Toys R146;nt Us

The recall worldwide of 1.5 million Chinese-made toys by American toy-maker Fisher Price could not have come at a more embarrassing moment for China. The country is already reeling from a slew of recalls this year of goods produced on its territory, ranging from toothpaste to ovens to pet food. Last week8217;s toys recall 8212; on account of 8220;accessible8221; lead being detected on paint used 8212; takes the issue of safety standards from low-price produce aimed mostly at discount stores to high-end products. How that country handles the crisis will determine its claim to being factory to the world. And as manufacturing continues to be scattered geographically, it should serve as a cautionary study of consumption in a globalised world: examined carefully, it portends the end of differential standards.

This is a crisis for China, because so much is at stake. China8217;s annual exports to the US are valued at more than 250 billion. And as the Fisher Price incident highlights, the consignments finds their way to various parts of the world. China is also at the flat centre of the so-called smiley-curve, where the manufacture of products is slim-margin operation between design/innovation and retail/marketing. It is the part of curve most susceptible to migration, with enough countries keen to leverage their comparative advantage 8212; in most cases, low-skilled labour. The Chinese commerce minister has been quick to stress that 99 per cent of Chinese exports are safe. But even the odd doubt on safety 8212; especially toxicity in toys and edible goods 8212; can affect consumer confidence on other goods, so evidently manufactured with the thinnest of profit margins. The American media, for instance, had already used the poisoned pet food story to recall that 79 per cent of all toys recalled in the US were Chinese-made. And to show how susceptible companies are to faulty products, the share price of Mattel, which owns Fisher Price, fell instantly upon news of the recall. This is capitalist wake-up call for China, in two ways. One, in a country still reluctant to crack down on cheap knock-offs, it should show that it is easier to have high standards across the board, instead of for just high-end export. Two, consumer is king.

India must learn from this episode. With its ambitious plan of kick-starting manufacturing hubs in SEZs around the country, it must keenly track and update safety protocols. India8217;s advantage: the system is more attuned to the concept of the consumer.