ALDI CR-Support in Hong Kong – taking a close look at production sites
Numerous non-food products that ALDI sells, such as textiles, toys and furniture, are manufactured in Asia, making Hong Kong the perfect location for ALDI CR-Support Asia Ltd., which works closely with our CR department. The team is responsible for monitoring the labour and social standards of production sites.
ALDI CR-Support Asia Ltd. is headed by Christian Lohoff. It isn’t the first time that the 36-year-old has worked abroad. Before he started at ALDI Buying in 2013, Lohoff had already spent two years living in Canada – an experience that helped him to quickly establish himself in Hong Kong. Lohoff is now a corporate responsibility (CR) expert in the supply chain. He manages a team of 13 employees at the company established in 2015. What makes ALDI CR-Support special is that everything revolves around CR matters, such as audits. In this interview, Lohoff describes his day-to-day work, the biggest challenges at the production sites and why he sometimes rubs people the wrong way in China with his direct manner.
Facts about the location
- Company name: ALDI CR-Support Asia Ltd.
- Established: 2015
- Employees: 14
- Main task: to visit and inspect production sites in Asia
Mr Lohoff, what exactly does ALDI CR-Support do?
Our main task is to take a very close look at suppliers and the production sites that our suppliers commission. Over the last two years, we have developed our own procedure for this called the ALDI Social Assessment, or ASA for short. When we perform on-site audits, we look at whether the employees are being paid in accordance with the law, for example. Occupational health and safety and worker health also play an important role. As the head of my team, I mainly work at my desk, while my colleagues perform the audits on site at the factories. Nonetheless, I try to go with them every now and then. It’s important for gaining an appreciation of current challenges at the production sites.
Head of ALDI CR-Support Asia Ltd.
What is the exact protocol for an on-site audit?
Before anyone heads out for an audit, we first have to decide which of our suppliers’ production sites we even want to visit. When it comes to textiles, we principally aim to inspect all factories that our suppliers work with. In terms of hard goods like electronics and furniture, we are focusing at the moment on our most important suppliers or those that harbour the greatest risk. Once we have made our decision, we go through various documents at the office and assess all of the information available to us about the production site. That way, we find out what we need to pay special attention to while on site. On the day of the audit, we first have a look at accounting records and important documents following an opening meeting. We scrupulously examine whether everything is consistent and conclusive. The intensive communication and collaboration with our suppliers and the production facilities while on site result in greater transparency in our supply chains. Once we have seen all of the documents, we then head into the factory. During a walk-through, we review the labour and social standards using a comprehensive checklist. We also speak directly with the workers, and we do so somewhere quiet. At the end of the day, we go through the findings with everyone involved, establish some initial measures and provide advice on all questions relating to implementation.
What happens after the on-site audit?
If necessary, corrective action plans are drawn up after the audits. They provide an exact breakdown of the areas where the production sites need to improve. Once the suppliers have received the plans, they tell us within ten days how the improvements can be made and by when. What happens after that varies from case to case. Sometimes we get photos from the suppliers proving that the shortcomings have in fact been fixed. If particularly critical issues are involved, then we will visit the factories several times. It is important to me not to withdraw our orders immediately when there are problems, because we can only make lasting improvements to the supply chain if we stay on top of things and look for solutions together. If a production site fails to meet our expectations on critical issues, then it will not receive any new orders from us for the time being to show that we’re serious.
What are some of the shortcomings that you often encounter during the audits? Are there regional differences?
In China, the most frequent problem is that workers work an excessive amount of overtime. In some cases, wages and extra pay, such as for working on weekends, are not paid correctly or on time. In Bangladesh, our focus is primarily on building safety and health and safety at work. We hope that our work on the ground will make an impact in the long term and lead to greater appreciation of these issues among suppliers and at production facilities.
Companies alone are unable to solve many structural problems. What role does collaboration with other actors play?
A very important one. Through our membership in the amfori Business Social Compliance Initiative (BSCI), we participate in regional CR meetings in Asia, for example. The primary aim here is to engage in mutual dialogue with other local companies about issues and challenges that arise in day-to-day work. We then share these practical insights with our CR department at ALDI Buying, which in turn continues developing the standard for a sustainable supply chain together with other amfori BSCI members. The standard also makes things easier for our suppliers, because they would otherwise have to meet a wide range of requirements depending on who the client is.
Moving from the Ruhr valley to Hong Kong, a metropolis of millions, was also a major step for you personally. What is it like to work in Asia?
It was a real adjustment at first. For example, it isn’t common here to directly address problems. People are afraid of losing face, which is why it is better to speak with employees and partners one on one and express criticism only indirectly. Fortunately, I have already had experience working in a foreign country and enjoy becoming familiar with new cultures. That made it easier for me to get settled in Hong Kong.
How the supply chain works at ALDI North
We do not purchase non-food products in Asia directly, which means there are suppliers between us and production facilities. They commission manufacturers with various production sites, which they have to designate when they submit a bid to us. In our work, we not only inspect the conditions at the factories, but also subject the suppliers to a comprehensive check before awarding them contracts. How well does the supplier know the production sites? How is the supplier’s supply chain structured? Is the supplier familiar with CR matters? Questions like these help us to determine what risks a given supplier entails. The audits are then the proof of the pudding. They show whether the supplier in fact knows about the importance of labour and social standards and have chosen a factory that meets our requirements.
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