Quality, Safety and Consistency Equals Better Business

The United States and China both hold unique titles in the global dietary supplement industry. The U.S. is the global leader in regard to manufacturing and marketing finished dietary supplements and China is the largest supplier of raw materials and ingredients. As the leaders in these two areas， it is important to lead by example and also be the safest.

However， over the years there have been a variety of incidents that have placed a gray cloud over China’s ingredient and food safety record. Past and continuing issues have encouraged many international manufacturers to look else where for their ingredients. Although this is not great news for China， it is however an opportunity for those Chinese suppliers that have high quality ingredients to step forward and prove that China in fact has high quality suppliers.

A recent article from Nutraceuticals World， a U.S. trade publication， stated that due to its abundant resources and competitive pricing， China is responsible for supplying upwards of 80 percent of the raw materials found in dietary supplement formulations around the world.

As China will undoubtedly remain the largest supplier of dietary supplement ingredients for the U.S.， it is critical for these suppliers to understand the importance of quality and safety along the supply chain. Chinese suppliers that demonstrate compliance to U.S. FDA’s Current Good Manufacturing Practices (cGMPs) will gain much more attention from U.S. buyers and see increases in business.

GMP compliance

The U.S. Food and Drug Administration(FDA) established GMPs for dietary supplements in 2007 as a way to ensure that dietary supplements are free of contaminates， meet quality standards and are accurately labeled. This regulation was established in conjunction with the passage of the Dietary Supplement Health and Education Act of 1994， which states that the dietary supplement/ingredient manufacturer is responsible for ensuring that its products are safe before marketing them.

Because the safety of dietary supplement products and ingredients lies in the hands of U.S. manufacturers， it is of upmost importance that their suppliers are providing quality ingredients. One way to ensure quality ingredients for U.S. companies is to choose suppliers that are NSF GMP registered， as this guarantees that the facility is audited yearly for compliance to U.S. FDA GMP regulations. (NSF International’s Health Sciences Division provides a wide range of certification， testing and training services for the dietary supplement industry. In March 2011， NSF opened the NSF Shanghai Testing Laboratory in Shanghai， China， to support the increasing international demand for nutritional supplement testing and certification services.)

The NSF Sourcing Guide is a directory for dietary supplement suppliers and manufacturers worldwide that includes all NSF GMP registered suppliers. This registration demonstrates that the facility complies with cGMP requirements. The guide is widely used by global buyers to seek out quality suppliers. Chinese suppliers that are interested in expanding their U.S. and overseas business should work towards getting approval to be added to the guide.

Noncompliance to the U.S. GMPs can result in multiple ramifications such as public warning letters， products labeled as adulterated， seizure by authorities， injunction from manufacturing， and damage to brand and company reputation. U.S. manufacturers are legally responsible for being GMP compliant and U.S. FDA has full authority to levy fines， sue companies and even hand out prison sentences to those breaking the law. Over the last few years， the U.S. industry has seen U.S. FDA increase the number of audits and issuances of warning letters to companies not in compliance.

One of the U.S. – China Health Products Association’s (USCHPA) board members Jarrow Formulas has been purchasing ingredients globally for decades. Their purchasing department and overall quality assurance team is very experienced in seeking out quality suppliers. This ensures their finished products meet the highest standards. Furthermore， working with quality suppliers means Jarrow receives all the necessary documentation from the supplier， which allows Jarrow to maintain clear and GMP compliant records.

When asked to explain some of the basic requirements they look at when reviewing a new potential supplier， Jarrow’s Purchasing Manager Kay Duncan said， “First step of course is a review of the potential supplier’s marketing material， which should include all their quality certificates， history and products produced etc. We look for companies that not only have their own domestic GMP registration， but also a U.S. third party GMP registration such as NSF as well as other appropriate registrations like ISO， TGA， CERES， Kosher， etc. If the company does not have these types of registrations or the information is not readily available then my attention will move to another supplier. ”

Jarrow’s Vice President of International Sales， Peilin Guo added， “If a company has all their certificates in order and is transparent in their communications， then the next aspect to review is the company’s mission statement， technology used， R D capabilities， and number of qualified staff with relevant degrees / training. If the company has simply purchased some equipment and is using antiquated or run of the mill technology borrowed from another company then we will most likely move on. We like to see that the company is committed to the industry and strives to increase quality through investing in qualified staff and R D. Also， I like to see that the President and top management of the company have health science backgrounds. If the upper management’s backgrounds are in unrelated fields I tend to seek out another supplier. That’s a clear signal the company was organized solely to reap profits from the growing dietary supplement industry and is not dedicated to the industry. This type of business structure is dedicated to profit and thus can lead to corner cutting resulting in poor quality ingredients or worse economic adulteration.”

