By the time Mattel’s quality problems came to light, the scene was already set for intense media interest, and Mattel’s scale and the dominance of its brand meant that it was bound to come under scrutiny.
Mattel took the decision in early in 2007 to change the design of its toys to prevent the problem: the decision regarding the 14th August recall was to deal with the toys that were already sold or in the downstream. There are no recorded cases of any child being harmed with the toys: the move was a precautionary measure. The nuances of this argument, however, were effectively swamped in the public debate about the recalls, which – while mentioning the design issue – focused obsessively on the issue of China, and the concept of inspection In addition, when massive Export License were suspended under Chinese government’s order and the executive of one of its contractors—Lee Der Industrial Co. committed suicide, both the Chinese and western press did not hesitate to assume this was linked directly to the recall. The move was a precautionary measure. The nuances of this argument, however, were effectively swamped in the public debate about the recalls, which – while mentioning the design issue – focused obsessively on the issue of China, and the concept of inspection.
Chinese Manufacturer’s viewpoint
The early part of 2007 witnessed a series of product recalls and scares about contamination related to products made in China: these included food ingredients, pet food, and toothpaste (Roth et al 2008). In particular, two stories laid the ground for the Mattel case: firstly, the preceding six months had seen a growing concern with children’s jewelry, and, in particular, the problem of lead ingestion from Chinese-made pendants; secondly, on June 13th, the US-based RC2 Corporation had issued a product recall for one and a half million wooden Thomas and Friends toys which were found to have been produced with paint with unacceptably high levels of lead. This last story in particular had led to a flurry of media concern about the vulnerability of children to harm from rogue toys. All these scandal and Mattel’s incidents tapped into a tangible anti-Chinese sentiment.
Within the top levels of China’s government, concern is growing that significant damage has been done to the “Made in China” label. As a professor at Baruch College, part of the City University of New York told The New York Times:”If Mattel, with all of its emphasis on quality and testing, found such a widespread problem, what do you think is happening in the rest of the toy industry and even in the low-end electronics industry?”
On the contrary, as a point of fact, sales of toys made in China suffered very little as a result of the product recalls in 2007.
Hence, taking into account of the imbalance between the importance of saving the “Made-in-China” image and the benefit of retaining Mattel’s contract, the manufacturer (at large) considered themselves as innocent.
Mattel’s viewpoint
Objectively, most of evidences suggest that Chinese manufacturer has violated their obligation stated in their contract regarding their use of raw material.
Two supplies are the most controversial in the lead paint issues: Lee Der Industrial Co. and Early Light Industrial Co.
Lee Der Industrial Co. in Foshan
Lee Der Industrial Co., which is regarded as the root cause for Mattel’s first recall, used leaded yellow pigment falsely labelled and certificated as lead-free. One report explains this as follows: Dongxing, (a subcontractor of Lee Der) on running short of pigment, bought 150 kg of the counterfeited powder for about $1,250 from Dongguan Zhongxin Toner Powder Factory, who provided counterfeit documentation for the material. (According to one report, police were seeking seven executives from the pigment company who were on the run.) Another report suggests a further tier of supply, and discusses the role of a company called Mingdai as the original providers of the contaminated pigment. Interestingly, Lee Der was registered to quality standard ISO 9000.
Early Light Industrial Co
As another primary vendor of Mattel, Early Light Industrial Co, responsible of the production of Sarge toys hired a subcontractor hired to decorate parts of the Sarge toy ran out of the paint which Mattel had clearly specified in the contract. The subcontractor, Hong Li Da (HLD), then substituted a paint that contained lead.HLD acted without informing Mattel, resulting in the second recall incidents.
These are only two clearest incidents among all of the scandalous vendors. While Mattel is a company with extensive experience in managing suppliers in China, with close and highly dependent suppliers, the lead paint problems experienced in the 2007 recalls do not appear to arise from any negligence on Mattel’s part, nor, realistically, on an inadequacy of the quality control systems in place. The stark fact is that there is a lot of lead-based paint available in China.
On contrast, the success of Toymaker company like Mattel relies heavily on its cost cutting from outsourcing. Its access to under-developed countries manufacturers is one of the company’s core strategies. As a matter of fact for Mattel, large range of products is made around the world, but most (about 65% by value) of its production – along with the rest of the global toy industry – takes place in China. Hence, it is clear that Mattel could not afford to lose their contract and long term relationship with Chinese manufacturers.
In summary, the dilemma facing Mattel accounts for its initial reckless blame on Chinese manufacturer. It also shed lights on the reason why Mattel attempt so hard to smooth the relationship with Chinese manufacturer and regarding authority by claiming that ” the problems were nothing to do with shortcomings of the Chinese manufacturers, it is a result of the design flaw”.