Post a CommentChina RoHS: Ready or not, it’s here
By Suzanne Deffree -- Electronic News, 2/27/2007
For some, it’s creeping in on cat’s paws. For others, it’s coming in as loud as a lion. Whether or not you saw it coming, the first phase of China RoHS concerning product “mark and disclosure” will arrive this Thursday. And the overwhelming question to the electronics supply chain is: Are you ready?
China RoHS, the common name for the Chinese law “Management Methods for Controlling Pollution by Electronic Information Products,” follows last year’s implementation of the European Union’s Restriction of Hazardous Substances (RoHS) directive. While the two are often compared – as both have tremendous impacts on the supply chain by regulating the amount of hazardous or toxic materials in electronics and both focus on the same six substances (lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyl and polybrominated diphenyl ether) – they vary greatly, most notably in terms of scope, exemptions and product markings.
Indeed, many product types not within the span of EU RoHS are within the scope of China RoHS; vice versa, certain product categories of EU RoHS are not within the range of China RoHS. Unlike the EU directive, which allows levels of the six defined hazardous substances in some product categories, including military and medical equipment, China’s Ministry of Information Industry (MII) has yet to define any exemptions for China RoHS. And marking a product as EU RoHS compliant will not meet the MII’s requirements for China RoHS product markings.
Specifically, China is requiring all products that meet its regulations for the six hazardous substances include a logo to signify that, an “e” enclosed by a green circle. If the product does not meet the regulations, China requires that a listing of the included hazardous substances be include in the product’s documentation and a different circle logo be included on the packaging that notes the Environmental Protection Use Period (EPUP), a 
time in years that the hazardous substances will not, under normal conditions, leak out or that the product will not cause severe environmental pollution, injury to health, or great damage to property. (See images to left)
Further, packaging material, itself, must be disclosed on the outside packaging for this first phase of China RoHS, and the date of manufacture also must be marked on the product.
What will happen on March 1
Michael Kirschner, president of Design Chain Associates LLC, a small San Francisco-based consultancy firm that snatched up the URL www.ChinaRoHS.com, and has been focusing on environmental regulations since 2003, is not concerned about an immediate impact of China RoHS when its first “in-force date” comes about this week.
“We can’t possibly see enforcement on March 1 because that date is the date of manufacture for products and nothing goes from manufacturer to on sale in the same day in electronics,” he said. “Whether and how extensively they enforce it in customs is very unclear. There’s contradictory information about enforcement at customs, which would be hard to do because they would have to open boxes and void warranties to look for proper marks and disclosures. Our experience over the last several months has been serious amount of misinformation and misunderstanding.”
Misunderstanding is perhaps most widespread as to what companies in the electronics supply chain the March 1 mark and disclosure portion of China RoHS will concern.
“There are different requirements for the supply chain and different requirements for the companies or end users,” Kirschner continued. “The company, or end user, has to mark and label the products packaging as required. For the most part, companies back up the supply chain that supply the parts don’t have to do that by law.”
But “by law” won’t necessarily mean a distributor or component maker in the supply chain is off the hook. “Certainly, we have plenty of clients who sell their products to larger or other OEMs and it’s basically an OEM relationship. In those circumstances, by order of the law, a company does not have to mark and label their products. However, the customer is going to tell them to label the product and disclose because they need to pass that through. Customer requirements might dictate other than what the law requires,” Kirschner said.
Noted Steve Schultz, director of strategic planning and communications for Avnet Logistics, component makers are ready for China RoHS mark and disclosure from the standpoint of having identified the chemical makeup of their products when complying to EU RoHS last year.
“That’s not a significant issue, in terms of that portion of the compliance that deals with having identified the presence above the threshold and the declaration of whether they are compliant or not on that,” he said.
To avoid a misstep, Jeff Shafer, a senior VP at Newark (formerly Newark InOne) said the company will only be distributing components in China that are RoHS compliant. “On the outside of the package, we have to identify that the product is RoHS compliant per the EU directive, then of course we have to apply the EPUP circle logo [to signify China RoHS compliance with the six hazardous substances].”
