What Led To The Collective Pollution Of The 48 Brands?

In April 9th, 4 domestic environmental protection agencies jointly released the "Research Report on the choice of textile brands in China for fashion cleaning and green selection", including Adidas, Nike, H&M, ZARA and other 48 fashion brands.

But as of April 24th, only 23 enterprises "replied to receive and understand the background".

Reporters through in-depth investigation, found some little known, and emissions of excess sewage associated with the industrial chain.

For more than half a month, Wang Jingjing did not ease his anxiety because of Ma's award.

Wang Jingjing is deputy director of the public environment research center (IPE). Ma Jun is director of IPE, who won the Goldman prize for environmental protection in April 16, 2012 because of his commitment to environmental protection for more than 10 years.

But even if IPE is one of the most influential environmental protection NGO organizations at home and abroad, its feedback report on the choice of textile brand in China in April 9th was released by 4 environmental protection agencies in the United Nations.

According to the report, including Adidas, Nike, H&M, ZARA and other 48 fashion brands, its supply chain has "improper" behavior such as excessive discharge of sewage, but as of April 24th, only 23 enterprises "replied to receive and understand the background".

Obviously, many brands have not yet realized that the "report" shows the seriousness of "pollution" in its supply chain.

In fact, with the continuous deepening of information disclosure of environmental protection organizations at all levels, how many fashion brands manage the supply chain to ensure that the first level suppliers or even the two major suppliers of environmental compliance have become the difficult points and key points to eliminate the potential risks of their brand communication.

"Dirty" of fashion

Sha Tin Li Hai is not as "low-carbon manufacturing" as it advertised itself. The regulatory data of the environmental protection department also means that cottoninc, cottonusa, Lycra, outlast, Lenzing, unifi-inc, supimacotton, creora and other brands that cooperate with the company are dereliction of duty for supply chain supervision.

As a leading manufacturer of knitted fabrics worldwide, Foton industries (Group) Co., Ltd. (0420.HK, hereinafter referred to as "Futian industries") is hard to get people to associate with excess effluent.

Fukuda official website and public announcement information showed that in January 2012, the company was awarded the "Green Pearl River Delta Environmental Protection Award 2010/11 green Medal" and "3 year + participation" medal by the Hongkong Federation of industry and Hang Seng Bank. Its subsidiary Dongguan Sha Tin Li Hai printing and dyeing Co., Ltd. (hereinafter referred to as "Sha Tian Li Hai") was greatly upgraded to the "gold" rating from the 2010 "certification" label in the 2011 WWF low carbon manufacturing plan, indicating that the "low carbon manufacturing plan" has been implemented in 2011, reducing carbon emissions, establishing a greenhouse gas emission management system, and following the best code of energy in the manufacturing process and operation.

According to data from the "report", although Sha Hai Li Hai has a turnover of 230 million US dollars, it ranks the fifth place in the China textile export and import chamber of Commerce in 2010, but IPE's pollution map database contains many bad records of the company.

In April 2009, the Guangdong provincial marine and Fisheries Bureau released the Guangdong marine environmental quality bulletin published in 2008. The quality of the wastewater discharged into the sewerage of the industrial wastewater from the sea area of Sha Tin is higher than that of the Guangdong provincial water pollutant discharge standard (DB4426-2001).

A year later, in April 2010, Li Hai in Sha Tin was once again "caught up", its sewage discharge still exceeded the standard.

Not only that, Dongguan's environmental protection letters and visits publicity (weekly) data in July 23, 2010 showed that: "the company's" 5 diesel engines with power of 1000KW have not been demolished as required, and 6 units (3 7MW, 1 4.6MW and 2 3MW have been discontinued) without environmental approvals "have been equipped with a coal-fired heat pfer oil furnace, which has been matched with the environmental protection department for acceptance.

In April 12, 2011, the environmental protection department of Guangdong Province on the 2010 Guangdong key pollution source environmental protection credit rating results showed that the enterprise for environmental protection and strict management of enterprises (red card), and until December 5, 2011, the Guangdong Environmental Protection Agency issued a document that Sha Tin Li Hai basically meets the relevant environmental management requirements, cancel its red brand logo.

Obviously, in 2011, at least 4 months, Sha Hai Li Hai was not as "low-carbon manufacturing" as it advertised itself. The regulatory data of the environmental protection department also meant that cottoninc, cottonusa, Lycra, outlast, Lenzing, unifi-inc, supimacotton, creora and other brands that were working with the company were dereliction of duty for supply chain supervision.

It is understood that the above brand is not the "brand oversight" duty of all brands.

