Chubb Encourages Chinese Firms to Adopt Risk Management Practices

November 18, 2009

Chubb Group recently co-hosted a seminar near Shanghai, which focused on the “increasing number of Chinese exports exposed to product liability claims and litigation in the United States and Europe.” As a result presenters called for Chinese companies to make “greater risk management efforts among manufacturers that supply these markets.”

Andre Dallaire, Chubb’s chief executive for Greater China, stated: “Chinese exporters are under the global spotlight. Now more than ever, Chinese companies need to understand product liability risks in the countries where they do a high volume of business to protect themselves effectively as suppliers to those foreign markets.”

The seminar, also co-hosted by the China Council for the Promotion of International Trade and the General Administration of Quality Supervision, Inspection and Quarantine of China, attracted more than 120 financial officers and other corporate executives from Hangzhou and neighboring cities in Zhejiang and Jiangsu provinces.

“Speakers emphasized that Chinese companies doing business in foreign markets face more litigious environments and greater liability exposures – often on grounds that are not applicable to the domestic Chinese market – and stressed the urgency of implementing effective risk management practices,” said Chubb.

The bulletin also noted the enormous amount of trade that passes between China, the U.S. and the European Union. It reportedly totaled between $252.3 billion and $292.9 billion in 2008.

Chris Lees, Chubb’s head of casualty insurance for the Asia-Pacific region, cited three product sectors where government regulations are becoming increasingly strict: food, beverage and toys. “The Chinese government has come down hard in these areas in particular, and many companies are complying with the requirements to avoid losing their licenses,” he noted.

Over the last two years in the U.S. and European markets, questions concerning product safety have been raised about Chinese exports, prompting recalls ranging from toys to tires. Most recently, tainted drywall imported from China has sparked legislation in the United States. For many manufacturers, the potential reputational and financial consequences of a product recall prompt even more vigilant risk management standards.

“Good companies will go beyond government regulations and existing customer safety and insurance requirements. They will see the competitive advantages and potential cost efficiencies of implementing a comprehensive risk management approach to producing safe and reliable products,” Lees concluded.

Source: Chubb Group –

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