The product safety issue has been one that I am consistently a bit sensitive to. If nothing else, it has continually proved itself to be a case where statistics can be used to show anything that an author needs to use them for.

While I am sure you all remember, the basic rundown of last summer’s highlights includes RC2, Mattel, FTS Import/ Export, and several Pet Brands whom imported goods that were dangerous (and potentially deadly) for one reason or another.

Through this time, it has always been my position that the brands themselves needed to invest in a process of ensuring their quality control, and in each case it is clear to me that each of the brands involved had either not invested in any china based QC, had failed to follow their own protocols, and in a couple of cases had not even visited the factories.

the result, again, as you know was a mess.

So, when reading through the BBC report EU warns over ‘risky’ China goods that covered the recently released Keeping European Consumers Safe Report (PDF Here) from the European Union Consumer Affairs (Rapid Alert System for non-food consumer products division), I was reminded of just how biased some reports could be when they fail to properly and completely cut the data.

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Last summer, one of my primary positions when it came to the product safety scandal was that importers had to ensure their supply lines were just as compliant in China as they were in the U.S.

It is a simple.. SIMPLE.. risk assessment really that some (maybe many) failed to fully understand, and as we all saw in the media over and over again, there were firms whose inability to follow simple risk assessments and make investments in quality assurance got caught.

Toxic tanks, lead paint Barbies, killer toothpaste… and so on… and while China as a country took the initial volley of blame, I continually pressed the point that these quality problems were a commercial issue and that firms needed to stop treating outsourcing like a trip through the local McDonald’s Drive-thru

Product quality, quality control, and risk assessment are not abstract concepts, and spending money on ensuring the strength in them is not an expense. It is an INVESTMENT.

Cleaning up the problem is the expense, and if the fact that Mattel had to spend millions to recall defective toys didn’t convince executives that the brands would ultimately pay for their failure to understand risk, perhaps this article (h/t Consumerist) will Charges Filed Against Importers Of Toxic Toothpaste

the key phrase (emphasis is mine) in the article is:

The companies are liable for distributing the tainted product even if they had no direct knowledge of the risk because they were negligent in not ensuring the toothpaste was safe, Supervising Deputy City Attorney Jerry Baik said

no sir.. actually buy no having any direct control of the process I thought it was perfectly safe.. Look Ma.  NO HANDS!

After reading the transcript of the press conference, I knew I had to get my hands on the report itself and read through it for myself (Action Plan can be downloaded here). I needed to see just what the findings were, and more than that, I needed to see what their recommendations were….

Now, given it is a 86 page and I am sure you all are not looking for the page by page, so first I will offer some thoughts on the points the government felt summed up their “plan”… and then I will offer a few comments

So first, the framework (as seen in the picture below)

The highlights of the findings as per the U.S. government fact sheet:

• The Action Plan proposes a strategy focused on a risk-based prevention with verification model that allocates import safety resources based on risk.
• The sheer magnitude of the import-export enterprise makes clear that our Nation cannot inspect its way to safety.
• The Action Plan presented today reflects the Administration’s commitment to continually strengthen and improve the import safety system

and their 14 recommendations:

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On Tuesday, an article came across my RSS that I just knew was going to lead to a post.. or series of posts. Bush’s Import-Safety Plan Is Detailed in the NY Times reported that the “plan” has been released

There is a lot of information that I am going to try and pack in here, so bear with me.

On November 6, the White House released its Fact Sheet while Michael Leavitt and Dana Perino were giving a press conference on “the Plan”, the process behind “the plan”, and what the plan in terms of “the plan” being rolled out.

So first some highlights from the press conference. Of course, over the last 6 months, there has been an increased effort to deal with this problem. There were toys from Mattel and RC2, tires, toothpaste, and other products that were being recalled during the summer, and Americans were scared of products from Communist China poisoning and killing Americans.

so, with that in mind, the Import Safety Commission set out on a mission to get down to the bottom of things:

I, personally, went to ports and border crossings and freight hubs and post offices and I saw drugs and vegetables and fish being processed. I went to retailers and wholesalers and fruit stands. I’ve inspected personally everything from imported tire irons to gingerbread houses.

and they asked questions….

