There are now more standards in China than in any other country: almost 150000, seven times more than in the European Union. Why such a strong interest for standardization? The great number of issues involved allows observers to identify several trends, all of them driving tactical moves towards standardization. But does China have a Grand Strategy?
Most of the global standardization procedures operate within the ISO (International Organization for Standardization), an NGO which is not a UN agency. The ISO brings together 160 national organizations, such as the DIN (Deutsches Institut für Normung), the BSI (British Standards Institution), the ANSI (American National Standards Institute), the JISC (Japanese Industrial Standards Committee) or the French AFNOR.
The board of managers consists of twenty members and includes a kind of “security council” of six permanent members: the US, Japan, Germany, the UK, France and, since two years and a half, China.
China’s international ambitions
China has recently asked to become a permanent member of the Technical Management Board (TBM), along with the US, the UK, Germany and France. Beijing wishes to strengthen its participation from both political and technical points of views. Subsequently, since 2004 Chinese representatives have taken responsibilities in several international work teams within the ISO.
The overall count of technical committee or sub-committee presidencies since year 2000 shows that the best represented country is the US (between 120 and 140 presidencies). It is immediately followed, and even surpassed since 2005, by Germany with over 130 presidencies. The British influence has steeply decreased during the same period of time (from 110 to 70 presidencies), despite the obvious edge of mastering English. France has more or less maintained its ranking (from 80 to 70 presidencies) while Japan has clearly increased its participation (from 30 to 60). Russia maintains a modest rank (less than 20 presidencies), despite the fact that the actual ISO president is a Russian citizen and that several signs suggest an increasing interest of Russia for international standardization.
China, on its side, has achieved extraordinary advancements: while it has taken its first responsibilities in 2004, it is already at the head of over 30 committees and sub-committees. As soon as a chair is vacant, Beijing submits an application. Its implication in the technical structures has also progressed in a very impressive way. At the end of 2010, the UK was present in 89% of these structures, while almost invisible within the presidencies. The next followers were Germany (84%) and China (82%) – who has already surpassed France (80%), Japan (79%) and the US (75%).
Considering the responsibilities of each country according to their GDP, one realizes that Germany, France and Japan are now playing “above their league” and that the US on the other hand is underrepresented according to its GDP. This situation is due to the complex American standardization system including between 100 and 150 SDOs (Standards Developing Organizations) such as the API (American Petroleum Institute), the SAE (Society of Automotive Engineers) or the IEEE (Institute of Electrical and Electronics Engineers).
The ANSI (American National Standards Institute) has a hard time trying to federate all of these bodies: on strategic and complex votes, it’s sometimes hard to understand how the American vote was built… The French also encounter difficulties when it comes to speaking as one voice within the ISO, the CEI or the UIT. On the contrary, during the last seven or eight years, China has made great efforts to reach a unique and recognized position within the different standardization organisms. According to several prospects, within 4 or 5 years, China will be ahead of Germany in terms of responsibilities.
China has carefully chosen its areas of intervention. It has grasped all the opportunities and deployed all the necessary means, with little (or no) comparison with what other countries can afford.
Quite naturally, China took position in a few otherwise secondary fields, such as entertainment fireworks or traditional Chinese medicine, for which it possessed specific capabilities. Its interest for border trade of second-hand goods is maybe due to a recycling policy that aims at a more sustainable growth. But China also acts on much more strategic areas such as energy, specifically biogas and coal-bed methane, as well as the technical rules to determine energy savings during renovation projects or in industrial firms and regions.
China’s interest in natural resources, specifically rare earths, is well known. Chinese officers are involved in committees devoted to copper and copper alloys, plastics, magnesium, magnesium alloys, iron alloys or on metal and alloy corrosion. China also established itself in the areas of light metal containers, internal combustion engines and, although more discretely, in the cutlery industry as well as decorative and kitchen metalworking.
Besides, China has multiplied bilateral cooperation on many fronts: with South Africa on the system for designating clothing and shoeing sizes; with Germany on boat and maritime technologies as well as machines and materials for building construction; with Canada on CO2 capture and storage and on the management of greenhouse gases and related activities; with Korea and Japan on textile; with Italy on oil and pipeline transportation systems; with the UK on the food and tea industry but also on the management of quality, the applications of statistic techniques, the implementation of the Six Sigma; with Sweden on packaging and environment; with Turkey on tobacco leaves; and with France on subjects related to energetic efficiency.