“We also like to see suppliers that invest in the U.S. meaning opening a sales office， joining associations like USCHPA and attending U.S. based expos like New Hope Media’s Engredea. These types of investments will help the supplier understand the U.S. market better as well as show U.S. buyers they are not afraid of the spotlight.” Guo said.

Economical challenges

One major challenge that Chinese suppliers face with meeting cGMP requirements is their tough economic circumstance. An increase in labor and raw material costs is making China a less economical export choice and leading to factory closures. Moreover， buyers are asking Chinese suppliers to become GMP registered while not increasing their prices， which makes GMP registration even more difficult for suppliers because they can’t offset their increased costs.

Becoming GMP registered is a sizeable investment， but one that may save factories and plants from closing because it ensures that the manufacturing facility is meeting current regulations. That kind of assurance to businesses and consumers is priceless.

Raw material contamination

Another challenge for Chinese suppliers lies in raw material control， specifically within herb extracting plants where the process of extracting herbs is very difficult. Contamination of raw material remains an issue in these plants， and strictly monitoring the supply chain is one way to overcome this challenge and better prepare for GMP registration.

Chinese manufacturers can better prepare for being GMP registration through a number of ways， one of which pertains to staff retention. As the economy continues to struggle， employees leave factory jobs if there is more money to be earned elsewhere. This creates a challenge for maintaining quality in keeping HAACP plans and cGMPs in place， but becoming GMP registered through an accredited third party organization can provide employees with the training they need to remain valuable within their company.

There are some 300 companies worldwide that are NSF GMP registered with one-third of these coming from China.

Quality assurance

At the end of the day， one of the most important things to consumers and manufacturers of dietary supplements is the safety and quality of their product.

Becoming GMP registered through a credible third party organization such as NSF International is an excellent way to establish trust with companies and consumers because it demonstrates that a product’s label claims have been verified， that the product has been formulated correctly， and that it is contaminant free， as well as verifying that the facility adheres to current GMPs for dietary supplements.

Without that security， manufacturers may be less likely to trust a supplier’s capabilities and consumers may not know if a certain product meets manufacturing requirements and is of the highest quality.

Investing in quality

A perfect example of a supplier that has invested heavily early on and is now reaping the benefits is TSI Inc. When TSI started to build its U.S. business back in 1996， investing in quality systems， certifications and customer satisfaction was priority one. To date， TSI has five fully GMP registered facilities in China with offices in the U.S.， E.U.， Australia， Japan and China. Just manufacturing ingredients isn’t enough anymore; buyers are looking for U.S. FDA GMP compliant companies as well as those with strong RD and analytical resources， which TSI has invested in.

What do they feel was lacking in the supply chain and how do they ensure their customers trust their quality? TSI CEO Joe Zhou replied， “We consider ourselves a global company and as such have a responsibility to our customers around the world. This means not only having regional and international quality registrations in place， but also invest in maintaining marketing / sales offices in the countries we operate. For example， TSI has an office in the U.S.， which allows our U.S. customers to communicate with us directly and conveniently. Another area that is important for our customers is liability. Let’s say a U.S. company decides to buy direct from China and when the shipment arrives it isn’t what was ordered or it is contaminated etc. What legal options does a U.S. company have against a Chinese entity? Liability insurance is not widely purchased in China， so from a legal standpoint this can be risky. This is why TSI has carries liability Insurance to protect itself and its customers.”

Raising the bar on quality

As we’ve seen in this article， quality ingredients， quality systems， certifications and liability are all things ingredient suppliers need to be aware of and invest in if they want to continue to sell to the global market. In today’s regulatory environment， increased business and profits are tied closely to quality， safety and consistency. Both the U.S. and China have been implementing a variety of new regulations aimed at improving food safety and consumer protection. A product’s quality and safety begins with its ingredients and raw materials， so make sure you are offering your customers the very best. After all， we are all consumers and should strive to produce the best for our families， friends and neighbors.

(Author: Executive President of U.S.-China Health Products Association)