They went deep. They asked questions like, “What are the current authorities that we have?” Asked questions like: “Do we need more authority?” “What are the changes that need to happen if we’re to be able to respond in a global economy?” “What are the limitations we have?” “Do we have enough resources?” Et cetera.

and they got answers…

And I think the thing that impresses you most when you see this is how much it takes to fill up and empty out the American pantry every day.

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One of my very first projects in China involved a study of 400 farmers in the Jiangsu province bringing agriculture to market. My team at the time went through town after town and interviewed farmers, wet market buyers, truckers, and food processors to understand the process as it stood .. .and we used that to develop our platform.

It was one of the most interesting projects that I worked on, and one that I wish had received the funding (we were 3 years too early).

So, while doing some research on trucking in China, I ran into a report online entitled The supply chain and management of fresh produce in China (PDF Report Here) by Huang Zu-hui, Song Yu and Liu Dong-ying of Zhejiang University that examined the process by which produce makes its way from the farm to the market (retail, wholesale, and export).. and it reminded me of many of the things we found in our earlier study.

While obviously a rough draft, and written by students who were ag. majors rather than logistics majors, they have done a pretty good job of mapping out the current situation in China, what it should look like, hurdles in way, and some of the catalysts that will drive change.

For anyone looking to understand the pain that big box retailers (Carrefour, WalMart, Tesco, Lianhua, etc) go through in China, I highly recommend taking the 10 minutes to run through it. It is an interesting read, and as a rough cut produced by students, it is without a sales pitch or spin.

for the last few months, there have been few China related topics discussed more than the 2007 lead tainted toys, and more generally, product safety. Fingers have been pointed, stones thrown, consumer rights in high gear, and Lou Dobbs has gained traction.

But thorough all this, many are wondering what the real impact will be. Will “Made in China” suffer, what will the impacts at the checkout counter be, and what does it all mean for those brands/ people in China who are manufacturing for export.

Well.. according to a NYT poll recently, it looks like cooler heads are prevailing (on the whole), and that the recent recalls have not damaged the “Made in China” brand – despite the efforts of some.

In fact, according to their study (full results can be downloaded here) that while a significant portion of the resppndants did think products made in China were more unsafe than those made in other areas

55 percent, said the recent wave of recalls just created a perception that Chinese imports are more harmful than imports from other countries.

and this “perception” of harm, while detouring some respondents (14%) from purchasing goods “Made in China”, has not detoured the majority (65% haven’t stopped).

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Just stumbled on a interesting collection of pictures on maZm (via China Digital Times) of men and women working in a toy painting factory. In total, there are 25 shots (I have a couple here).

As I said before, the average consumer is too disconnected from this process, and I hope readers will pass this around. There are no stone face killers in these pictures, just some shots of your average Mr. and Ms. Zhou (pronounced Joe) hard at work.

Why Lou Dobbs Scares Me More Than Chinese Toothpaste was a post I wrote early on in the days of “Made In China”. My position was that while there were certainly problems in the supply chain, Lou Dobbs (and other like him) were actually far worse because of their predatory reporting. Far from being balanced, Lou Dobbs always feels the need to remind viewers that China is a communist country, and does little himself to bring on balanced panels or perspective.

Well… it appears that someone else (more powerful than I) has also grown tired of Lou and his “communist China” angle.