As early as June 2006, the Dongguan Fu'an textile printing and dyeing Co., Ltd. (hereinafter referred to as "Fu'an textile"), which was jointly owned by the Guangdong provincial Environmental Protection Bureau and the State Environmental Protection Administration, found that it was located in the sewage outlet of the Maozhou River in Dongguan and Shenzhen, and two private pipelines were used to steal.

One of the iron hidden pipes with a diameter of 25 cm is controlled by two concealed valves covered with cement, and more than 2 tons of printing and dyeing wastewater is directly discharged into the river every day. According to the sampling and testing, the sewage outlet is seriously exceeding the standard, and the chroma exceeds the standard to 19.5 times.

In order to cope with the daily environmental check, Fu'an textile even made a special account of water consumption statistics specially designed for the environmental protection department.

{page_break}

Jane Spencer, a reporter for the Wall Street journal who interviewed Fu'an textile at that time, found that companies including Gap, Tommy Hilfiger Corp., Reebok and Nike were all clients of Fu'an textile.

After being fined $1 million 500 thousand by the environmental protection department and asked for an investment of US $2 million 700 thousand to upgrade sewage treatment equipment, Futian industries did not seem to have learned completely.

Fukuda industrial financial year (as of August 31, 2011) reported that the group's latest fabric factory in Yancheng, Jiangsu, Yancheng Fuhui Textile Co., Ltd. (hereinafter referred to as "Fuhui textile") was put into operation in 2010, and the company's goal is to maintain the textile dyeing capacity of 3 million pounds per month in the 2012 fiscal year. After the completion of all segments of the Yancheng plant, the monthly production capacity of Fuhui textile dyed fabric will be increased to 10 million pounds depending on market conditions.

The problem is that the reply issued by the Jiangsu provincial environmental protection department on the environmental impact statement on the project of weaving and dyeing and finishing of 55 thousand tons of high-grade knitted fabrics in Yancheng Fuhui Textile Co., Ltd. issued by the environmental protection department of China showed that the emission allowances of the Futian industrial Yancheng project were quite astonishing, no matter whether the pollutants were emitted from the air or the discharge targets of the waste water. For example, the annual emission of the annual emission of sulphur dioxide reached by Fuhui textile was up to 79.46 tons, and the annual discharge amount of wastewater could reach 4 million 317 thousand tons.

"Yancheng City is located in the north of Jiangsu, and its water environmental capacity is smaller than that of Guangdong. The amount of sewage approved is very large, which will have an impact on the local river and even the offshore area, which needs further observation.

In view of the lessons learned before Fu'an's textile industry, we call on Fuhui textile to strengthen pollution control and environmental information disclosure, and call on its customers to pay attention to it.

The report is not without worry.

Fukuda responded by saying: "the sewage treatment system in Fu'an, Dongguan is designed to discharge the plant after the sewage treatment plant is in compliance with the standards. The sewage treatment arrangement of Yancheng Fuhui is the most initial sewage treatment in the plant, and then discharged in the central treatment plant of the government development zone after centralized treatment.

Mode "hidden worry"

The reason why many brands are involved in pollution is that under the general trend of global division of labor, many fashion brands have adopted the "light assets" operation mode.

In fact, similar to Futian industries such as the 2011 fiscal year turnover of up to HK $7 billion 600 million, the size of the enterprise is more vulnerable to the public attention to the industry leader, and more small scale small and medium-sized textile enterprises sewage volume is also amazing, and not easy to be found.

As the "world factory" of the textile industry, the statistics of China textile net show that the total export volume of China's textile and clothing reaches US $212 billion, which accounts for 34% of the world's total exports. In the same year, the total fiber processing in China's textile industry is 41 million 300 thousand tons, accounting for about 52%~54% of the world's total.

China's environmental statistics annual report (2010) shows that the textile industry in China's 39 main industries COD (chemical oxygen demand, chemical oxygen demand, the greater the pollution of organic pollutants) ranks fourth, the total wastewater discharge ranks third, the annual emissions of about 24.55 million tons of waste water, accounting for 11.6% of China's industrial wastewater in 2010.

In 2006, the proportion was only 9.6%.

"A lot of brand suppliers are involved in pollution. One of the important reasons is that under the general trend of global division of labor, many fashion brands have adopted the" light assets "business mode.

Wang Jingjing said.

The so-called light asset mode, that is, branding is mainly responsible for product R & D, design and brand communication, and outsourcing production, logistics and other operational links to third party suppliers.

In this mode, brand operators can mainly focus on brand operation, and the third party suppliers who take orders can get more brand orders. The latter can also purchase and organize production on a larger scale, thereby reducing production costs, and the two sides have their own advantages.

But generally speaking, the profit margin of the brand is far higher than that of the third party OEM.

