Feasibility Study: Post-manufacturing Traceability System between the PRC and the

EU, November 2008

This study, carried out during 2008, focuses on the commercial, technical, legal and political feasibility of a
post-manufacturing traceability system along the supply chain between the People’s Republic of China and
the European Union. The traceability system would cover product quality, safety, authenticity, compliance
as well as the manufacturing process, environmental impact and CSR-related issues. The study highlights
the fundamentals needed for such a system to be launched, operated and sustained over the mid- to long-
term.

This feasibility study was funded by the EU-China Trade Project, Beijing, to investigate possible means to
strengthen Europe’s commercial partnership with the People’s Republic of China while enhancing the safety
level of the products manufactured in China and distributed in Europe.

The study is based on a collection of technical specifications compiled by a group of internationally

recognized experts in quality control, quality assurance, quality management and high tech marking systems
(RFID, QR code, Data Matrix, bar code). These specifications were used to build a demonstration model to
illustrate the collective knowledge now available on traceability systems across diverse populations of users
and/or stakeholders. The demonstration model served as a benchmark for interested parties to understand
how they could position themselves if such a system were to be available. The model has played a useful
role in demonstrating what such a system might look like in concrete terms. It was of particular assistance in
making issues clear to the different target groups which all have distinct and different requirements from a
system. Four main key supply chain players were interviewed: Chinese manufacturers, international buyers,
authorities (including Chinese, EU and Japanese), and consumer associations. Following feedback from a
diverse range of potential users, the model was adapted so as to accord as closely as possible to the
requirements of all the different parties.

The study results in the following conclusions :

• Technically, the system should be a 3rd party, international database located in an independent
country with hierarchically differentiated internet access to the data dependent on the user's profile,
with a batch based numbering system based on the EPC standard and where each and every
product should be tagged individually.
• Commercially, the marking cost of the products should not exceed 3% of its FOB value, making
both optical and RFID marking technologies eligible for most products.
• Legally and politically, a voluntary approach may eventually result in such a proliferation of
schemes that its purpose would probably be defeated. The preferred approach would be a
harmonised framework agreed between the EU and the USA requiring individual product tagging.

Following the drafting of the report the methodology, finding and recommendations were extensively
discussed with a Chinese specialist, nominated by AQSIQ, so as to ensure a knowledgeable channel
reporting directly back to the Chinese government.