“Our position is to support the entire initiative via the RoHS compliancy,” Shafer said, adding that Newark will be releasing a Mandarin catalog of 30,000 China RoHS products next month under the name Premier.
But Shafer -- reminding that an EU RoHS compliance marking must be accompanied by the China RoHS compliance marking to meet the MII’s requirements -- noted unease that products in the supply chain will not be marked as both EU RoHS compliant and China RoHS compliant.
“There’s a disconnect right now where many of the suppliers that support the EU directive perceive the marking on the packaging today as being compliant with China RoHS. Our question as a distributor is will we begin receiving these products from manufacturers not only with the EU markings, but also with the China markings here in the U.S. Supplier response has been minimal as to having those markings,” Shafer said.
“U.S. suppliers are playing to the EU directive, but I see marginal support for the China directive. That could be because much of the product is made in China today, thus they are marking it and selling it to distributors there,” he continued.
Why is the supply chain less prepared for China RoHS than it could be?
Sheer market size could be placing more emphasis on the European market’s environmental compliance regulations than those in the China market. According to the AeA (formerly the American Electronics Association), in 2005 the largest market for U.S. high-tech exports was the European Union at $43 billion, which showed an increase of 4 percent year over year. China was less than a quarter of that at $10 billion, but remains a key U.S. trading partner and had increased 14 percent on 2004’s $8.8 billion in exports, the trade association reported. On the flip side, the U.S. imported the most high-tech products from China, $86 billion worth, while only importing $33 billion worth of high-tech products from the European Union.
“The EU is definitely a bigger market for U.S. companies, but China is not an insignificant market. China is big and growing and everyone wants access to it. If this is the price of access, then this is the price of access,” Design Chain Associates’ Kirschner said.
To be fair, it should be noted that China gave significantly less time to comply with its environmental regulation than the EU did. Indeed, the EU started warning technology companies that RoHS was coming in 2004 with a July 2006 enforcement date. With China, the run-up to this first March in-force date was approximately a year from the MII’s first publication of the law. Moreover, English translations of China RoHS didn’t begin cropping up online until last spring, and China has yet to determine the timeline and specific requirements for phase two of its law, which will define the extent of material restrictions and the range of products affected in a catalog of electronic information products (EIP).
“I don’t think people are as prepared for China RoHS [as they were for EU RoHS],” Newark’s Shafer said. “I think a lot of people may have procrastinated because they thought China would move out the dates, because typically these dates get moved back. But China has not done that. The leniency that has been given has been with [mark and disclose], then [China] is giving you another eight or nine months to get your product tested for the catalog and that’s when the rubber will meet the road with China compliance.
“We don’t know when phase 2 will start. I think China is feeling this out and seeing how well this is progressing. I don’t think they want to shut down anything or hold anything from coming from the country.”
What to do now
If a company has done nothing yet on China RoHS, there is little it can do before the first phase begins on March 1. Looking to phase two, the most important thing to do, advises Kirschner, is not to panic and don’t make assumptions.
“I see a lot of companies freaking out and worrying about phase two, but the fact is that they [China] have a challenge and the challenge is whether or not to adopt the same exemptions that Europe granted,” he said. “It’s perfectly obvious that if they decide they will not grant any exemptions, that really limits the EIPs that can go in the catalog. I keep hearing rumors, I keep hearing what the MII says, and it changes, it varies. Unless something is cast in concrete, don’t make any assumptions.”
It’s also imperative to stay informed on the regulation’s progress. Companies need to read the law’s translation and stay in touch with their supply chain on its evolving next steps, advises Shafer.
“I’m getting calls everyday from customers asking questions, and here we are talking about something that is happening next week and they aren’t sure what to do.”
And, advises Avnet’s Schultz, stay organized.
“I look back at EU RoHS, and it took a long time, a lot of energy, a lot of hours and run-up, because you didn’t know what the rules were. It wasn’t rocket science, but you didn’t know what the requirements were,” he said. “The only thing companies can do is take a posture just like they would have done with the European RoHS: Have a cross functional team of some sort that is continuously looking into the law as new items come about and be ready to move quickly once the catalog is published.”
For commentary on this story, see our electronics supply chain blog, “Supply Chain Reaction.”
