CHINA: WILLING AND ABLE TO MAKE SAFE PRODUCTS?
More often than not, when you look at a product to see where it was made you’ll see “Made In China” on the label. It is a fact of our global economy that China has a massive manufacturing infrastructure and has dominated that segment of the global economy for several decades. The Chinese, with an artificially devalued yen, cheap labor, and a robust manufacturing infrastructure, supply much of the products we use every day and enjoy a massive trade surplus with the United States. Many of these products wouldn’t surprise us, like small plastic toys and low-end electronics. What may be surprising is to learn that China supplies many high end products, and even food products. China is a leading exporter of: rice, wheat, potatoes, corn, peanuts, tea, millet, and barley…apples, oilseeds, pork and fish (U.S. Dept. of State).
Because of the recent press around the safety of Chinese products, this issue has come to the forefront for both the American consumer, and the US government, whose many responsibilities include the protection of the consumer. Toys with lead paint are being recalled (MSNBC.com). Tainted pet food products are killing dogs and cats (Barboza). A high-level Chinese official was executed for drug safety testing fraud (Schwartz) These and other occurrences (e.g., toothpaste, tires, mattresses, etc.) have made it clear that China does not have the legislative and enforcement infrastructure required to ensure that the products they ship are safe and meet minimum safety standards. In fact, it may be entirely possible that China does not want to have these safeguards in place, as it will raise the costs of goods exported from China and may erode their competitive advantage in the market place.
Recent figures place the trade surplus China enjoys with the United States at $24.97 billion in August 2007, the second-highest monthly level on record. (NY Times.com) It is these enormous amounts of money that China necessarily wants to protect, and any change to the status quo would be viewed as potentially damaging to the Chinese economy.
In fact, the tainted pet food scare of several months ago potentially cost Chinese industry millions of dollars. Many brands of pet food products were found to have industrial chemicals in them and several dogs and cats were killed as a result. This, in itself, would be a terrifying prospect. However, the reality may be much worse. Many believe that these products were PURPOSEFULLY contaminated to bring them up to nutritional requirements.
Now, regulators with the U.S. Food and Drug Administration are examining the possibility that melamine was intentionally mixed into the wheat gluten in China as a way to bolster the apparent protein content and to meet pet food requirements, according to a person briefed on the investigation (Barboza).
However, the cost to China is negligible when compared to the possible impact of the current Mattel recall. Potentially, billions of dollars worth of Mattel toys may contain high levels of lead paint, even though the use of lead-based paint has been outlawed for several years. In fact, since June 6, 2007 Mattel has recalled over $430 million – this compared to $130 million in recalls for ALL of 2006 (Ng). The total of all products withdrawn from American shelves so far this year is over $1 billion (Ng). What these figures don’t speak to is the dramatic health effects that these toys may have on American children. Lead is known to cause learning disabilities and birth defects – enough to where lead in paint was outlawed.
There are many different health effects associated with elevated blood lead levels. Young children under the age of six are especially vulnerable to lead's harmful health effects, because their brains and central nervous system are still being formed. For them, even very low levels of exposure can result in reduced IQ, learning disabilities, attention deficit disorders, behavioral problems, stunted growth, impaired hearing, and kidney damage. At high levels of exposure, a child may become mentally retarded, fall into a coma, and even die from lead poisoning (National Safety Council).
Although the Chinese government has taken several steps of late, many argue that these steps are just window-dressing – or an effort of damage control to the reputation of Chinese products. What is especially troublesome is that China does not acknowledge that there is a widespread problem.
China, while conceding that regulation needs to be improved, has insisted that most of its products are safe. The government takes seriously media reports questioning the safety of Chinese goods and has "begun enforcing a very strict examination and inspection procedure,'' President Hu Jintao said at the Asia-Pacific Economic Cooperation summit in Sydney on Sept. 6. Hu said 99 percent of China's exports meet international quality standards (Ng).
Yet, 1% of potentially $300 billion in merchandise is still $3 billion in merchandise. Clearly, the Chinese are diminishing the magnitude of their problem. I would argue that China is neither motivated to enact significant changes, nor are they capable. China, although a massive and growing economic power, is still behind the rest of the industrial powers in many ways. They appear to be ill equipped to handle many of these regulatory pressures that countries like the US, England, Japan, etc. are able to enact with respect to consumer protection. In fact, it is becoming increasingly evident that the US government is no longer sure that the Chinese can regulate their products properly and some congressmen are starting to say we should do it for them. Rep. Mike Ferguson, R-N.J., reiterated that companies that manufacture their products in China will need to ensure they meet federal safety regulations. He adds, “If they don’t, I believe Congress must give federal regulators the authority to ensure that our kids’ toys won’t actually harm them” (MSNBC.com).
This regulation, whether done in China, or at home, will have the ultimate effect of forcing the American consumer to pay higher prices to get the products they crave. However, a silver lining of this may be a return to “Made in USA” purchasing. It is entirely conceivable that clever marketers will spin this current environment to something akin to: “Buy American, Buy Safe”. In fact, according to the Anholt Nation Brands Index, “China dropped to 37 out of 38 nations, ahead of Indonesia, in the second quarter in a ranking of how favorably consumers view a product based on its origin” (Ng). Will this lead to people buying less from China? Will this lead to more companies going to other manufacturing locations for their products? Ultimately, the consumer will have the final say as they always do.