Doing business in China: October 2007 Archives
By Channel NewsAsia
26 October 2007
The US government on Thursday issued a flurry of product-safety recalls affecting hundreds of thousands of China-made children's toys and jewellery amid fresh concerns about lead paint.
The latest recall notices, issued by the Consumer Product Safety Commission, follow mass recalls of China-made toys earlier this year. The world's biggest toy maker, Mattel, has been particularly hard hit by the recalls.
The government said it was recalling 142,000 toy buckets decorated in a Halloween theme that have been sold by Family Dollar stores across the country.
Officials said paint on the buckets contained excessive levels of lead. The United States banned lead paint from being used to colour toys on health grounds in 1978.
The agency also issued a recall for 80,000 bobble head cake decorations cast as American football figures for numerous teams including the Indianapolis Colts and New York Giants. The bobble heads have been sold in bakeries and ice cream stores nationwide since January, according to the recall notice.
Also affected were 97,000 children's toy gardening tools sold by Jo-Ann Stores. Inc, and 38,000 toy boats made in China for Fisher-Price, which is owned by Mattel.
Traces of excessive levels of lead paint also sparked a recall for 190,000 sets of children's jewellery, including earrings, necklaces and bracelets, made for Greenbrier International, and 110,000 metal jewellery sets produced for WeGlow International.
>> Read complete news item
By Ben Blanchard | REUTERS | via (uncensored) Yahoo! News
October 24, 2007
China should pay more attention to shoring up its product safety supervision network rather than apportioning blame for recent problems, a senior European Union official said on Wednesday.
The quality of Chinese goods has come under international scrutiny following scandals involving products ranging from toothpaste and pet food to toys and fish.
China insists the issue is limited to a few errant companies and hyped by foreign media as well as being driven by a protectionist agenda in some countries.
Chinese deputy quality watchdog chief Wei Chuanzhong repeated that criticism of the press to European Commission Director General for Enterprise and Industry, Heinz Zourek, but the EU official said he thought action would be better than words.
"I can assure you that the European Union is determined to draw conclusions out of these experiences that we have been witnessing. But we feel that we should concentrate our efforts on how to improve the system rather than blaming anybody," Zourek told Wei at a meeting in Beijing.
"What we must not do is compromise on the safety, whatever the quality level. The products have to be safe," he added. "It is important to undertake measures, but it is equally important to have an efficient communication and alert system in place."
By The Financial Times
October 12, 2007
After serving for decades as the world's favourite manufacturer of cheap goods, China is struggling to upgrade itself into an "innovation society." But innovation does not always lead to profits. In a country where low prices matter more to consumers than brands or quality, counterfeiting runs rampant and punishment for intellectual property piracy remains toothless.
Some enterprising counterfeiters in China refill brand-name perfume or liquor bottles. Others make extra, unauthorised batches of products at contract manufacturing facilities and sell them on the side. China has pledged to enforce its loose piracy laws more aggressively, and it is cracking down on counterfeiting ahead of the 2008 Olympics. But in a complaint filed with the World Trade Organization and joined by Japan, the EU, Mexico and Australia, the US claims China's inaction is costing its businesses billions of dollars each year.
By Lin Yali | The Epoch Times
October 05, 2007
Ultra low wages paid to workers for ultra-low-cost products
The Wang couple from New Jersey decided to purchase a baby crib on September 22, 2007. "Just as we were leaving the house, a friend of ours called saying that he happened to watch the news regarding the recall of over one million infant cribs that were made in China," said Mr. Wang. "With this new information my wife paid special attention to the crib's country of origin that we were planning to purchase."
On September 21, 2007, the U.S. Consumer Product Safety Commission (CPSC) announced a recall of about one million China-made cribs from among 11 styles designed by U.S. crib supplier, Simplicity Incorporated. These cribs have been sold in the U.S. market through both the Target Corporation and the Babies "R" Us Company from January 1998 to May 2007.
The CPSC pointed out that the drop-side of the crib can easily detach creating a dangerous gap that led to two infants suffocating to death. A third similar fatality is still under investigation. The spokesperson for the CPSC added that the recall is due mainly to defects in the design and not with the assembly operations in China.
That same day, the world largest U.S. toy company, Mattel, apologized to China for the recent recall of 21 million Chinese-made toys. Mattel confessed that among the recalled toys, 87 percent were due to design flaws, while 13 percent were due to use of lead paint.
With several months of bad press concerning the safety of products that come out of China, twists to these recent stories suggest that these U.S. companies share a significant portion of the blame. But consider all the incidents involving China's product safety over the past year, and a definite pattern begins to emerge.
