RECENT TRENDS AND REGULATORY UPDATE FOR EXPORTING APPAREL AND FOOTWEAR PRODUCTS TO EMERGING MARKETS July 2014 Christy Chan

TABLE OF CONTENTS

Section Content

1 STAY COMPETITIVE IN THE INDUSTRY

2 RESTRICTED SUBSTANCES OVERVIEW FOR APPAREL AND FOOTWEAR

3 SOLUTIONS TO THE MARKET

STAY COMPETITIVE IN THE INDUSTRY

MARKET SITUATION

Consumer safety in spotlight

Marks deliver trust

Corporate Social Responsibility (CSR) more concerned

More green commitments

HOW TO BE SUSTAINABLY SUCCESSFUL?

Regulatory compliance

Buyer/Customer expectation

System Improvement

How could YOU stay competitive?

New markets

VALUE ADDING IN THE SUPPLY CHAIN

RAW MATERIAL

Is it extracted in a sustainable way?

PROCUREMENT

Is the material hazard-free?

DESIGN

Is it a eco-friendly design?

MANUFACTURING

Is the worker condition compliant with regulation?

PACKAGING

Is the package non-excessive and green ?

OVERALL CONTROL

Are the goods ok for shipment ?

RETAIL

Is the service up to standard?

END OF LIFE

Is there any recycle system ?

REGULATIONS THROUGH THE EMERGING MARKETS: THE TREND

CURRENT MARKET CHALLENGES

Global Regulatory Challenges • More and more countries are imposing regulatory requirements for the

presence of residual chemicals in textile and footwear products. • Brands and retailers need to meet differing requirements in order to gain

global market access. • National governments conduct surveillance to ensure compliance.

NGO Challenges • NGOs conduct market surveillance to ensure products are safe to use. • Most remarkable campaign (known as DETOX) was launched. • Emails, online social media (facebook, twitters), letters, street-side

campaigns aim to raise awareness amongst consumers. • This campaign initiated fundamental changes within the textile supply chain

RECENT RECALL CASES WORLDWIDE

EU RAPEX RECALL

Azo dyes 303 mg/kg

Product: Children’s jeans Date: 27 Dec 2013 RS Requirement:

Azo dyes: 30 mg/kg each Corrective Actions:

Voluntary recall by suppliers Country of Origin: Bangladesh

US CPSIA RECALL Product: Children’s Shoes Date: 20 Feb 2014 Requirement: No Sharp Edge Corrective Actions: Product recall Country of Origin: China

Laceration Hazards

Contains Sharp Edge

TAIWAN RECALL

Product: Infant’s walking shoes Date: 1 April 2013 RS Requirement: Phthalate (DEHP+DBP+BBP+

DINP+DIDP+DNOP≤ 0.1%w/w) Other violation: No labelling and Country of Origin

Information Corrective Actions: Product seizures Country of Origin: Unknown

Phthalate 38.2% DEHP

CHINA RECALL

Product: Children’s leather coat Date: 12 Nov 2013 RS Requirement: Free formaldehyde (150 ppm limit) Corrective Actions: Does not say, but general footwear

buying tips have been given to consumers Country of Origin: China

Formaldehyde 646 mg/kg

Sources: 1. EU RAPEX: http://ec.europa.eu/consumers/dyna/rapex/rapex_archives_en.cfm 2. US CPSIA: http://www.cpsc.gov/cpscpub/prerel/prerel.html

3. China AQSIQ: http://cpzljds.aqsiq.gov.cn/ (Chinese only) 4. Taiwan BSMI: http://www.bsmi.gov.tw/wSite/index.jsp (Chinese only)

WHEN EAST MEETS WEST

Japan established Japanese Law 112, with the earliest textile chemical regulation for Formaldehyde in apparel in Asia

India is the second Asian country launching chemical regulation. Certain Azo Dyes are banned in textile and apparel.

