People don’t see the distinction between the company that owns the brand and the company that makes the product

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The headline in this Reuters article jumped out at me. “Big-name brands sourcing from polluting China firms”. Wow. I would hate to be those guys. Why? Because people don’t see the distinction between the company that owns the brand and the company that makes the product. The article named several major companies including Adidas, Nike, Puma, Calvin Klein, Lacoste, Abercrombie and Fitch whose products are sourced through one of two major textile suppliers; the Youngor Textile Complex in Ningbo and the Well Dyeing Factory in the Pearl River Delta. Both of these companies have been accused of polluting waterways with “toxic, hormone-disrupting chemicals banned in Europe and elsewhere” according to Greenpeace. This incident hammers home the point that the companies we contract to build our products become extensions of our brand. If the company does something unethical, illegal or environmentally damaging, the brand owner is mired by the contractor’s actions. The problem is that as a brand owner you may feel that you have limited influence on your subcontractor as they are a separate corporate entity. Let’s look at how you can address this; 1) It’s more than just price - Look beyond the price point and consider the total cost of contracting with this company. If they are the lowest cost, perhaps there is a reason. Perhaps they achieve their low cost through shoddy quality, through unethical business practices or through irresponsible environmental behavior. 2) Hold the contract manufacturer to the same standards that you hold yourself. Remember, they are an extension of your brand. If you have environmental or ethical policies, make sure that your contract spells out that they are expected to follow these policies. Further, stipulate that failure to follow these policies would be considered a breach of contract. 3) If you are holding your contract manufacturers to your standards, make sure that you do periodic audits to ensure that they really are adhering to the standards you’ve set. At a minimum, go to the place where your product is being made and observe how things are done. 4) If there are environmental standards or certifications applicable to your industry, look for contractors that have achieved those certifications. This can make life much simpler as the certifying organization is now responsible for auditing. When we close our factories and have product made for us by another company, we are giving up a lot of control. If you partner with the wrong company, it’s not just cost and delivery that can be hurt; it’s your company’s hard won reputation. How do you ensure that your contract manufacturer is protecting the image of your brand? Comment back and let us know!

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