According to a press release dated October 17, Gary Shapiro (CEO of the Consumer Electornics Association) has:

issued a direct challenge to Dobbs to present his viewers with a balanced view of international trade. “I am prepared to debate Lou Dobbs live on his CNN show,” Shapiro said. “His anti-trade comments on his cable show and his refusal to grant equal time to opposing viewpoints are inconsistent with CNN’s great legacy as a pioneering news network. We are hopeful that CNN will wish to retain its credibility and allow equal time for pro-free trade viewpoints.

also included in the release were some stats from a Zogby study (I am looking for study) that I found very interesting:

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For those who read Last week, you may have noticed that I made a quick reference some Dr. Tea gave to the boys inside the beltway… well, here are a few more details on Dr. Tea as well as her testimony.

So first… Dr. Tea (Professor Mary Teagarden), is a close friend of mine and of many Thunderbirds is one of those old China hands who have spent the better part of the last 30 years working with China. She lived in Beijing when you still had to ride your bike across town to schedule international phone calls, she has advised dozens of companies entering China, she has worked with various government entities, and that is why she was asked to The Hill to give her thoughts on the recent product recalls.

Next.. the hearings Committee Questions Consumer Product Safety Commission, Mattel on Lead-Tainted Products and Toy Recalls

The session was split into two panels, and while toys were the primary focus, more important issues were discussed (support for agencies, legislation needed, etc). The participants included:

Panel 1 included:
Dana Best, M.D., M.P.H. – American Academy of Pediatrics (PDF testimony here)
Olivia D. Farrow, Esq., R.S. -Assistant Commissioner,Division of Environmental Health Baltimore City Health Department (PDF testimony here)
Michael Green - Executive Director, Center for Environmental Health (PDF testimony here)
Lori Wallach – Director, Global Trade Watch (PDF testimony here)
Mary Teagarden - Professor of Global Strategy, Thunderbird School of Global Management (PDF testimony here)

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Importers Defend Trade With China ,US needs ‘new vision’ for trade,
and Bills Targeting China’s Trade Practices Draw Concern From Business Leaders
During the last few months of product recalls, the difference between what the papers and politicians have been saying has been quite different from what we have been saying on the ground. It has been easy for finger pointing and broad brush statements to be taken as fact, and as this has continued the fears of trade wars and backlash have grown. Well… it appears that some U.S. buyers and lawmakers have realized just how tied they are to China, and that if they do not do something to protect the relationship that they may be the ones to feel the pain.

All Copies Of Beijing Times Have Been Sold
One of .the most interesting stories about the lengths competitors will go to in order to prevent a successful campaign of another competitor, electronics retailer GOME (who just signed deal with Dell) has apparently purchased every copy of the Beijing Times to prevent the 12 pages inserts of their competitor from hitting the streets. While selling out the complete stock of papers is usually considered a huge success, GOME has duped the system and could end up a real mess once the Sunning lawyers come out with their estimates on damages.

Outsourcing and Trade Imbalances (PDF Here):
In response to increased political and public concerns about China in the U.S. from a macroeconomic (manufacturing and trade) standpoint, Henryk Kierzkowski and Lurong Chen of Graduate Institute of International Studies, Geneva have written an excellent paper on how trade benefits all. Even if both partners are running deficits. An interesting article well worth the read as many of the intangible benefits of trade are highlighted. I have always said that the U.S. has been able to defy economic gravity with the assistance of China,and were it not for China, more than the quote 2 million jobs would have been lost. I have never been able to articulate or prove that… but this article begins the conversation.

In China, Being an Olympic Pig Sounds Better Than Being a Human and China Bloggers Stew About Olympic Pigs
China’s recent inflation numbers shocked many analysts, and for those of us in China the shock comes every time one goes to the store. Prices are up.. especially on pork. Add to this, stories of product safety becoming more and more prevalent, and it is easy to see why local residents are up in arms when they hear about the Olympic stock of pigs who are on organic diets and going for daily jogs around the yard. For many Chinese who believe that foreigners are given preferential treatment, they now have issue to hold onto, and as residents are told to clean up their acts for the Olympics, the are some who are beginning to wonder what it is all about when they have to eat pigs eating who knows what while those invited to the greatest show on earth have a red carpet rolled out across the Great Wall. Just fuel for the nationalistic fire..