The Chinese standardization principles
Most countries lack a legal framework for standardization. The English Crown simply recognizes the BSI through a chart. The German federal government did the same for the DIN. China is a rare example of a country that has adopted a legal basis in this area: Chinese standards are established by the public authorities, not by the industry. The SDOs are controlled by the Chinese government, who acts as the ultimate arbitration authority.
The participation of stakeholders in the Chinese Standards Developing Organizations depends on the policy of each institution. Some are very open, others less. The committee members are nominated intuitu personae and, in case of unavailability, they cannot be replaced by a representative of the same firm. As for foreign firms, they can only have access to an observer status.
Standardization is financed by the Chinese government, the industry being no more than a cofinancer. The intellectual property policy applying to the standards’ content can vary from one SDO to another. To access official documentation, you require a Chinese bank account; otherwise, you simply can’t buy the documents.
The AQSIQ (Administration of Quality Supervision, Inspection and Quarantine) is at the top of the Chinese standardization system and in charge of supervising the market. The role of the SAC (Standardization Administration of China) is rather to insure technical surveillance. The SAC is almost structured as a ministry. It has authority over the administrative departments of standardization in the provinces, regions, ministries and industries. It also controls the national technical committees.
The CNIS (China National Institute of Standardization) insures the census of standards. The SPC (Standards Press of China) takes in charge their promotion. The CAS (China Association of Standardization) is in charge of monitoring their dissemination.
The Chinese national standards are divided in four categories: the compulsory standards (Guóbiāo, or GB), the recommended national standards (Guóbiāo tuījiàn, or GB/T), the sectorial/industrial/ministerial standards; and last, the provincial standards.
There are between 3000 and 4000 compulsory standards (GB), considered as part of the technical regulations. They deal with subjects such as security, health, work, protection of consumers, the environment, etc. The GB standards are a basis for the CCC certification (China Compulsory Certification). The CCC mark is the only way to access the Chinese market, at least for foreign firms. In the past, there were fewer requirements for Chinese firms in terms of accreditation but after several media covered incidents (the milk scandal, toys scandal…), the situation is starting to change. The GB standards are compiled by the CNIS, but also by over 70 NGO and research institutions, causing great fragmentation of the information. The SAC is responsible for controlling the compatibility between these standards and the international standards, as well as preventing that are used as barriers to trade – which would lead to receiving notifications from the WTO.
The recommended national standards (GB/T) are much more numerous: there are over 25000 of them, spread in all areas of standardization, including products, processes, goods, services, defense, etc. They are the property of the SAC and are compiled also by the CNIS and by over 70 associations and research institutions. However, they don’t serve as a basis for the CCC certification. Several have received voluntary certification.
The sectorial/industrial/ministerial standards are a Chinese exception. By extrapolation on the basis of the known data, it is estimated that there are over 100000 of such standards in China, a huge number. Only one fifth of this stock of standards is really used. These standards are ministry property (Communication, Development, Energy…). They are compiled by specialized ministerial units, as well as industrial unions and research laboratories. Their access is therefore quite complex. Approximately 15% of these standards are compulsory. They are often used by ministries to define the regulation in matter of market access. Their harmonization with international standards depends on each ministry. It is generally considered optional. This can lead to big problems for the market players, since many of these standards are as constraining as other national standards. The World Trade Organization recently expressed its concern over this category of standards.
The last group brings together the provincial standards. Their number is estimated to approximately 20000. Only 20% to 30% of these standards are compulsory, but if a firm wishes to maintain good relations with the provincial authorities, it’s in its best interest to take them into consideration. The provincial standards are the property of local governments. They are developed by local organizations of the AQSIQ. They are currently submitted to a policy of attrition from the central government, and their influence tends to decrease.
Deciphering the Chinese strategy
Through the implementation of a legal framework, the allocation of specific resources, the adoption of predefined processes, China has clearly shown its will to develop standardization. There are more standards in China than in any other country in the world: with a total of 150000 standards, China dwarves the European Union by seven times. Despite the great number of issues involved, one can try to decipher the strategy, or rather the strategies, behind this explicit policy.
First of all, in several domains such as energy, China is facing certain hot topics for which the adoption of standards seems vital. Some players have expressed concern over the fact that the standardization and regulation efforts carried in these areas could erect new trade barriers, for the engines’ sector for example.
