<<The Chinese business model seems to be, "we'll sell you garbage cheap, and when it breaks, we'll sell you more cheap garbage.">>
... I do not agree with Stratfor's take at all, because Vietnam etc are not viable options for mass manufacturing with reliability of getting what one designed and specified, especially if one does not wish to get wiped off the arena by China-based competition, but in any case, do the letters F.O.O.L. mean anything to you at all?
You of course meant to say "The American business model seems to be, "we'll sell you garbage cheap, designed wrong, made to spec in diligent and thrifty China and when it breaks, we'll sell you more cheap and disposable garbage.", sell out our country men and women, hollow out the economy, sing the praise of new paradise, buy and leverage homes for nothing down, and spend the false gains or more stuff, after which we watch TV and lecture folks on issues we haven't a clue about" - yes?
Oh, yes, and your culturally affinit-ied Russian friends are up to no good again, doing what you do, grating toward the end game.
Again, yes, satellites fly by wings.
Will you post something intelligent on the poorly designed cribs that kill babies? Or will you pass judgement on your soldiers killing the babies of others in broad day light, sanctioned by your law? No? Why not?
chortle chortle chortle
chugs, tj
P.S. You make my days and Stratfor make my nights. Life is a hoot.
China: Mattel Takes the Blame
Summary
Mattel's executive vice president for worldwide operations issued a public apology to China on Sept. 21, taking full responsibility for the brand's design-related product recalls. Mattel's mea culpa is actually intended for a U.S. audience, however. The company's earlier failure to take direct blame has not gone down well with its key U.S. customers, so Mattel is now in damage-control mode. Potentially dangerous toys are a serious issue, but the scale of the problem is not yet big enough to spark an exodus of U.S. importers from China.
Analysis
Mattel's executive vice president for worldwide operations, Thomas Debrowski, issued a public apology to China on Sept. 21, taking full responsibility for the brand's recent rash of design-related product recalls. The statement confirms earlier reports by Chinese media that the head of the General Administration of Quality Supervision, Inspection and Quarantine, China's quality watchdog, received a letter of apology from Mattel.
The reality of the situation is that U.S. importers are not about to jump to Vietnam or Indonesia over the discovery of lead paint in some of Mattel's made-in-China toys. The big question for the industry is whether Mattel's recalls -- 15 percent of which were for lead paint, and 85 percent of which were for design problems leading to safety issues -- represent a problem endemic to China itself, or just a problem for Mattel.
Substandard toys are a matter of life or death for U.S. retailers and for other major toy brands besides Mattel -- but so far, no major importer of Chinese-made toys has breathed a word about relocating away from China. Instead, responses have ranged from apologies to tighter monitoring measures, to shrinking the number of contractors used in order to get a tighter grip on the supply chain. For all of these companies, brand reputation is central to commercial survival, which raises the question: Why would Mattel assume full blame for the recalls, instead of simply relocating outside of China?
Chinese political pressure might have been partially behind the decision -- but U.S. industry pressures have been far heavier. For U.S. retailers, the risk is that the product-quality issue will eventually taint every product "made in China" -- practically everything on their shelves. The perception that Chinese goods are unsafe across the board could be highly costly to retailers such as Wal-Mart and Toys R Us. If Mattel's brand image is endangering their bottom line, they will demand that Mattel set the record straight.
Other large toy brands (Hasbro, for example) that source from China have been feeling the heat, too. European rivals already have started to use "not made in China" status to gain a competitive edge. Some of this pressure will likely translate into political lobbying that could in turn come back to haunt Mattel -- Robert Eckert, Mattel's chairman and CEO, faced some harsh questioning at a product-quality hearing before the U.S. House of Representatives on Sept. 19.
Six weeks ago, the situation was framed as a China problem -- a view reinforced by concurrent food-safety worries. But after weeks of post-mortem audits inside China by U.S. retailers, toy importers and U.S. trade officials, an industry consensus is emerging that this is a Mattel problem. No other major toy brand has yet been forced into major recalls (though there have been a few recalls by smaller companies).
Mattel's failure to take the blame immediately when the issue first emerged in fall 2006, along with a subsequent series of product recalls, has fuelled a growing sense within the toy and retail industries that -- in addition to the Chinese product-quality issue -- the U.S. toy industry itself is seriously flawed, and Mattel is behind most of the problems. In the past, taking responsibility for such problems has enabled large brand names to pull through similar quality crises (for example, Tylenol's product-tampering scare in the 1980s). Mattel is now taking its chances with tort cases, rather than jeopardizing its relationship with major retailers.
If this were really a China problem, the toy industry would be pulling up stakes and going elsewhere for production in 2009 or 2010. A mere apology from Mattel would be of limited use -- another unsafe toy would be discovered down the line, and U.S. toy brands and retailers would be put out of business unless they could move sourcing to alternative locations such as Thailand, Indonesia or Mexico.
Substandard toys from China remain a serious issue, but the problem is not yet large enough to force U.S. importers to relocate. For the time being, U.S. industries will work hard to preserve China's image in the United States -- no toy manufacturer wants to have to spend the money to find new (and likely more expensive) suppliers if they can help it. An apology to Beijing should appease the Chinese government and secure their help to implement a pre-market testing regime announced in September by the U.S. Toy Association.
With the Christmas season just around the corner and heavy retail stakes in the balance, Mattel is biting the bullet. This is hardly the final word, however: If U.S. toy importers ever feel their control over Chinese supply networks slipping, the U.S. buyer exodus from China could be completed within a few years. Beijing knows this; thus, the government crackdowns and new quality-check policies will continue -- regardless of how well they work.
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