September 25, 2007 in Business

Toymaker has some growing up to do

Bert Caldwell The Spokesman-Review
 

China wrung an extraordinary apology out of Mattel Inc. on Friday.

The American toymaker, already under fire at home, was called out for casting too much blame for its product recalls on Chinese suppliers. The suppliers, and China, have a legitimate complaint.

Of the toys Mattel has recalled this year, 17.4 million included magnets that, if ingested, could damage the digestive tracts of toddlers. Only 2.2 million were tainted by lead paint.

But you might not know that from statements made by Mattel officials, including Chief Executive Officer Robert Eckert, who sometimes glossed over the different explanations for defects in its Thomas the Tank Engine, Barbie and Dora the Explorer product lines, the last of which has repercussions in Spokane. More on that later.

It was easy for Mattel to suggest responsibility rested with the Chinese, especially in the context of other recalls affecting pet food, toothpaste and tires. But the Chinese wised up to the Mattel spinning.

The company first tried to soothe the irritated Chinese by sending a letter to Li Changjiang, director of the General Administration of Quality Supervision, Inspection and Quarantine, regarding any “misunderstandings.” Li is undoubtedly under pressure to re-establish China’s status as a quality supplier.

The letter was an opening to set the recall record straight, and Li used it to set up a meeting with Mattel Executive Vice President Thomas Debrowski. And set up about nails the interview.

The two sat side-by-side in oversized chairs before what appeared to be a small gathering of Chinese reporters. Debrowski mostly read a prepared statement acknowledging that the magnet-related recalls originated with faulty designs by Mattel, not with the supplier. Also, he added, some of the products thought to contain excessive lead turned out to be in compliance with government safety levels.

“I would like to apologize personally to you, the Chinese people and all of the customers who received toys,” Debrowski told Li. He conceded the furor had damaged the reputations of the nation’s manufacturers, 5,000 of whom produce 60 percent of the world’s toys.Li used the occasion to defend China’s efforts to assure quality. The licenses of 300 manufacturers have been suspended or revoked, he noted, and criminal sentences are pending against four involved in the recalls.

One unfortunate factory manager took his own life.

What Li did not address was widespread use in China of lead paint because it is so cheap. And one deputy secretary of his agency earlier this year defended the use of lead in jewelry as long as it was coated with paint. No wonder one-third of China’s children have blood-lead levels considered harmful.

Mattel, for its part, tried to cloak the make-nice session with Li as a gesture to the Chinese buyers of its toys, insisting it has made similar gestures elsewhere, as well. The reality is Mattel has been outsourcing production of toys to China for 25 years, and is desperately dependent on business relationships the Beijing government can disrupt at will.

One innocent bystander in all this is Zak Designs of Spokane, which also relies heavily on Chinese suppliers for kids dinnerware licensed by the Walt Disney Co. and Nickelodeon, among others. Owner Irv Zakheim says he’s noticed a slight downturn in company sales of its Dora the Explorer dinnerware stemming from the bad publicity over Mattel-made Dora products. Dora is a Nickelodeon brand.

Consumers are not drawing a distinction between Zak and Mattel, he says.

Zakheim welcomes a recent announcement by Disney, also hit by a Mattel recall, to independently test goods featuring its characters. Holding all licensees to high standards can only help Zak Designs, he says.

Zakheim says his company has meticulously monitored its suppliers for years, to the point inspectors sleep in some factories. In 30 years, there has never been a recall of company products, and Zakheim says some vendors have thanked him for making them better manufacturers.

Mattel, he speculates, got caught pressuring suppliers to produce goods at impossibly low cost, so they cut corners to comply. Then it got caught passing the blame. Now, U.S. politicians are taking potshots at the company for allegedly bowing to the Chinese.

Oh, well. Mattel is learning the hard way that when it comes to child’s play, you have to act like an adult.


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