1970s

1990s

2000s Introduction of China GB 18401-2003 in textile products includes the restriction of Azo Dyes, Formaldehyde and pH value

More new regulations entered into force » Korea (KC Mark) » Taiwan (CNS 15290) » Egypt Regulations » Vietnam (Circular 32/2009/TT-BCT)

REGULATIONS THROUGH THE EMERGING MARKETS: THE TREND

COMMON RESTRICTED SUBSTANCE

CHINA EGYPT INDIA JAPAN SOUTH KOREA

TAIWAN VIETNAM

Azo Dyes X X X X (proposed)

X X X

Formaldehyde X X X X X X

pH value X X

Organotins X X X

Phthalates X X

Flame retardant X X X

Lead X X X

Cadmium X X

Cr(VI) X X

Organotin X X X

COMMON RESTRICTED SUBSTANCES

AZO DYES

What are Azo Dyes? Dyes which contain at least one azo bond (-N=N-). Outstanding fastness and wide spectrum Major dyes in different dyes classes Some of the aromatic amines in reductive cleavage are

carcinogenic Only those produced aromatic amines which are listed/found

to be carcinogenic or suspected carcinogen are concerned!

Aromatic amines Azo dyes

FORMALDEHYDE

What is Formaldehyde? Volatile organic compound (VOC) with pungent odour

Major Applications Raw material for RESIN in finishing textile and leather

upper materials Leather preservative Production of adhesives for outsole bonding

Concern in textile industry Irritate to eyes, nose and respiratory system Cause skin allergy and mucous membrane irritations

HEAVY METALS

Where they can be found? Pigments, metal coatings, plastics (as a heat

stabilizer) and constituent materials Examples: Lead, Cadmium

Concern in textile industry Certain metals are highly toxic and can cause

damaging effects even at very low concentrations. They tend to accumulate in the food chain and in the body and can be stored in soft (e.g. kidney) and hard tissues (e.g. bone)

NICKEL RELEASE

Where they can be found? Making alloys with other metals to increase hardness

and resistance to corrosion Added to cutlery to increase its strength and polish Found in metal accessories : buttons, Zippers, Rivets

Concerned in textile industry Trigger dermatitis owing to prolong contact

CHROMIUM (VI)

What is Chromium VI? Chromium is a heavy metal. Chromium has several

oxidation states, including Cr(III) and Cr(VI).

Concern in textile industry Used as dyes and pigments in fabric dyeing and leather

tanning process leather is tanned by Cr(III) tanning agents in majority

[chromium(III) sulphate] Corrosive to skin and can cause allergic reactions Chromium (VI) and certain Chromium (VI) compounds are

known carcinogens

PHTHALATES

What are phthalates? Mainly used as plasticisers in plastics (especially PVC) to

increase softness and flexibility

Concern in textile industry Risk to human health and environment Bioaccumulative Endocrine disruptor Carcinogenic listed

FLAME RETARDANTS

What is flame retardant? Inhibit or resist the spread of fire Used in textiles to reduce their flammability Naturally occurring substances such as asbestos Synthetic materials: usually halocarbons such as PBDEs, PCBs have

been used in this capacity:

• Effective flame-retardant • applied to prevent electronics, clothes and furniture from taking fire

Concern in textile and footwear industry These flame retardants are suspected to be carcinogenic and

mutagenic

They are bioaccumulative in the biological tissues and along the food chain

ORGANOTIN COMPOUNDS

What are Organotin Compounds? Compounds containing at least one tin-carbon bond

Why they are concerned? Very toxic to marine and freshwater organisms Damage liver & kidney system Disrupt biochemical process such as blood forming mechanism and

enzyme system

R = hydrocarbon group

QUICK REVIEW OF CHEMICAL REGULATIONS

QUICK REVIEW OF CHINA REGULATIONS

GB 18401 - Textile Products

TEST ITEMS CATEGORY A CATEGORY B CATEGORY C

Formaldehyde 20 mg/kg 75 mg/kg 300 mg/kg

pH value 4.0 – 7.5 4.0 – 8.5 4.0 – 9.0

Azo Dyes (24 items) Forbidden (20 mg/kg)

Colourfastness

Water 3 – 4 3 3

Acid perspiration 3 – 4 3 3

Alkaline perspiration 3 – 4 3 3

Dry rubbing 4 3 3

Saliva 4 3 3

Odour None None None

Products for infants (36 month or under) should comply with Cat. A technical requirement Products with direct contact to skin should at least comply with Cat. B technical requirement Products without direct contact to skin should at least comply with Cat. C technical requirement