Safety Problems with Chinese-made Products in 2007
| Toys | In August, Peru confiscated over 60 tons of Chinese-made toys. | Peruvian authorities believe that toys contain toxic substances including lead. |
| Tires | In June, a U.S. company dealing with imported tires was forced to recall some 500,000 tires made by China's Hangzhou Zhongce Rubber Co. Ltd. in the wake of a deadly car accident. | Hangzhou Zhongce Rubber Co. Ltd. has failed since 2002 to insert an important gum strip between the steel belts which may result in the tread and/or belts separating from the tire. |
| Toothpaste | In May, a poisonous ingredient known as diethylene glycol was found in Chinese-made toothpaste sold in Panama, Australia, and the U.S. | To cut costs, the ingredients propylene glycol and glycerine were replaced by the much cheaper, but toxic diethylene glycol |
| Cough Syrup | At the end of April, at least 365 Panamanian patients died after consuming cough syrups containing diethylene glycol. 100 of these deaths have been confirmed as poisoning. | The toxic glycerin was found to be manufactured by the Taixing Glycerine Factory in China's Jiangsu Province. |
| Pet Food | Since March, many pets have been poisoned after eating dog and cat food manufactured by the Menu Goods Company. At least 8,000 cats and dogs have become ill and dozens died as a result of eating the contaminated pet food. | Cyanamid dichloride, the poisonous substance found in the pet food's wheat and rice protein powders, were imported by Menu Foods Company from both the Xuzhou Anying Biologic Technology Development Co. Ltd. in Jiangsu Province and the Binzhou Futian Biological Technology Development Company in Shandong Province. |
Ultra Low Prices with Ultra Low Wages
With so many stories concerning the safety of Chinese-made products, many in the West have started to ask, "What has gone wrong with China?" As reporters began to dig into the story, many began to reveal the appallingly low wages earned by Chinese laborers. The article "China, The Violin Prodigy" published on the Los Angeles Times on Jan. 13, 2007, mentioned that the violins made in China are "incredible." A violin maker in Studio City, California is quoted as saying, "They're just gorgeous instruments for the price." But at what cost do we enjoy this low price? The following summary from that article shows the hourly pay of workers in mainland China based on both domestic and overseas media reports.
Wages Paid to Workers in China in 2007
| Position | Wage (US dollars) | |
| Shenzhen Longhua Taiyang Electrical Co., Ltd.(Guangdong Province) | Skilled worker with more than one year experience | $0.47 per hour |
| Taixing Fengling Musical Instrument Co., Ltd. ( Jiangsu Province) | Skilledl worker, violin assembly | $0.50 per hour |
| Dongwan Toy Industry (Guangdong Province) | Ordinary laborers | $0.25-$0.35 per hour |
| Guangzhou Haizhu Garment Industry | Ordinary laborers (working 16 hours a day, with two days off a month) | $0.30 per hour |
| Dongwan Kaiyuan Handbags Manufacturing Industry (Guangdong Province) | Ordinary laborers (working overtime until midnight every day | $93 per month |
| Dongwan Dongcheng Juwang Shoes Factory (Guangdong Province) | Ordinary laborers (working seven days a week, including frequent overtime at night) | $53 per month |
Has Exploitation Reached its Limit?
Cheap labor and poor working conditions have provided China with a competitive advantage in taking the global market by storm, however the products continue to reveal problems with quality. Has the strategy of exploiting low-cost labor to broaden the market share reached the limit?
Toy maker, Chen Dong (alias) in Shantou City, located in China's Guangdong Province, employs more than 200 workers in his factory. For each batch of toys the factory produces, the local authorities will assign two or three inspectors to conduct an on-site examination. Chen says he has to bribe inspectors--otherwise his products would be rejected, labeled "poor quality," and banned from export. Last year, an inspector sneaked into his factory and spotted an underage worker (a month under 16 years old). His factory was fined 40,000 yuan (US$5,329) but Chen bargained with officials and settled the case with 20,000 yuan ($2,665).
Furthermore, world appreciation of Chinese yuan (renminbi) has boosted material costs and squeezed the profit margin. Under such circumstances, the only ways to stay profitable, according to Chen, are (1) sourcing cheaper raw materials; (2) resorting to tax evasion (a method of 70 to 80 percent of Chinese companies) and (3) labor coercion.
"We would like to offer higher wages to the workers, but we simply can't," Chen explained. "The rental expense and labor cost keep increasing, but the selling price keeps falling. It is harder and harder to make money. We do whatever we can do to survive. If we fail, we can't do anything but shut the door."
The purpose of the website is to publish articles by journalists about a variety of topics concerning the People’s Republic of China. All journalists and the publications that publish their writings are clearly identified. All copyrights belong exclusively to the identified sources of these articles. | Powered by
Information + More