China in recall nightmare

‘Made in China’ is usually associated with cheaply made items. That association is now taking on a more sinister tone what with threats of lead poisoning, asphyxiation and physical injury.

So if a child is denied the latest toy, it may be an act of love.

Yesterday, China hit the headlines again when US toymaker Mattel withdrew millions of toys for the second time in a fortnight (see sidebar).

The last recall took place on Aug 2 when 1.5 million Fisher-Price toys, including Sarge die-cast cars from the animated film Cars, were found to contain high levels of lead in the paint.

Mattel has reportedly blamed a subcontracted Chinese company for using paint from unauthorised suppliers.

The industrial giant has been in the line of fire in the past for pet food contaminated with chemical melamine and the use of diethylene glycol (DEG), a substance used in antifreeze and as a solvent in toothpaste.

China accounts for about 50% of all notifications on the EU’s RAPEX (rapid alert system for all dangerous consumer products).

Only last weekend the owner of Chinese toy factory Lee Der Industrial committed suicide after Mattel identified his company as the manufacturer of recalled products, highlighting the growing pressure the country is facing to conform to international standards.

What this series of recalls have done is effected a very clear spike in interest in product recall insurance, says Ian Harrison, executive director of global casualty at Lockton.

“A large number of companies, whether food manufacturers or toy suppliers, are realising that they are exposed financially to the mistakes of suppliers, a large degree of which are from China.

“Our client base is looking closely at the supply chain and scrutinising their contracts to see whether the supplier can be held responsible,” Harrison said.

The onus is now on retailers and manufacturers to conduct stringent internal checks.

Richard Matthews, head of product liability at international law firm Eversheds commented: "This incident highlights the importance of retailers and manufacturers being seen to be responding appropriately to safety scares in the eyes of the media and consumers. In this case, the problem was apparently identified by internal checks. This should act as a reminder for retailers to update supplier audits and put in place effective quality control and quality assurance procedures.

“Importers should not merely rely upon assurances from suppliers that appropriate tests have been carried out. Failures in these areas can lead to significant liabilities, irrecoverable losses and reputational damage.”

Matthews added that retailers must ensure that they are aware of, and are fully compliant with the regulations governing CE-marking, the General Product Safety Regulations 2005, and safety regulations applying to specific consumer products such as toys.

Starting June 1, toys that fail to meet the standards of the national China Compulsory System (CCC) product certification system will be banned from being sold in China.

The European Commission and China signed a strategy document in Sept 2006 which included a commitment from the Chinese authorities to strengthen inspection and supervision of toys exported to Europe.