Chinese Toys- Lessons from Mattel Story

Many years ago, I had read a story in Readers Digest about the quality of a Japanese doll that was getting inspected. The inspector rejected it as the doll had some sharp feature that could hurt the child using it. The quality may not have a total definition. But the product must not harm the user in any manner, more so a toy.

The recent stories about the Americans rejecting all sorts of Chinese imported goods must not make Indian manufacturers rejoice. Unfortunately Indian manufacturers, particularly SMEs hardly keep themselves abreast with the latest in its business. The story of Mattel cautions that the manufacturer must understand the specifications in all its perspective. It is not only dimensional and visual acceptance. It also requires some imaginative thinking to go in. The process designer must appreciate all the finer aspects such as possibility of a child putting the toy in his mouth. Any material that can harm him must be avoided to make it safe.

Mattel is the world’s biggest toymaker. It has had to recall 21m toys this year. On September 5th Mattel had confessed to an American Congressional committee its own fault. It recalled 17.4m toys containing a small magnet that could be swallowed by children. It agreed that it was due a flaw in the toys’ design, rather than production flaws in China. Mattel also recalled some other toys because of allegedly hazardous levels of lead in their paint, Mattel admitted that it had been overzealous and is likely to have recalled toys that did not contravene American regulations on lead content. The Chinese had to bear with the unfair accusations of shoddy production. Once the Chinese came to know of the in-house problem of Mattel, the Chinese felt a public apology was long overdue. Mattel too couldn’t displease the Chinese, as it could have created a supply chain problem. Mattel tried to rescue its relationship with its Chinese suppliers.

“Mattel takes full responsibility for these recalls and apologises personally to you, the Chinese people and all of our customers who received the toys.” said Thomas Debrowski, Matteel’s senior executive in a meeting in Beijing on September 21st with Li Changjiang, the chief of China’s quality watchdog.

Mr. Debrowski had not intended to talk to Mr Changjiang in the presence of journalists, but Chinese officials made it a condition for the meeting. But the Chinese are shrewd and tough. They made Mattel apologize.

For many Mattel’s apology to the Chinese was strange. Economist writes, ‘the apology was late, reluctant and was no sooner made than it was partly retracted’.

Mattel is dependent on cheap Chinese production for most of its wares. Of the roughly 800million toys Mattel produces every year, more than two-thirds are made in China. The subcontractors have to comply with safety and quality standards specified for each toy. But it is also up to Mattel to specify the process and material specifications that goes in the process, and even check for compliance.

It has become a common practice recently to blame the subcontractor for the quality of the product. According to the Western media, companies in China are operating in a largely lawless environment. There is hardly any effective regulation and little recourse to law. In August the Chinese government published its first white paper on food safety in the wake of 96 deaths from food poisoning in the first half of the year. With oversight of food safety spread between five different ministries, responsibilities are still murky. The Chinese have no culture of compliance and cut corners on safety and quality when squeezed on price.

So western firms doing business in China have a responsibility to do their homework and keep a vigilant eye on their suppliers. Buyers of toothpaste or dog food, which have also been subject to safety scares and recalls this year, should have known that more than one-fifth of China’s food products failed government safety-tests last year. Corruption, blackmail and counterfeiting are rampant. Eight buyers at Carrefour, a French supermarket chain, are under investigation for accepting kickbacks from suppliers. Zheng Xiaoyu, a former boss of the SFDA, was executed earlier this year for taking bribes to approve fake drugs and certificates claiming that the paint used by Mattel’s suppliers was lead-free.

Chinese firms, for their part, complain that they are bullied by foreign purchasing managers to cut costs. This forces them to squeeze their own suppliers, with unpredictable consequences. Local firms also moan about having to meet the complex logistical demands of foreign customers in a country where such costs are typically 15% higher than in the West.

Some feel, the Chinese focus on high-volume, low-cost manufacturing has worked well in the initial phase of the country’s economic take-off. But producers must now pay more attention to quality, brand development, governance and transparency or more harm will be done to “Made in China”. Almost 40% of British consumers are less likely to buy Chinese-made toys because of Mattel’s recall crisis, according to a YouGov survey commissioned by Marketing Week, a trade publication. Hamleys, a toy shop, says it is thinking about sourcing more toys from Europe and not from China.

The different regulatory agencies in India must caution Indian consumers who are falling for cheap Chinese products including the nicely packed alluring food items. All the Indian manufacturers, who wish to play big and export in the market of developed countries, must take the quality story seriously too.

Read : No child’s play by AMAN SETHI<

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