SGS expands certification services

SGS SA, the world's largest third-party testing, inspection and certification company by revenue, is expanding its services in consumer goods and manufacturing in China, a company official said.

The Switzerland-based company will add more than 1,000 employees and set up another 10 laboratories in different locations throughout China this year, including a life sciences laboratory in Shanghai, a rail transportation lab in Chengdu and one for medical devices in Guangzhou. Shentu Xianzhong, managing director of SGS China, said China's closer integration in the world economy has pushed its manufacturers to meet domestic and foreign quality standards.

"Rising incomes, accelerating urbanization and diversified food options in China are further driving demand for safer food and agricultural products, as well as quality consumer goods, such as furniture, vehicle parts, cosmetics, clothing and electronic products," Shentu said.

"Chinese shoppers are also keen to know the quality of the products they buy."

With continued economic weakness in Europe and North America, more manufacturing and consumer goods are now produced and sold in China than anywhere else. Chinese products are gaining a bigger presence in the domestic market.

Shentu said third-party testing, inspection and certification services will help people in China improve their knowledge of Chinese products.

SGS entered the China market in 1991, soon after the nation started to develop its certification and verification industry. Those activities didn't become vital to the Chinese market until after the country became a member of the World Trade Organization in 2001.

The company has 110 laboratories and more than 13,000 employees working in more than 50 locations across China. SGS' global sales reached $6.17 billion in 2012, up 16.3 percent from the previous year.

"The trend is clear: more Chinese companies are willing to improve their purchasing outlook and many have also realized that obtaining certificates for green products is quite helpful in building up their brand images in international markets," said Shentu.

"Many domestic companies in China's coastal provinces only wanted to gain a certificate to export their products to the European and US markets two or three decades ago.

"But now, they are carrying out quality tests voluntarily even if it isn't required by the government," said He Jingtong, a professor at the institute of economics of Nankai University in Tianjin.

"However, most Chinese certification agencies are not authorized to issue international certificates accepted in Europe or the US. The majority of European countries and the US require testing results and certificates issued by agencies that they have appointed," He said.

With a growing number of Chinese companies selling products in the world market, securing foreign certificates has become popular and necessary, especially given signs of an increasing number of export barriers against Chinese products.

Therefore, if these Chinese enterprises want to expand their business abroad, they have to meet other countries' standards for consumer safety.

Du Jiabin, general manager of consumer product testing services at SGS China, said this gap has opened the door to third-party agencies, mostly foreign ones, to play an essential role in China's export business.

The China Compulsory Certificate mark, a safety license requirement of the Chinese government, requires manufacturers to obtain the CCC seal before exporting their products. That means that exporters have to pay twice for certification charges to foreign and domestic agencies before their goods are shipped abroad, even though the CCC seal isn't always required by foreign buyers.

Still, there's been progress. China's General Administration of Quality Supervision, Inspection and Quarantine waived the inspection and quarantine charges for exported cargo, containers and outbound vehicles from August to December last year to reduce the financial burden of exporters.

The charges included inspection and quarantine fees for cargo and the vehicles used to move such shipments; inspection registration, certification verification and laboratory inspection fees.