Today, we had Liz Mair on the show and we discussed Hillary’s free trade leanings (she doesn’t, especially when compared to what Bill did when he was Prez) that she wrote about in her article in NRO. We ended up chatting about China, and the real problems that we have experienced lately with goods from that country. We basically concluded that while many may be jumping up and down for better government regulation and testing, we agreed that over the long haul, consumers will avoid products from China just because of the problems with pet foods, lead paint (and use of lead in general) and toxic plastics in childrens toys. This will do more harm to their economy than any regulation we could put into place quickly, and with no retribution (i.e., what’s the retribution by a country when people just won’t buy your products vs the US establishing trade barriers?)
Well, shortly after the show, I found this article on Treehugger:
Brand China is so in the toilet over leaded toys made for export that the Chinese Government is starting to take action against pirates in the toy supply chain. The other interesting aspect of his story is that it points to the lack of US coverage, so far, of evidence that voluntary standards don’t help when China is the supplier.
China has banned more than 750 toy makers from exporting in the last two months as Beijing bends to western pressure to stem a flood of dangerous goods, according to a European Commission report.
A further 690 companies in the southern province of Guangzhou alone were ordered to renovate factories and improve product quality within a fixed period after Beijing investigated more than 3,000 manufacturers in September and October.
In spite of the quick response from Beijing, the report, published on Thursday, says the safety system needs a swift overhaul. In a quarter of cases the makers of dangerous toys cannot be traced because of poor record-keeping.
“One of the main problems is incomplete or complete lack of information about the manufacturer, which prevents them [the Chinese] from following up effectively,” says the report.
“Traceability is a key issue for the industry and China,” said a Commission official. “As with food, we have to be able to find out where these goods originate to tackle the problem at source.”
Ready for some black humor? The article cites a government official claiming this reason why regulatory reform is not needed in China.
“There is no immediate need for a sweeping change in the regulatory system or imports,” the report states, which also reveals that buyers have returned only a fraction of potentially lethal devices.
Of the 500,000 magnetic toys sold in one member state, only about 10,000 were retrieved, the report says. Of the 13,000 toys containing lead sold in another member state, only 160 were returned.
Like, it’s a good idea to ship tiny lead filled toys all the way back to China in order to register the need for reform.
And now for some diversity of cultural perspective.
Most Chinese consumers say they trust domestic brands more than foreign ones, according to a McKinsey survey that amounts to a stark warning for multinational companies about nationalist sentiment in China’s booming market.
This is why I believe that American (and other) consumers will basically say "Thanks, but no thanks". Cheap is one thing – dangerous is another.
The Chinese economy is about to learn a long hard lesson about American consumers and that concerns a word that plays little in China right now – trust.