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Cablegate: How China's Product Quality System Works in the Pearl River

VZCZCXRO7594
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #1100/01 2780827
ZNR UUUUU ZZH
R 050827Z OCT 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6507
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEAUSA/DEPT OF HHS WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 02 GUANGZHOU 001100

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD EIND TBIO ECON PGOV CH
SUBJECT: HOW CHINA'S PRODUCT QUALITY SYSTEM WORKS IN THE PEARL RIVER
DELTA


(U) This document is sensitive but unclassified. Please protect
accordingly. Not for release outside U.S. government channels. Not
for internet publication.

1. (SBU) Summary: Chinese officials hosted a tour of inspection
facilities and export production sites (reported septel) that helped
shed light on China's product quality control system for imports and
exports. This telegram provides details on the system's bureaucracy
and procedures as described by Chinese officials. End summary.

A Massive Bureaucracy
---------------------

2. (SBU) During the September 24-27 tour of inspection and export
production facilities hosted by China's General Administration of
Quality Supervision, Inspection and Quarantine (AQSIQ) for foreign
diplomats, Chinese officials provided details on how China's product
quality inspection system works. The system's bureaucracy includes
300 local China Inspection and Quarantine (CIQ) branches reporting
to 35 main provincial-level offices, as well as 2,000 local
Technical Supervision Bureau (TSB) offices that perform testing on
products for domestic consumption only. TSB's 180,000 employees are
controlled exclusively at the provincial level, while CIQ's 30,000
nationwide employees are supervised directly by AQSIQ headquarters
in Beijing.

3. (SBU) The size of the inspection bureaucracy can create problems.
Communications are sometimes slow. AQSIQ sends standards
revisions and other official documents to local CIQ offices via
regular mail. Resources can also be scarce among local CIQs, even as
some high priority sites such as Shenzhen receive sizeable budgets.


Different Views on Centralization
---------------------------------

4. (SBU) Officials differed on the degree of central control within
the product quality inspection system. A Guangdong CIQ official
described China's national regulatory regime as consisting of 17
laws and regulations on product and food quality and safety.
However, he made it clear that provinces like Guangdong can
implement their own localized regulations. An AQSIQ official, on the
other hand, emphasized that he and his staff are committed to
ensuring that all CIQ inspections take place uniformly according to
established national regulations, and not in a way that might result
in local protectionism.

Guangdong - Three Provinces in One
----------------------------------

5. Guangdong Province has three "provincial-level" CIQ offices. In
addition to the Guangdong office, headquartered in Guangzhou, the
cities of Shenzhen and Zhuhai each has a separate CIQ office due to
the high volume of trade passing through their ports. According to
Guangdong CIQ Director General Zhong Dechang, his office with staff
of 7,000 has jurisdiction over one quarter of all imports to China.
He also noted that Guangdong CIQ maintains 38 laboratories with
equipment worth over RMB 100 million. Shenzhen CIQ authorities
pointed out that they have jurisdiction over one seventh of all of
China's exports.

Rating Companies
----------------

6. (SBU) CIQ officials in Shenzhen described in detail the system
they use to rate companies based on their inspection record.
Companies with an "A" rating have an excellent inspection history
and are deemed to be most reliable in their quality control
procedures and internal product quality inspections. They require
less frequent inspections by CIQ officials. Companies with a "B"
rating are doing well in their efforts to maintain product quality,
but they have experienced recent minor problems that lead to more
CIQ attention and more frequent follow-up inspections than "A"
companies. CIQ considers companies with a "C" rating to have
demonstrated acceptable product quality standards, but not without
lapses requiring regular attention of CIQ officials and frequent
inspections at company facilities and at the ports. CIQ officials
explained that a "D" rating denotes significant product quality
problems that require sustained government attention. These
companies are subject to restrictions from exporting food and/or
manufactured products until comprehensive improvements to their
quality control systems and inspection results are demonstrated. If
there is no improvement, the company is closed down and all
production ceases.

GUANGZHOU 00001100 002 OF 002

Laboratory Sampling Procedures
------------------------------

7. (SBU) Local CIQ laboratory staff described equipment and testing
protocols, including sampling processes. According to the
procedures, laboratory staff take three product samples for any
testing. The first sample is used for the initial analysis, and the
other two samples are stored on site for a period of up to six
months, depending on the type of product. (Biological products are
stored for less time.) The second sample is tested if the first
sample reveals contamination or other quality problems. The third
sample is held in reserve as a record of testing that was performed.
In addition, one Shenzhen CIQ official revealed that CIQ
retroactively tests products facing scrutiny in foreign press
reports.

JACOBSEN

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