The Pitfalls of China's Rough Capitalism

By THE ASSOCIATED PRESS | The New York Times
January 12, 2008

Ron Rust and Beve Kozub were poking around the toy booths at China's biggest trade fair two years ago when something caught their eye: pouty-faced baby dolls snuggling in light blue and pink fleece blankets, their eyes tightly shut or gazing with a newborn's woozy stare.

The American dealers plunked down $22,052 for a shipment of 2,740. But the lifelike dolls turned out to be knockoffs. Rust and Kozub were slapped with a lawsuit that could have cost them their home in Harmony, Pa.

Despite getting burned, they were back in China this fall. For new products at the right price, China is ''the only option at this time,'' Rust said.

The Americans fell prey to one of the many dangers of China's rough and raw capitalism. It's a cutthroat, predatory world where many factories cut corners to make an easy buck or just stay ahead of the thousands of others vying for their business. Safety scares, copyright ripoffs and outright thuggery are endemic.

Yet, foreign buyers keep snapping up toys, clothes, laptops and a myriad of other products that the world's factory floor churns out. Getting your hot product made in China is seen as a sure moneymaker. In the first 11 months of 2007, China's exports totaled $1.1 trillion, up 26 percent from the same period in 2006, according to China's Commerce Ministry. Chinese exports to the U.S. totaled $212.7 billion, a 15 percent increase from 2006, the ministry said.

The buyers are not blameless: Many breeze in on buying missions and don't stick around to ensure the goods are made right.

For consumers, it can be a dangerous and even deadly game. Chinese-made toy trains coated with lead paint ended up in playrooms worldwide. Cough syrup containing a poisonous chemical used in antifreeze killed dozens in Latin America. A tainted pet food ingredient killed dogs and cats in North America.

Chinese officials defend their factories, saying only a tiny fraction of the billions of dollars in exports each year have problems. But it takes just one bad batch of toothpaste to cause deaths.

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