Dr. Gerhard Nickolaus, Managing Director of PFI Fareast and Mr. Karl Borgschulze, Managing Director of Consulting Service International Ltd., shared their insights into the Initiative Lieferkettengesetz during the German conference.

Dr. Gerhard Nickolaus shared that “LKG requires any company in Germany, producing or offering products to really know their supply chain. In other words, companies must have a comprehensive understanding of the working, social and environmental conditions, in which the products have been manufactured. LKG also demands on-site visits in the production facilities and for ratings of companies”.

The general issues relating to implementation of LKG in China and the instruments for LKG’s implementation were also mentioned throughout the discussion.

Some key takeaways from the conference were:

• LKG puts a lot of emphasis on The Universal Declaration of Human Rights established by the United Nations (UN). While China sees the implementation of LKG and the enforcement of Human Rights as a foreign interference.
• There are discrepancies with China’s national laws, especially in relation to “Human Rights”. Environmental protection, as well as worker safety and all social issues are the exclusive right of government institutions.
• China is tired of audits in general and has become very self-confident. Hence, when the Western world demands activities such as audits be conducted, it is seen as a harassment.
• Companies will accept the testing of their products on quality and dangerous substances, etc. but they will not accept checks on their production processes.
• Knowing the supply chain down to tier-1 is comparably easy, as the customer still has certain influence on the supplier at this stage. The influence decreases rapidly the further deeper one dives into the supply chain. Tier-3 suppliers are no-longer directly approachable by the European customer, making the tracking of documentation along the entire supply chain, as required by LKG, a challenge.
  
  
  

The instruments in response to the Initiative Lieferkettengesetz are basically the same as for any supply chain management process. The responses must be made sensitive and reasonable taking each country’s laws into account, Dr. Nickolaus continued.

Practical supply chain models specialising in both environmental and social compliance are offered by both PFI and CSI. With their collective wealth of experience in supply chains in Asia, a solution to the impending LKG, is just a click away. Talk to PFI’s experts now for more information about the Initiative Lieferkettengesetz.

The international (held in English language) LKG conference will be organised by PFI Fareast (Hong Kong) in April. Please stay tuned for further details.