Has China’s drive to higher value exports hit a serious bump? After winning recognition for extraordinary improvements in areas like consumer electronics and clothing, quality and safety concerns from overseas in recent weeks have left the country in a quandary.
In 1950, Japan famously invited W. Edwards Deming to lecture on quality and followed up by pledging to train 20,000 engineers in statistical quality control in a decade. Rebranding “Made in Japan” to mean quality and reliability resulted in global leadership in high value products such as electronics and automobiles that continues to this day.
Of course, Japan has always exported primarily under its own brands. It has never possessed a China-style huge export base shrouded in the relative anonymity of an outsourced manufacturing model.
However, it’s this model that has been giving China grief. Mass manufacturers are in danger of sending the “Made in China” tag back to the wrong side of the quality line.
Chinese food-related exports now reach deeply into US and EU supply chains. But recent international coverage of what the New York Times described as “spreading international fears over tainted and adulterated exports” from China has done potentially severe damage to the country’s trade reputation.
Pet foods, seafood, toothpaste, and cough medicine – ingredients made in China if not the products themselves – are in the spotlight after being found to contain antibiotics, carcinogens, veterinary drugs, salmonella, or just “filth.” Among these, the dangerous substitution of diethylene glycol (DEG) for glycerin has a long history. Chinese DEG has been blamed for deaths in Panama, Bangladesh, Nigeria, Argentina, and India.
Problems with non-consumables include lead paint in model trains, “diesel hydrocarbon” skins on elastic balls and sharp metal objects in stuffed toys.
Most recently, 250,000 light truck tires from China were recalled because manufacturers skimped on a required anti-delamination strip, while the Brilliance BS6 mid-level “affordable” luxury car failed abysmally in basic EU crash tests.
The US Consumer Products Safety Commission’s (CPSC) 2007 China Program Plan reports, “on average about two-thirds of all US product recalls are of imported products, and the large majority of those products are manufactured in China.” An EU watchdog organization noted that 48% of all dangerous product recalls were for Chinese-made products, some 440 cases in 2006.
Both the US and EU have signed cooperative agreements with China as part of efforts to reduce the risks of hazardous imports.
Although the earliest complaints were met with denials or retaliation, Beijing is taking action. China has tough and detailed regulations concerning food and drugs. The government just amended 1,817 national food safety standards and last year closed 152,000 unlicensed food manufacturers and retailers for producing or selling fake or inferior products. Meanwhile, two former State Food and Drug Administration officials (Zheng Xiaoyu, who led the regulatory body, and Cao Wenzhuang, a department director) have been sentenced to death for taking bribes to certify unproven antibiotics.
All of the above indicate a serious and focused response to the problems – but will enforcement be sustained and consistent?
Many of these problems are reported as intentional adulteration of products to increase profits rather than quality lapses. Typical or not, reliable or not, the reports suggest a callous attitude and obfuscation of supply chain links to avoid responsibility by makers, traders, and even regulators.
The perception hurts those Chinese who are responsible businesspeople and also endangers the country’s development calculus, not only to grow exports but also to move up the product value chain. US regulators hold importers responsible for ensuring that foreign-made products meet safety standards, and liability lawsuits will torpedo the dense web of small-scale distributors that channel many cheap Chinese goods around the globe.
Until effective remedies are put in place, instructions given to US consumers to “throw out” China-made toothpaste could be applied to a much wider range of products. Whether it is food, health and beauty supplies, toys or automobiles, the key selling point in US and EU retail may become “Not Made in China.”