For Chinese toy producers, this August was a true nightmare, as
tens of millions of Chinese-made toys were recalled by foreign
companies. With this move, the made-in-China products have once
again been thrust into the world spotlight.? After analyzing
the situation, experts pointed to trade barriers as the main source
of conflict.
On August 2, Mattel Inc., (Mattel) an American toy company,
announced a recall of 967,000 products made by Dali Toy Limited
Company (Dali), an original equipment manufacturer (OEM) located in
southeast China's Guangdong Province.? Mattel announced that
paint on the toys contained excessive amounts of lead, and was
potentially poisonous for children. Consequently, Dali would suffer
a devastating loss US$30 million.
On August 11, the CEO of Dali, Zhang Shuhong, a businessman from
Hong Kong, committed suicide.? His tragic death shocked the
country and contributed to the collapse of Dali.
Three days later, Mattel shocked insiders when it decided to
recall 21.8 million Chinese-made toys from the global market on the
grounds that their magnets are liable to fall off, posing a
potential danger to children. This is the largest recall in the
company's history, and has made the safety of Chinese toys a
worldwide concern.
On August 21, Wang Luxia, the spokesperson for Mattel, explained
that the recall was a self-initiated action, not targeted against
any third party. Wang went on to say that while the recalled toys
met many countries' quality standards, Mattel had raised the bar
for quality monitoring and thus decided to recall the products that
could not meet the new safety standards.
It has been recorded that as early as 2006, Mattel discovered
the toys' magnets were prone to detachment, but the company
postponed the recall until this year.? Some toy industry
insiders accused Mattel of deliberately exaggerating the safety
problems of Chinese-made toys and said that in essence, the recalls
were part of a trade war.
Wang refuted the charge, saying that the August 2 and August 14
recalls have no connection at all and the decision was made for
children's safety rather than to set a trade barrier.
Yin Tao, director of the Industrial Economy and Corporate
Management Research Institute under the Guangzhou Academy of Social
Sciences, argues that the US has unfairly put China in a very
unfavorable position by constantly raising the market-access
standards and recalling Chinese-made products. He believes that the
US is performing an act of economic hegemony by using its economic
supremacy to set rigid technical barriers for developing countries.
He suggests China should firmly hold its ground to fight against
the recalls, explaining that the country should not worry because
such product recalls are a very common occurrence in the global
market.
Li Zhuoming, deputy executive director for the Guangzhou Toy
Association, commented that Dali should not be the only one blamed
for the recall.? Mattel should also assume responsibility
because it failed to do a thorough job of quality examination
before buying the toys, he said. Chinese OEMs make 80 percent of
the toy exports to the US based solely on the design requirements
set by importers. Therefore, the US side cannot avoid
responsibility if any problems occur with the toys, he added.
Li also agreed that the safety problem of made-in-China toys has
been deliberately exaggerated, and is confident about the quality
of the toys made in Guangdong.? According to Li, there are
more than 5,000 toy-manufacturing enterprises in the province,
offering job opportunities to about 1.5 million people. Last year,
these companies had gross production values totaling 121.9 billion
yuan. Li said the latest recalls would not influence the
development of the toy industry as a whole nor consumer
confidence.
In addition, Li complained that with toy production costs
increasing, foreign purchasers are trying to bring down the
purchasing prices rather than raise them, making it impossible for
Chinese manufacturers to make high-quality toys on such a
shoestring budget.
Therefore, Zhang Shuhua, deputy director of the Industrial
Economy and Corporate Management Research Institute, said the
Chinese toy industry should build a uniform price-fixing mechanism
to ensure margins as well as enough expenses for standard raw
materials and production procedures. She also advised toy companies
to obtain insurance to cut possible risk-generated losses.
Additionally, these experts say that all toy makers should
enhance their quality management by strictly examining the raw
materials, production procedures, and finished products. From the
material purchasing to packaging, every step of production should
meet standards.
Finally, and most importantly, the experts agree that the
Chinese toy industry needs to create its own well-known brands,
like American company Hasbro. Since the toy industry is currently
mostly engaged in the processing trade, it can only make the
products that have low added values and are labeled with foreign
brands. With little competitive edge, the industry does not have
much room to develop. Therefore, the Chinese toy industry should go
through an innovation-oriented reform in order to protect long-term
development.
(China.org.cn by Pang Li, September 5, 2007)
?