QUICK REVIEW OF CHINA REGULATIONS

GB 20400 – Leather and Fur

TEST ITEMS CATEGORY A CATEGORY B CATEGORY C

Formaldehyde 20 mg/kg 75 mg/kg 300 mg/kg

Azo Dyes (23 items) 30 mg/kg 30 mg/kg 30 mg/kg

Category A: Products for babies (≤ 24 months) Category B: Products with direct contact to skin Category C: Products without direct contact to skin

QUICK REVIEW OF CHINA REGULATIONS

GB 21550 – Restriction of Hazardous materials in Polyvinyl Chloride Artificial Leather

Restricted Substance Restricted Limit

Vinyl Chloride Monomer (VCM) < 5 mg/kg

Soluble Heavy Metals:

Soluble Lead

Soluble Cadmium

< 90 mg/kg

< 75 mg/kg

Other Volatile Substances < 20 g/m2

QUICK REVIEW OF EGYPT REGULATIONS TEST ITEMS ES 7266-3

HOME TEXTILE ES 7266-4

GARMENTS ES 7266-5

CARPET RUGS ES 6535 / ES 7322

LEATHER BAG

ES 3571 / ES 3572 / ES 7322 SHOES

Formaldehyde X X X X X

Azo Dyes X X X X X

Navy Blue X X X X X

Carcinogenic Dyes X X X

Phthalates X X X

Flame Retardants X X X

Cadmium X X X X X

Lead X

Nickel Release X X X X

Chromium (VI) X X

Soluble Heavy Metals X

Pentachlorophenol X X

Vinyl Chloride Monomer X X

pH Value X X

QUICK REVIEW OF EGYPT REGULATIONS

TEST ITEMS LIMIT

Formaldehyde Textile and leather garment Children product: 20 mg/kg

Direct contact with skin : 75 mg/kg Indirect contact with skin: 300 mg/kg

Leather bag and shoes Textile: 75 mg/kg

Leather: 150mg/kg

Azo Dyes 30 mg/kg

Navy Blue 0.1%

Carcinogenic Dyes Prohibited

Phthalates DEHP, BBP, DBP, DINP, DNOP, DIDP: 0.1% (each)

Flame Retardants PBB, TRIS, TEPA: prohibited

Cadmium Prohibited (50 mg/kg)

Lead Children product: 300 mg/kg

Nickel Release 0.5 μg/cm2/ week

Chromium (VI) 3 mg/kg

QUICK REVIEW OF EGYPT REGULATIONS

TEST ITEMS LIMIT

Soluble Heavy Metals Antimony: 60 mg/kg Arsenic: 25 mg/kg

Barium: 1000 mg/kg Cadmium: 75 mg/kg Chromium: 60 mg/kg

Lead: 90 mg/kg Mercury: 60 mg/kg

Selenium: 500 mg/kg

Pentachlorophenol Natural textile / leather : Free (1 mg/kg) Natural substance (wood used in footwear): 5 mg/kg

Vinyl Chloride Monomer 1 mg/kg

pH Value Leather: not less than 3.5

QUICK REVIEW OF INDIA REGULATION

Notification No. 3 (RE 2001) / 1997-2002

Notification No. 12 (RE 2001) / 1997-2002

TEST ITEMS LIMIT

Azo Dyes (22 items) 30 mg/kg

QUICK REVIEW OF JAPAN REGULATION

Act on Control of Household Products Containing Harmful Substances (Act No. 112)

Requirement for textile products:

TEST ITEMS LIMIT

Formaldehyde Baby: Not detected (A-Ao <0.05) Others: 75 mg/kg

Organotins (TBT, TPhT) Not detected

Organomercury compounds Not detected

Polycyclic Aromatic Hydrocarbons (DBA, BaA, BaP)

3 mg/kg (each)

