China Struggles with Toy Recalls

2007-11-27
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After months of effort to improve product safety, China is still struggling to control its exports of dangerous toys.

The country’s manufacturers have come under an international cloud since April, when a series of reports spotlighted China’s use of harmful chemicals in exported products ranging from pet food to cough syrup to toothpaste.

More problems followed with a wave of product safety recalls for Chinese-made toys that were found to contain high levels of toxic lead paint.

The world’s largest toymaker, Mattel, issued recalls for some 22 million products in August and September.

I think the burden of proof rests with Chinese companies and Chinese regulators to demonstrate that the brand does have integrity and that it has a positive meaning...

Officials and experts have argued about whether Chinese contractors or foreign importers bear the primary responsibility. But the Chinese government has taken steps to improve safety and quality control.

The General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) has introduced a new recall system for defective products and has suspended the export licenses of some 750 toymakers, according to China’s official Xinhua news agency.

Problems persist

Meanwhile, the State Food and Drug Administration has launched special campaigns to check drug registration and production processes.

Yet in spite of these efforts, serious problems continue to occur.

In November, a popular toy known as Bindeez in Australia and Aqua Dots in the United States was recalled after at least five children were hospitalized.

The Chinese-made bead toy, named “Toy of the Year” in Australia, was found to contain a chemical that produces a toxic, coma-inducing substance called GHB when ingested.

In an interview with Radio Free Asia, Eric Johnson—professor of operations at Dartmouth College’s Tuck School of Business—said that the full effects of damaged consumer confidence in China have yet to be felt.

More than half of all U.S. toys are sold in the pre-Christmas period of November and December, but those sales will be heavily concentrated in the month following Thanksgiving Nov. 22, Johnson said.

“So, it’s that month-long period that will really be the proof of the impact of these various recalls. And I think after the holiday season, manufacturers will be able to see clearly how strongly consumers felt about these problems.”

Johnson said returns from retail sales in the United States could be crucial to the future of Chinese exporters. But decisions on the safety of Chinese products will also depend on whether more problems arise.

'Decisive' sales figures to come

“If we don’t see a big effect this holiday season and there aren’t lots more recalls next year, I don’t think it will have substantial lasting impact,” Johnson said. “But if we see consumers reacting strongly this year, then there will be an echo effect for years to come.”

Gary Hufbauer, a trade expert and senior fellow at the Washington-based Peterson Institute for International Economics, said consumer reactions have yet to be reflected in trade figures because big orders for the Christmas season were placed before most recalls were announced.

But he agreed that retail sales results this season will be “decisive” for some Chinese producers.

“Because either the big stores will find that Chinese toys are being ignored to some extent on the shelves or not. And if they are being ignored, then you can be sure that orders going forward will be way down.”

Hufbauer said memories of this year’s problems may fade if there are no more recall cases next year, but that moves are already under way in Congress to toughen U.S. product safety rules. “China ought to welcome this,” he said.

“The more that can be done both in China and the United States to weed [these problems] out and preserve the good name of Chinese products, the better in the long term.”

James Post, a Boston University School of Management professor of strategy and policy, said that U.S. consumers now need to see “manufacturers in the United States and in China, and the governments in the United States and China, responding to this in a coherent, sensible way.”

“In my judgment, there’s no question that ‘Made in China’ has been damaged as a brand. Most of the world is stopping and paying attention to where these products come from now,” Post said.

“I think the burden of proof rests with Chinese companies and Chinese regulators to demonstrate that the brand does have integrity and that it has a positive meaning, not just a negative meaning.”

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.

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