Toys - cutting through the safety confusion

Hey there, time traveller!
This article was published 2/12/2007 (4278 days ago), so information in it may no longer be current.

OVER 200,000 children are injured in the United States every year while playing with toys, and about 15 of those result in fatalities. The recent rash of toy recalls has brought this issue to the forefront and consumers are beginning to question the quality, and more importantly the safety, of the "made in China label."

In August 2007, Mattel announced one of the largest toy recalls in recent history. This was followed by a number of recalls of Chinese-made toys for containing excessive lead in surface paint. Just when parents thought they had seen the worse, they were hit by the recall of Aqua Dots for containing GHB (or the date-rape drug).

Not surprisingly, everyone is wondering: do imports from China mean poor quality goods and more recalls? A question like this and the popular sentiment of some people against Chinese-made products potentially has serious implications for global trade. In order to answer this question, I analyzed (with my colleagues Paul Beamish and Andre Laplume) U.S. toy imports and recalls for the period 1992 to 2006.

First, we computed the share of China in the U.S. toy imports since 1992, and compared it with the share of Chinese-made toys in the recalls. We found that the share of Chinese-made toys recalled is similar to the share of Chinese-made toys sold in the U.S. However, we are bound to see more recalls of Chinese-made toys because almost every toy sold in the U.S. is made in China. As a result of China's attractive low-cost business environment, it became the most preferred destination for toy manufacturing. Not surprisingly, Chinese toy imports accounted for a full 86 per cent of toy imports to the United States in 2006, an extraordinary increase from 41 per cent in 1992.

While it may be somewhat comforting to know that the recalls from China are not higher than their imports, it does not reveal if there is an overall increase in the recalls and more importantly, why they are occurring.

Therefore, we categorized the recalls by the reason behind the recall, a design-flaw or manufacturing-flaw. A flaw, such as the small parts, is because of the way it is designed by a toy company. It would occur irrespective of where it is manufactured. On the other hand, a manufacturing flaw occurs because of poor assembly or raw material, such as lead paint.

Overseas manufacturers in China can be held responsible for manufacturing flaws, but not for the flaws in designs handed to them by large toy companies.

Our research found that recalls as a percentage of imports have increased over the years, because of both design and manufacturing flaws, and whether the toys were made in China or elsewhere. What was surprising to us was the number of toys recalled for design flaws. For example, in the year 2006, 0.05 percentage of toys made in China were recalled due to manufacturing flaws, whereas nearly 20 times more toys (0.99 per cent) were recalled because of design flaws.

It seems as if Chinese manufacturers have been unjustifiably, represented quite harshly in the media.

China aside, quite worrying is the overall increase of toy recalls.

There are two primary reasons behind the increase. First, the global supply chains have not geared up to manage the differences in standards between manufacturing countries like China and the Western markets. Second, the larger toy companies have not been able to eliminate the design flaws.

Therefore, focusing on China alone is not going to solve the problem. Rather, by focusing our energies where the least problem lies, we may be ignoring the larger problem and the opportunity to address it.

The question to be asked is not whether toys made in China are safe, but why the toys are unsafe.

Hari Bapuji is an assistant professor

in the department of business

administration in the Asper School of Business at the University of Manitoba.