Flame retardants (TEPA, TRIS, BDBPP) Not detected

DTTB 30 mg/kg

Dieldrin 30 mg/kg

Azo Dyes (proposed) 30 mg/kg

QUICK REVIEW OF TAIWAN REGULATION

CNS 15290 – Textile Products

TEST ITEMS BABY DIRECT SKIN CONTACT

INDIRECT SKIN CONTACT

INDOOR DECORATION

Formaldehyde 20 mg/kg 75 mg/kg 300 mg/kg 300 mg/kg

Azo Dyes 30 mg/kg 30 mg/kg 30 mg/kg 30 mg/kg

Cadmium (in textile accessories)

Not allowed Not allowed Not allowed Not allowed

Lead in surface coating (children for age ≤ 12 only)

90 mg/kg 90 mg/kg 90 mg/kg 90 mg/kg

Organotins TBT: 0.5 mg/kg TPhT: 0.5 mg/kg

TBT: 1.0 mg/kg TPhT: 1.0 mg/kg

TBT: 1.0 mg/kg TPhT: 1.0 mg/kg

TBT: 1.0 mg/kg TPhT: 1.0 mg/kg

Physical safety requirement (children for age ≤ 12 only)

Comply with CNS 15291:2009

QUICK REVIEW OF SOUTH KOREA REGULATIONS TEXTILE PRODUCTS

TEST ITEM INFANT CHILDREN INNERWEAR MIDWEAR OUTERWEAR / BEDDING

Formaldehyde 20 mg/kg 75 mg/kg 300 mg/kg

pH Value 4.0 – 7.5 4.0 – 9.0

Azo Dyes 30 mg/kg

Organotins TBT: 0.5 mg/kg

DBT: 1.0 mg/kg TBT: 1.0 mg/kg

Dimethylfumarate 0.1 mg/kg

Phthalates (total) DEHP, DBP, BBP, DINP, DNOP, DIDP: 0.1%

DEHP, DBP, BBP: 0.1% N/A N/A N/A

Lead 90 mg/kg (metal: 300 mg/kg) N/A N/A N/A

Cadmium 75 mg/kg N/A N/A N/A

Nickel Release 0.5 μg/cm2/week

Cords and drawstrings Conformance N/A N/A N/A

Flame Retardants TDBPP, PentaBDE, OctaBDE: Prohibited

Disperse Dyes Prohibited N/A N/A

Magnet 50 kG2mm2 N/A N/A N/A

Small Part No small part after tension test N/A N/A N/A N/A

QUICK REVIEW OF SOUTH KOREA REGULATIONS LEATHER PRODUCTS

TEST ITEM INFANT CHILDREN INNERWEAR MIDWEAR OUTERWEAR / BEDDING

Formaldehyde 20 mg/kg 75 mg/kg 300 mg/kg

Pentachlorophenol 0.5 mg/kg 5 mg/kg

Chromium (VI) 0.5 mg/kg 3 mg/kg

Azo Dyes 30 mg/kg

Organotins TBT: 0.5 mg/kg

DBT: 1.0 mg/kg TBT: 1.0 mg/kg

Dimethylfumarate 0.1 mg/kg

Phthalates (total) DEHP, DBP, BBP: 0.1%

DINP, DNOP, DIDP: 0.1% DEHP, DBP, BBP:

0.1% N/A N/A N/A

Lead 90 mg/kg N/A N/A N/A

Cadmium 75 mg/kg N/A N/A N/A

Nickel Release 0.5 μg/cm2/week

Magnet 50 kG2mm2 or not small part N/A N/A N/A

Small Part No small part after tension test N/A N/A N/A N/A

QUICK REVIEW OF VIETNAM REGULATIONS

Circular 32/2009/TT-BCT for Textile Product

TEST ITEMS CHILDREN PRODUCT

DIRECT SKIN CONTACT

INDIRECT SKIN CONTACT

Formaldehyde 30 mg/kg 75 mg/kg 300 mg/kg

Azo Dyes (22 items) 30 mg/kg 30 mg/kg 30 mg/kg

QUICK REVIEW OF SAUDI-ARABIA

TECHNICAL REQUIREMENTS FOR WOVEN AND KNITTED GARMENTS

TEST ITEMS LIMIT

ph of the aqueous extract 4.0-7.5

Formaldehyde kids: 20 ppm Adult: 75 ppm

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