Chinese roll with recalls

U.S. demand for inexpensive goods stays unquenchable

August 16, 2007|By Greg Burns | Greg Burns,CHICAGO TRIBUNE

LAS VEGAS -- Emily Yu has come from Anhui, China, to the sprawling convention center here with a load of factory-made wooden toys that meet what she describes as the highest standards of safety and quality.

Lead paint? "No," she says, smiling reassuringly at the carved alphabet puzzles in her exhibit. Choking hazards? "No, no, no." Shoddy workmanship? "No, no, no," she says, emphatically. "All of them are safe."

At this week's Variety Merchandise Show, America's largest trade event for everyday wholesale goods, Chinese vendors were having no trouble overcoming the fallout from a drumbeat of consumer-product safety recalls.

In booth after booth, America's unquenchable desire for inexpensive goods was on display. Swimsuits, stuffed animals, rice cookers and cell phones all could be had for extremely low prices, and buyers from across North America were taking a look. Conversations focused on how many and how much, and Yu said only a couple of her first 15 customers asked anything about safety.

In fact, some buyers say they consider the "Made in China" scare overblown, dismissing worries about hidden costs in these imported bargains. At the same time, U.S. consumers have continued voting with their wallets at discount chains, dollar stores and other mass retailers.

U.S. imports of Chinese products have nearly tripled since 2000, according to the Commerce Department. The Sino-U.S trade gap set another monthly record for July despite revelations about defective tires, tainted pet food, lead-painted toys and a host of similarly flawed goods.

Underscoring the trend, China's Ministry of Commerce for the first time sponsored a separate pavilion at this buying fair to promote dozens of leading exporters.

The thousands of Chinese products on display here testify to a conflict between the safety that consumers say they want and the penny-pinching impulses that drive their shopping habits, said retail consultant Neil Stern of Chicago's McMillan/Doolittle LLP.

"Consumers want it cheaper and faster, so you're not getting the same quality control and inspection," Stern said. "When retailers drive down margins so far, if manufacturers want to make a profit, they have to cut corners. It is a trade-off."

After initially bristling at criticism of its exports, China is making product quality a priority. It is cracking down on shady operators and introducing its first recall system. The apparent suicide earlier this week of a Chinese executive embroiled in a huge U.S. toy recall underscored the high stakes.

Some experts expect swift results.

"They are smart enough to act quickly on it and manage the growth in a more disciplined way so that they don't cut corners," said Dipak Jain, dean of Northwestern University's Kellogg School of Management, who recently returned from teaching in China. "With the experience they now have manufacturing these products, they can cut costs in other ways."

Yet the sheer scale and newness of China's booming manufacturing sector make tracking goods a challenge. Chinese producers typically have long supply chains that thwart good-faith efforts to trace the origins of parts and ingredients.

At the trade show, for instance, some goods had manufacturing codes on their packaging to identify when and where they were made, but not on the items themselves. Some had no codes at all, which would complicate any recall.

"It's just not on half these products," said Edmund Mierzwinski, consumer advocate with the U.S. Public Interest Research Group. "You can't tell where they were produced."

At the same time, he said, customs inspections are far too limited to keep up with the overwhelming flow of cargo containers from the Pacific Rim. "There is no deterrent to shoddy products getting into distribution."

Naturally, the companies involved have an interest in avoiding controversies. Yet even giants with ample resources for vetting products still encounter major problems, as reflected in the huge recall of Chinese-made toys that Mattel Inc. announced Tuesday.

"The bigger companies have a lot of skin in the game, and a lot of liability," said Mierzwinski. Smaller operators typically can afford fewer protections, he said.

The small-scale wholesalers exhibiting at the Las Vegas show say they also provide a line of defense for independent retailers.

"We won't sacrifice the quality for price. It only comes back to haunt you and costs more," said Ben Harary, chief executive of Country Silk Inc., which imports silk flowers and other goods from China. "I'd rather not make the product."

Rising costs are boosting the pressure, however, particularly for those such as Harary serving dollar stores that sell at the fixed price of a buck. "We're working on tighter margins," he says.

Some doubt that small operators have the capabilities to vet goods sufficiently. "They don't have the time to be the guardians of our shorelines," said Stanley Meretsky of McCullough Corp., a Michigan surplus broker. "They buy what will sell. That's what they care about."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.