Another hot topic is public security (mining techniques, road traffic, protection against fires, etc.). The Chinese public opinion is increasingly sensitive to these questions and accidents are not tolerated, whether concerning consumer goods or during industrial operations. In spite of the control exerted on the Internet, provincial governments and cities are regularly questioned on the subject.
Standardization is also considered as a necessary tool of industrial policies, as indicated by the 12th Chinese five-year plan. As far as I know, no other country in the world displays this priority as clearly. Some German texts highlight the crucial role of standardization in, for example, the rise of electric vehicles. But China is the only country that states as plainly the importance of standardization in its global industrial policy. Standardization, along with patenting, is considered as a tool to disseminate scientific knowledge, technological innovation and industrial savoir-faire. An AFNOR study following a method traditionally used by the Germans and British also shows on the long-term (25 years) an obvious correlation between the number of patents, the development of standardization and economic growth, though no evidence indicates precisely which are the causes and which are the effects.
Some players and commentators make a link between the development of standardization and a desire to control the access to the market. Without going as far, one can say that the complexity of the system acts itself as a barrier to imports. However, this complexity doesn’t seem to be really wanted. It is certainly known of, and perhaps sometimes used.
The standardization trend can also be explained by national security concerns. Five years ago, China presented to the ISO a standard called WAPI, quite similar to Wi-Fi. The main specificity of the WAPI was to let Chinese authorities have access to the communications and eventually control them. The Chinese had several countries back their proposal and the norm was almost adopted. However, the ISO stated that it was impossible for two different standards to coexist.
The Chinese industry has been accused many times of lacking respect towards intellectual property. Today, Chinese firms act more responsibly as they themselves are victims of pirate copying. They subsequently have started to file more patents.
Despite all of its efforts, China’s capacity to intervene in international standardization processes is still modest. It’s basically an issue of English fluency. And this problem should however disappear with the arrival of thirty years-old American university graduates. But China must also overcome other disadvantages.
The Chinese standards are often ignored outside of their country. Things are however starting to change, principally in South-Eastern Asia, thanks to what one might call a “gravitational” strategy. In case of troubles when promoting a new norm at the international scale, the Chinese will adopt it as a national norm, applied to their own market. Given the size of this market, it is very likely to end up successfully making its way through the international market. On their side, the Japanese have sometimes adopted surprising positions regarding standards – certainly because they share common interests with China. This happened for instance with the Blu-Ray, when Chinese manufacturers threatened to adopt a third standard and use it on the Chinese market.
The Chinese standardization is controlled by the ministries and not by industry, especially when it comes to compulsory standards. Therefore, it is generally compliant with an “interventionist” strategy. In the US, on the contrary, each player does more or less what he wants, which leads to an overall wasteful system. But paradoxically, there are no efficient mechanisms in China to resolve conflicts between sectorial standards and national standards. The system will suffer from partial inefficiency as long as the priority will not be given either to the sectorial or to the thematic standards.
The adoption of conformity assessment procedures (i.e. certification) often precedes standardization, which in return is used for restriction or control. This approach hinders the development of rigorous scientific standards.
The provincial standardization and the local implementation of regulations increase the risks of market fragmentation. Of course, the size of the market within a Chinese province is still quite considerable…
A new Great Wall of China?
In November 2011 the WTO published a new report of the yearly transitory exam required by the accession protocol. Japan and the UE welcomed China’s efforts whereas the US were much more severe and criticized “the persistent lack of transparency in the development of technical regulations, standards and assessment procedures concerning China’s conformity; as well as its policies concerning assessment and conformity”. It also laments that the WTO hasn’t been notified of “thousands of compulsory industrial standards” regarding “at least 58 industrial sectors from oil and gas to textiles, cars and the protection of the environment”.
This is even more problematic taking in account that “in most cases, you must buy the standards from authorized resellers in China. Their price is modest but in general, resellers don’t accept international credit cards and require the use of a Chinese bank account. In practice, this obligation impedes firms and professional US associations, even the biggest, to obtain copies of these standards, if they don’t have a presence in China”. On the field, one must admit a difficulty with the access to standards, including for the local authorities. Moreover, there is a power of judgment and interpretation of the texts – most of them ambiguous – which makes the concept of fairness difficult to establish.
China has adopted a great number of protectionist measures just before stepping joining the WTO, actually building a new “great wall” that will be very long to dismantle. The Chinese government says that it will comply with its obligations concerning this matter. But much still needs to be done.