Hong Kong Startup ICW Targets Supply Chain Diversification

Currently, locating suppliers presents difficulties for American importers, stemming not just from COVID-19 related travel limitations. Designations on the U.S. government’s entity list, sanctions connected to human rights concerns, and various other trade restrictions focused on Chinese businesses have also created disruptions within U.S. supply networks.

A relatively new organization, International Compliance Workshop – known as ICW – aims to simplify the sourcing process for businesses globally, having recently secured additional funding. The startup, headquartered in Hong Kong, has obtained $5.75 million in its Series A funding round, bringing the company’s overall funding to approximately $10 million, as stated by co-founder and Chief Executive Officer Garry Lam to TechCrunch.

ICW functions as an intermediary connecting suppliers and purchasers, but distinguishes itself from established platforms like Alibaba’s B2B marketplace or international trade events by also verifying suppliers regarding compliance standards, product excellence, and certifications. This data is compiled into a continually expanding database containing information on more than 40,000 suppliers – with 80% presently located in China – and is used to provide tailored recommendations to clients.

Established in 2016, ICW’s present roster of clients includes several of the world’s most prominent retail companies, such as Ralph Lauren, Prenatal Retail Group, Blokker, Kmart, and a large American drugstore chain that has requested anonymity.

The most recent funding round for ICW was spearheaded by Infinity Ventures Partners, with contributions from Integrated Capital, and continued investment from MindWorks Capital and the Hong Kong government’s $2 billion Innovation and Technology Venture Fund.

Supply chain shift

Reflecting the increasing trend of companies seeking manufacturing locations outside of China – a movement influenced by the U.S.-China trade dynamics and rising expenses for labor within China – ICW has noted a growing number of clients working to broaden their sourcing networks. However, this change faces certain constraints in the immediate future.

Lam pointed out that locating alternative suppliers for specific product types remains challenging. “Finding manufacturers for items like Bluetooth-enabled devices and portable power banks outside of China is proving difficult,” he stated. “However, the shift away from Chinese production for apparel and textiles has been underway for approximately ten years.”

Across Southeast Asia, which is becoming a significant alternative to Chinese manufacturing, individual nations are developing specialized areas of expertise. Vietnam is particularly strong in wooden furniture, Thailand excels in plastic products, and Malaysia is a reliable provider of medical equipment, according to Lam.

To address complex regulatory requirements, such as those related to human rights restrictions, ICW utilizes independent certification organizations to assess and validate suppliers.

“A specific set of criteria exists to confirm a supplier’s commitment to corporate social responsibility – including adherence to labor regulations, guaranteeing minimum worker rights, and proper payroll management,” Lam clarified.

ICW intends to allocate the newly acquired funding to enhance its offerings, specifically its compliance oversight system, product evaluation platform, and business-to-business sourcing platform.