Case Analysis: China

Lauren Hodge-Clark

Prof. Nicholas

MKTG 342-WE1

14 February 2015

Case Analysis: China

Summary

        Two major scandals occurred in China. The first occurred in 2007 with Lead Paint in Chinese Manufactured Toys. In August of 2007, Fisher-Price issued a recall of about 967,000 toys in the United States. Mattel issued a recall of 9.5 million in the U.S. and 11 million in other countries. Some of these recalls included toys such as Sesame Street toys and Barbie dolls. Companies such as RC2 Corp (Thomas & Friends toy line), Hasbro (Easy-Bake Ovens), and Marvel are required recalls because of the use of lead paint and the lack of quality-control testing.

        After the lead paint incident, a year later poor standards in the dairy industry occurred. Chinese baby formula producers used an additive known as melamine in their products. Melamine was added as protein in watered-down milk. Like the use of lead paint, milk was watered-down in China because of costs. Small amounts of melamine are not harmful but after a while it can become harmful especially to infants.

Problem

Should China continue to recall items and increase quality-control testing?

List Alternatives

China should continue to increase quality-control testing and recall items if need be.

China should not continue to increase quality-control testing and not recall items.

Analysis of Alternatives

If China continues to increase quality-control testing then the positives would be that countries like the U.S. and other countries would change their toy import policies. The Chinese law was much stricter than the U.S. laws. While the U.S. allows 600ppm of lead in paint, China allowed 90 ppm and show manufacturers were still in violation of both regulations which is why the U.S. changed its law. This insured consumer safety and parents would not have to be worried if their child put their mouth on their toys they would not have lead poisoning. Because of the recalls due to the violation of lead paint, there were no long term effects on Chinese toys exports.

For the melamine found in baby formula, increased testing would cause less death and ill infants. Six deaths occurred in December of 2008 and 300,000 infants were ill because of the contaminated milk. This was also found in dog food and many household animals became sick.

The negative effects of increased testing and recalls for both companies are that the cost would go up. For the lead paint incident, because of the increased pressure from the government led the owner of Lee Der Industrial to commit suicide in August 2007. Many places would probably close like some factories and stores did because of manufacturing and distributing contaminated milk products.