for domestic sale, but also to export factories whose products are exported and then imported back into China. As such, the new rule will affect a significant number of Hong Kong companies.

The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and the National Regulatory Commission for Certification and Accreditation (NRCCA) stipulate that six types of toys, namely children's vehicles, battery-operated toys, plastic toys, metal toys, toys with shot projectiles, and dolls, are subject to the CCC scheme starting 1 June 2007; failing which they will be prohibited from leaving the factory, being sold on the market, imported into or used in China. After this new rule was announced, many of the toy factories in Shenzhen have begun applying for certification.

At the end of March 2006, NRCCA designated three certification bodies and 15 laboratories to carry out the certification and testing work respectively. Among these, two certification bodies and two laboratories are located in Shenzhen, namely China Certification & Inspection Group Shenzhen Co Ltd, China Quality Certification Centre Shenzhen Branch, Shenzhen Entry-Exit Inspection and Quarantine Bureau Toys Inspection and Quarantine Technical Centre, and Shenzhen Academy of Metrology and Quality Inspection.

Starting from 1 April 2006, toy factories in Shenzhen may appoint these designated certification bodies to provide CCC service. To provide greater convenience to enterprises, China Quality Certification Centre Shenzhen Branch offers online certification processing service. It normally takes about one month to process the application and issue the certificate if a request is well supported by required documents and the product concerned passes the safety test.

However, Hong Kong companies should take note of the following statistics provided by the Shenzhen Toy Association. There are more than 1,200 toy manufacturing enterprises currently operating in Shenzhen, of which many are Hong Kong-invested. In 2005, Shenzhen's toy exports topped US$6.12 billion, accounting for 51.3% and 40% of the provincial and national total respectively. Shenzhen enjoys a market leader position in toy exports. More than 800 of the toy makers in Shenzhen are producing the six types of toys subject to CCC. Among them, about 150 sell their products on the domestic market. Meanwhile, Shenzhen imports US$150 million worth of toys a year, involving over 70 toy importers and distributors.

Shi Zhijie, director of the China Quality Certification Centre Shenzhen Branch, said CCC will become a prerequisite for the 150 toy makers while those which do not sell to the domestic market but focus entirely on exports are not subject to the certification requirement. However, as the findings of a domestic market survey show, there are 650 toy makers which export their products but a significant proportion of these toy exports is subsequently imported back into the mainland. For instance, some toys produced for McDonald's are exported to form part of the retail giant's global sourcing network and are subsequently imported back into China. Upon entering into China, such products are required to carry the CCC mark. If a toy maker overlooks this requirement, it will have problem trying to import its products without the CCC mark back into China.

Since the mandatory certification system was introduced in China in August 2003, three categories of products are subject to CCC, namely mechanical and electrical products, decoration materials, and automobiles and motorcycles. Toys are going to become the fourth category. According to Shi, about 1,500 enterprises in Shenzhen falling under the three existing product categories have successfully obtained the CCC certificate issued by his organisation. Shenzhen enterprises are relatively more proactive in meeting the certification requirement than their counterparts in other parts of the country. The three categories of products requiring CCC that are on sale in the Shenzhen market have all secured the CCC certificate.

Shi pointed out to Hong Kong companies that the CCC requirement only entails basic safety standards and is not as high as some might think. Its objective is to give consumers peace of mind when they purchase and play with the toys.

As many toy factories in Shenzhen are small and medium in size, they lack the initiative to meet the certification requirement due to cost consideration. However, certification fees are specified by the National Development and Reform Commission and range from several thousand to 20,000 yuan depending on the number of product categories concerned. Although cost is an important consideration for any business operator, certification as a ground rule in the toy industry is something industry players have to go by.