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Mattel Toy Recall Result of Poor Oversight and Demand for Cheap Goods, China Says

Aug 22, 2007 | Parker Waichman LLP, LLP Lax oversight by Mattel is partly to blame for this month’s massive toy recall, claims a Chinese official.  American companies’ demands for low cost goods put pressure on Chinese suppliers to find the cheapest ways possible to make those products.  This often leads the factories to cut corners and employ shoddy manufacturing practices.

Li Zhuoming, executive vice chairman of the Guangdong Provincial Toy Industry Association told the state-run Guangzhou Daily newspaper that Mattel “did not do its job well in quality inspections.”  Li said that while the factories that make dangerous toys are responsible for their part in the fiasco, Mattel also shouldered much of the responsibility.

Li told the newspaper that Chinese factories have very low profit margins, in part because buyers like Mattel want inexpensive products.  When foreign companies demand unrealistically cheap goods, they might get poor quality products from the Chinese factories.  “If you give a high price for purchasing,” Li told the Guangzhou Daily, “the factories will use high quality raw materials.  But if the price is low, they can use only inferior raw materials.”

Last week, Mattel recalled millions of toys made in China.    That recall included 9 million magnetic play sets where the small magnets could come loose and cause serious intestinal injuries in children if swallowed.  The same action also recalled 436,000 die-cast toy cars from its “Cars” line because paint used on the toys contained excessive amounts of lead.  

The August 15 recall was the second in a month for the toy giant.    On August 1, Mattel’s Fisher-Price division recalled more than a million toys because they were also made with lead paint.  That recall encompassed more than 80 different toys and toy sets, and included toys based on characters from popular TV shows like Sesame Street, Dora the Explorer and Spongebob Squarepants.  

And the Mattel recalls were just the most spectacular example of dangerous Chinese products.  This year, everything from dog food to toothpaste to tires made in China have been recalled for dangerous defects.  All of these cases are indicative of deep-rooted problems with Chinese manufacturing.   Often, supply chains in that country are extremely long, making it difficult to trace the origins of components.  In the Fisher-Price recall, it seems that the factory owner was buying lead-tainted paint from his best friend, despite a contract that stipulated that paint only be purchased from Mattel-certified suppliers.

Though Li’s interview was obviously an attempt by Chinese manufacturers to deflect blame for the hazardous toys, much of what he says is true.   According to an article in Forbes magazine, if adjusted for inflation, toy prices are actually lower than they were 40 years ago.  In order to keep prices low and profits high, toymakers like Mattel sent much of their manufacturing to China, where labor costs are a fifth of what they would be in US factories.  According to the Forbes article, this set up has made China the “wild west” of manufacturing, and now companies like Mattel are getting exactly what they paid for.

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