Product Recall. PR Premonition.

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News of dangerous and bad-quality products coming out of China has come thick and fast recently. Many seem to blame China for not regulating manufacturers more efficiently – and they are making efforts to improve – by arresting (and even executing) corrupt officials, and by closing down or revoking export licenses for the worst offenders.

While supporting the need to improve things at source, I believe that companies buying from China (or from anywhere) also need to take responsibility for the quality and safety of the goods they brand and sell on to their consumers.

The latest news is about the toy-maker Mattel, and it comes on two fronts. One via a PR offensive, the other via a product recall.

ImageThief posted an interesting article on July 30th about how Mattel, almost alone among toy-makers, had given a New York Times reporter access to their operations, and notes:

    “It sets Mattel up as an example of how to manage overseas manufacturing, dwelling at length on what the company has learned from its experiences and what distinguishes it as a leader today”.

The future-seeing spin blogger went on:

    “I suppose this story could back to haunt Mattel if they have a China-based problem in the next few months. But that seems unlikely –or at least an acceptable risk– and in the meantime they’ve earned themselves good coverage out of a situation that many other companies simply hoped would blow over.”

Which brings me to the second part of the story, and the recall that hit the papers yesterday:

    “Mattel Inc.’s (MAT.N) Fisher-Price unit is recalling about 1.5 million Chinese-made toys around the world, nearly a million of them in the United States, because their paint may contain too much lead…

    The recalled toys, which include popular preschool characters like Elmo, Big Bird, and Dora, were made by a contract manufacturer in China using a non-approved paint pigment containing lead, Mattel said on Wednesday.”

Mattel are investigating how this happened (the sort of investigation my company did for another big corporate when an industrial dye got into the food chain). Mattel are now wise to the risks (on PR and products!) and, no doubt, will tighten control of suppliers. Other companies buying from third parties would also be wise to ensure that their own risk management systems are not only in place, but are also operating effectively.

A long-term supplier of 15 years may be great, but what due diligence was done all that time ago? Is the management the same now as it was then? Have they changed their raw material suppliers? Do they allow their clients to audit their suppliers, or their suppliers’ suppliers? Has the industry suffered from competition, higher staff and material costs, and lower profits? Have they been able to pass on any of these costs to their esteemed foreign customer? Might they be tempted to cut costs? Are regular, independent inspections and tests carried out? Does [insert your company name here] feel lucky?

And, as one of my insurance industry clients pointed out the other day, does the supplier have product liability insurance? Now there is a growth market. And that is a phone call worth making!

See news source:

Mattel’s Fisher-Price recalling 1.5 mln toys
Washington Post

5 Responses to “Product Recall. PR Premonition.”

  1. Jeremy Gordon Says:

    More on this from ImageThief today: http://news.imagethief.com/blogs/china/archive/2007/08/02/and-sometimes-china-problems-blow-up-in-the-faces-of-pr-risk-takers.aspx

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