Thursday, August 02, 2007

Yet Another: Chinese Toy Recall

An new report today on a massive recall of products from China. This time, it's lead in the paint of (gasp) children's toys--the beloved Elmo himself carrying poison. If this were a regional market, rather than an international market, repetitive quality problems from the largest manufacturer would quickly open a window for a smaller, higher-cost, "trusted supplier." That door may open on the international stage also. Remember when "Made in Japan" was turnoff to Americans? It later became a signal of quality and manufacturing prowess. Innovative, modern Chinese factories are joining small-time operations, adding capital to low labor costs. In doing do, they should establish new standards among Chinese exports for quality and dependability. Importantly, this should be true even if they don't set a lower standard for cost since the labor cost they are replacing is already low. And it looked like that's the way the story would play out. In 2005 and 2006, China seemed on the brink of turning the manufacturing-reputation corner from the standpoint of American consumer perception. Virtually all expected China to win the global manufacturing battle and, given the low prices and satisfactory quality, few were concerned (except those whose manufacturing jobs disappeared). Yet over the last 6+ months, seemingly biweekly reports on dangers lurking in toys, ramen, pet food, toothpaste, etc. has got to have some of the largest distributors hedging their supplier bets. China isn't going to stop making things, but if the manufacturers or the export regulators don't get their act together, it certainly isn't going to make everything.

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