Taking Nike as an example, it often gains more than 40% gross margin through a strong brand premium, and its gross profit margin is usually below 10% of its representative factory (data sources: 2006, 2007, 2008, 2009, 2010, China Environmental Statistics Yearbook).

Of course, after the outsourcing of production and the extension of supply chain, the influence and supervision of Nike and other brands on terminal supply chain have been neglected.

An obvious fact is that suppliers such as Foton industries are not directly associated with brands, but manufacturers of brand manufacturers are likely to purchase Futian textile materials for the production of brand outsourcing orders.

In this way, if branding fails to effectively supervise its OEM manufacturers, OEM manufacturers will easily pfer the "hidden worry" of raw material procurement cost to the terminal suppliers, while the cost of raw materials manufacturers will be quite high in the face of the constantly depressed purchasing prices.

A key node confirmed by Nike is that in 2000, Nike admitted that without knowing the situation, its football factory in Pakistan hired child laborers to sew soccer. After this information broke out, Nike improved the factory supervision mechanism, and put forward more stringent environmental supervision requirements for the foundry enterprises which had closer cooperation with Nike.

But this is still unable to avoid Nike's endless supply chain supervision problems.

In 2006, the third party agency, FLA (Fair Labor Association), conducted a survey of the SAGA factory in Pakistan, found that the factory used a large number of household workers and child workers.

After the incident, under the pressure of public opinion, Nike suspended the contract with SAGA.

Similar events were also staged in 2003~2007. A large number of Nike's manual sewing football orders were subcontracted to their rural families in Jinzhai, Jiangsu and Huaian areas in Anhui (see the Nike blind area September 28, 2009).

Cost dilemma

In addition to the relative concentration of enterprises in the distribution areas, the cost of enterprises will still increase. In this case, it is necessary to clean up the pollution problems of textile enterprises in the supply chain.

Because the level of subcontracting and continuously lowering the purchase price of products, the brand owners' regulatory "blind spots".

The rising labor force and the cost of means of production have made Futian industries struggling in the global financial crisis.

{page_break}

In April 16th, Futian industries released its mid 2012 report (up to February 29th), and its indicators declined in all directions: turnover fell 12.8% year-on-year, gross margin decreased from 16.2% to 7.8%, and the company lost 157 million 600 thousand Hong Kong dollars, while in 2011, the company also made a profit of HK $154 million 100 thousand.

"During the first half of fiscal year 2012, the economic environment in North America and Europe, which was caused by high unemployment rate and worries about European debt default, led to a weakening of consumer confidence and a decline in demand for textiles, which in turn affected sales prices and sales volume of the group during this period.

At the same time, the price of cotton (21100, -65.00, -0.31%) and cotton yarn continued to decline sharply in the last three quarters of 2011, resulting in the downward pressure on the market price of knitted fabrics.

In view of the fact that most of the cotton and cotton yarn used by the group during the review period were purchased at a relatively high cost earlier, the negative impact on the gross profit of the group for the six months ended February 29, 2012 ".

Xia Jinan, managing director of Futian industries, said in his earnings report.

In the face of the grim survival situation, the NGO environmental protection organization has become a new burden for Futian industries to meet the requirements and cost pressures of wastewater treatment.

However, Fukuda replied to our newspaper that "environmental protection, energy saving and emission reduction and corporate social responsibility" have been one of the long-term goals of the company in recent years.

In line with the general direction of the national policy in environmental protection, such as responding to the government's construction of an environmental protection industrial park, and investing in the construction of a new comprehensive sewage treatment plant in Dongguan, it will meet the latest requirements of the government and increase the direction of reclaimed water reuse in the future.

Therefore, the group's investment in environmental protection will not be directly affected by profits, and the group will not reduce its emphasis on environmental protection because of the increase or decrease in profits. "

But it is obvious that more small and medium-sized enterprises can not have the operation scale of Futian industries, and their investment in environmental protection equipment is facing a funding gap.

In the face of these pressures, the 10 recommendations made by the US Natural Resources Protection Commission (NRDC) to textile enterprises are particularly costly.

"Small and medium-sized textile enterprises have to solve the problem of sewage discharge, and the cost of operating pollution control equipment alone is high. Therefore, the whole bidding scheme can be considered in some areas with heavy emissions, that is, the sewage enterprises should share the cost of treatment according to the discharge volume, and the third party professional sewage treatment department will compete for the price and ensure that the emission is up to standard."

Wen Yibo, the first president of the National Federation of industry and Commerce environmental services industry, told reporters.

However, in addition to the relatively concentrated distribution of enterprises, the cost of enterprises will still increase.

Under such circumstances, it is necessary to clean up the pollution problems of textile enterprises from the root of the supply chain, and the pformation and upgrading of suppliers and the profit margins of brands are undoubtedly more important.