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China Product Health and Safety News Raises Bigger Issues

August 6, 2007

Toy Recall Shows Challenge China Poses to Partners | online.wsj.com

1.  There is a key distinction between quality control problems, which are remediable by technical and human-resource programs, and intentional acts by profit-maximizing individuals who violate technical standards or contracts to gain short-term benefits for themselves or their companies. 2.  Foreign investors in production in China, and foreign importers of Chinese products, will have to spend more on quality assurance and inspection programs at the Chinese plant level, to avoid even more costly crises such as class-action lawsuits or other punitive responses from customers and consumers when things go wrong. 3.  Changing the culture of business conduct in China today will take many, many years, given the weakness of civil society (e.g. consumer groups), the widespread corruptibility of Chinese officials and legal personnel, and the frequent collusion between enterprises and their government regulators in China.

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