Export Documentation, Traffic and Banking 10/02/2007
Lucie Tesarova
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Mattel Apologizes to China
Mattel apologized a few days ago to China for damage to the country’s reputation and
accepted its own “design flaw”. This action has been reported by several newspapers,
among them namely The Wall Street Journal1. Its article offers a few views of the
situation and possible legal ramification of Mattel’s action.
China is Mattel’s most important supplier. The company had to recall recently about 20
million toys bearing a label “made in China”. About 2.8 million toys has been recalled
due to lead paint, the biggest recall by far, involving about 18.2 million toys has been
recalled due to design flaw.
Mattel’s apology has been seen by some people as an unusual move stemming from
diplomatic and public-relations pressure that Mattel faces. By accepting the “design
flaw”, Mattel together with other toy manufacturers, can become more vulnerable in
lawsuits. It can potentially lead to the establishing of new safety standards.
It seems that the Mattel’s motivation for an apology to “the Chinese people” might be to
soothe the Chinese government so it is still willing to do business with Mattel and other
American companies. The label “Made in China” has been harmed. People tend to
perceive “Made in China” products’ quality as low.
The quality and health-safety issue does not concern merely Mattel and toy industry.
Many other American companies offshore the manufacture of their products to China,
which is one of the most favorite offshoring destinations. Mattel’s recalls added to the
deterioration of “Made in China” product’s image. American consumers may remember
recalls for tainted pet food, toothpaste, or suffocation-risk cribs, all “Made in China”.
Maybe Mattel realized that American parents buying toys for their child want to buy
something safe and are willing to pay more to make sure that the product is safe. And
from that point of view, it could be better to apologize and accept a mistake in the design
process and announce that the portion of toys that have been recalled because of the lead
issue was much larger than the real number of toys that had dangerous level of lead in it.
1
Nicholas Casey, Nicholas Zamiska and Andy Pasztor: Mattel Seeks to Placate China With Apology. The
Wall Street Journal. Weekend Edition: September 22 – 23. 2007. A1
Export Documentation, Traffic and Banking 10/02/2007
Lucie Tesarova
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It might help the customer think that this was rather issue of this specific company that
had a design flaw and was not careful enough to check appropriately the lead level than
the “Made in China” issue. Mattel is perhaps trying to prevent such a situation in which
people might not want to get anything from China any more because they would be afraid
that it has risks and that they would rather pay extra money for a product made
somewhere else to avoid the risk. Generally people do not pay a very close attention to
where the product has been made. But with such a publicity regarding products “made in
China”, the situation could change. And even though the Chinese government would be
willing to continue in cooperation is some way, the profit could be smaller because of the
“Made in China” label’s public image.
In this way, Mattel is trying to placate not only Chinese government, but also its
customers. And the situation may well end up in its customers’ favor – as I mentioned at
the beginning, the apology may have legal repercussions and as the situation could
develop into setting a new safety standards.