Lighting company accuses China of protectionism

Louis Poulsen was told it would need to give Chinese factory auditors a ‘gift,’ but declined because they did not want to be accused of corruption

November 21st, 2012 5:27 pm| by admin
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A Danish lighting company is accusing China of using needlessly strict safety regulations to delay the approval of foreign products in the Chinese market.

Chinese policies require that foreign factories producing goods for China meet strict safety regulations. Foreign products must also be sent to China for testing in laboratories before they are approved for sale.

But Louis Poulsen Lighting's CEO, Søren Schøllhammer, is accusing China of implementing excessively strict safety regulations to protect its domestic producers.

“In my point of view, they are using it as a trade barrier,” Schøllhammer told Berlingske newspaper. “My theory is that they copied the American standards, which they then made even more strict in order to make it even harder to fulfil.”

Schøllhammer outlined a number of ways in which Louis Poulsen’s products, which include the classic PH Lamp, have been delayed from entering the Chinese market.

Firstly, the Chinese factory auditors were six months late arriving in Denmark, and before they arrived, the company was made aware that the auditors would be expecting a gift.

“We’re not talking about a pair of cufflinks,” Schøllhammer told Berlingske, adding that they chose not to give anything. “We did not want to risk a corruption case.”

The auditors then demanded to know very detailed information about the production of the products, such as whether the staff wore safety shoes, the last time the fork lift truck had been serviced and the educational levels of the staff.

The company is also waiting for paperwork confirming the approval of about 70 products they have sent to China for review.

In the meantime, they cannot send products for sale in China where, in Beijing, they have already established a showroom and sales office.

“They mercifully granted us permission to send products to our showroom but under the condition that we sent it back after six months,” Schøllhammer said. “It’s not easy to trade like this.”

According to business lobby group Dansk Industri, Louis Poulsen’s story is far from unique.

“There is a growing tendency for the Chinese to develop their own standards that deviate from Western standards,” DI’s China consultant, Nis Høyrup Christensen, told Berlingske. “It would be nice if the Chinese accepted the Western standards that were agreed upon long ago, but they chose a different direction. That is why there are trade barriers that Danish businesses are forced to navigate when they attempt to enter the Chinese market.”

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