From Nation, page 10, issue no. 341, November 12th 2007
Translated by Liu Peng
Original article: [Chinese]
Although the American toy giant Mattel has apologized for its worldwide recall exercise of China-made toys, the score has yet to be settled. Chinese toy makers, who suffered financial losses and a reputation crisis in the fallout after the recall, are planning to sue it.
The law suit is expected to be filed by toy industry players from Guangdong province grouped under an umbrella body, who are now seeking legal consultation in preparation for the case.
Chen Lipeng, director of the fair trade division of Guangdong Foreign Trade and Economic Cooperation Bureau, revealed those plans during the annual China International Economic Law Conference on November 3rd.
This latest incarnation of the product safety drama traces back to August, when Mattel announced a recall of 21 million China-made toys. It was played-up by the foreign media, who launched an assault on the Chinese toy makers.
Among the recalled toys, 85 percent were made in accordance with the requirements set by American clients and importers. Fifteen percent contained excessive lead, for which Chinese manufacturers were held responsible. The statistics were released by the General Administration of Quality Supervision，Inspection and Quarantine at the end of August.
On September 21, Thomas A. Debrowski, Mattel's executive vice president for worldwide operations, apologized for damaging China's export reputation in the aftermath of the recall, admitting that the majority of the products were flawed due to the way Mattel designed them.
Subsequently, China's Ministry of Commerce organized several training sessions for domestic toy makers to improve products quality control and management. At the same time, Guangdong local government also performed stringent checks on toy manufacturers, issuing shutdown or reform orders to unqualified manufacturers.
These damage control measures, however, are unable to completely restore the reputation of "Made in China" products.
Chen Lipeng believes the recall episode has far reaching impacts. China is the world's toy factory, the largest toy exporter globally, and Guangdong province is the powerhouse that produces 70 percent of such exports.
Following the incident, Guangdong toy exports were worth 710 million dollars in September, a contraction of 5.776 million dollars when compared to August.
And in a recently concluded trade fair, toy export transactions registered 900 million dollar, a drop of 10.7 percent when compared to the previous year.
"Foreign traders are less enthusiastic this time around, as they have become very cautious and do not place large orders like before," says a Guangzhou based Taiwanese toy maker identified as Liu.
Similar scenes are taking place in other parts of Guandong. Liu has visited Huizhou city and found that even though the Christmas festival is around the corner, many factories failed to get reasonable amount of orders.
Liu is a member of the Guangdong Toy Makers Association, where he says talk has emerged over the association's preparation to sue Mattel and its being in the process of lobbying for members' support.
On November 5th, Chen Lipeng expressed the government's solidarity with industry players, saying that government agencies would provide assistance to manufacturers or industry association wishing to initiate legal proceeding in accordance with international practice against Mattel.
"We have identified several problems. Firstly, Mattel has unjustly marked down prices for toy makers, including those from China. Second, Mattel has management flaws, especially in the standardization of quality control system. Third, its information delivery system is problematic, as it fails to transmit the latest revised standard timely to manufacturers. Last, there are flaws in product design."
When contacted, Guangdong Toy Makers Association declined to comment on the said legal proceeding. A spokesman would only go as far as to say, "We have done what is needed or what will be required".
Lawyer Zhu Lieyu of the Guangdong Guoding Legal firm, points out that Chinese suppliers are only obliged to meet product standards stipulated in the contract signed with Mattel. However, the suppliers are not required to meet the American quality requirements.
In the latter case, Zhu believes that according to international trade practice, the importer should be held responsible, namely that Mattel should bear the consequences of the recall. He says that Mattel has not handled the recall in a prudent manner, and further tarnished China's brand name, and that that these are all reasonable grounds to sue Mattel.
Zhu suggests that an umbrella body representing the industry players should initiate the legal proceeding, so that outcome from the law suit would benefit the industry as a whole. He also believes the case should be filed with the court in the United States.
The EO submitted an interview request to Mattel press relation officer regarding the imminent law suit, however, the company had yet to respond when the article went to press.
