Chinese toy recalls show need for stringent quality control

The US Consumer Product Safety Commission announced a record number of recalls of defective products in 2006. This has coincided with record imports of goods from China.

Donald Mays, a product-safety expert at the Consumers Union, testified last month that Chinese products now account for nearly 60 percent of product recalls.

"We believe the responsibility for safety has to be firmly attached to each link in the supply chain," Mr. Mays told a Senate committee. "Producers, importers, distributors and retailers, as well as government safety agencies, have to own that responsibility."

Experts on global manufacturing say the issue goes beyond China, however. In toys and other industries, producers are locating production in many low-cost nations where similar problems can crop up.

"It's largely due to the length and complexity of the supply chain," says Donald Rosenfield of the Massachusetts Institute of Technology's Sloan School in Cambridge. But "there's clearly some nasty things going on in China."

The concern about product safety has become part of a larger debate in Congress about the US-China trade relationship – including alleged currency manipulation, illegal subsidies, and piracy of intellectual property.

This is coming to a head after years of roaring growth in Chinese production.

"The core problem is that there's just been this huge surge in imports" from China and other low-cost nations, says Robert Scott, a trade economist at the Economic Policy Institute in Washington. Firms "have to make heavy investments in testing those products," and so far have not done nearly enough, he says.

In the case of toys, the industry is scrambling to burnish its image.

The vast majority of toys are safe, but that fact doesn't mollify worried parents.

Toy-industry analysts are paring back their forecasts of holiday sales, at least modestly.

Garrick Johnson, of BMO Capital Markets in New York, cut his forecast for Mattel's 2007 revenues by $25 million after Tuesday's recall news. Total sales for the company could reach nearly $6 billion this year, he says, but with the risk of "further recalls or declines in consumer spending on toys."

Like Mattel, other companies in the industry are scrutinizing their supply-chain policies.

RC2, which makes Thomas the Tank Engine products and other toys, faced its own lead-paint recall this year. It launched an internal investigation, began auditing contractors' factories, and increased its testing of products and materials.

Mega Brands has redesigned and relabled its magnetic toys, in a $35 million recovery effort after an April recall.

Mattel, for its part, took out full-page ads in major newspapers to reassure parents of its commitment to their children's safety.

In Congress, some lawmakers are wondering if the industry needs new regulation or monitoring to make sure toys meet US standards.

"If they don't, I believe Congress must give federal regulators the authority to ensure that our kids' toys won't actually harm them," Rep. Mike Ferguson (R) of New Jersey said this week, according to the Associated Press.

Sen. Bill Nelson (D) of Florida is sponsoring a proposed Children's Products Safety Act. "There's going to have to be a private sector independent panel such as Underwriters Laboratory that would have to certify the safety," he said in a recent hearing.

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