Thursday, February 24, 2011

It's Time to Rethink Chinese Tech Manufacturing —

Pressure to adhere to environmental, safety and labor standards, while simultaneously offering the lowest possible prices, often motivates Chinese factories to innovate in the area of faking documents, lying to their clients and staging fake conditions to showcase to visiting inspectors. They believe it's the only way to win bidding wars for contracts, and they may be right.

Western companies monitor factories through official audits. These auditors request documents, such as billing records, accounting documents and various certifications that demonstrate chemicals used, salaries paid and compliance with environmental and safety regulations.

But in China, an enormous industry of consulting companies has arisen whose sole purpose is to help factories pass those audits by any means necessary. They bribe officials, make fake documents and generally do whatever it takes to convincingly lie to the auditors.