Made in China?

It’s going to interesting to see what impact the recent flurry of stories of recalled or defective Chinese-manufactured products ranging from toys to toothpaste has going forward.

The most immediate response, it would seem, is likely to come from three sources: businesses forced to decide whether the cost savings they realize by manufacturing in China are worth the potential liability exposure and risk of damaging their brand; consumers, who might look long and hard at the words “Made in China” in the near future when deciding on purchases; and the Chinese government, which no doubt will look to move quickly to prevent having the words “Made in China” come to be equated with poor quality.

Another group likely to respond to the recent developments concerning Chinese made products is insurers. Broker Aon Corp. put out a release recently noting that Chinese manufacturers will need to boost their commitment to quality if they hope to secure product recall coverage.

The insurance industry has been eager to expand into the Chinese markets, but these recent developments have no doubt provided cause for thought. “The issue for insurers and brokers alike is developing recall insurance in a Chinese market that is relatively unsophisticated and only just coming to terms with the concept of product liability, let alone product recall,” Aon said. Insurers will demand testing and controls throughout the supply chain, according to the broker.

Toymaker Mattel Inc. certainly was given its own cause for thought earlier this month when it had to recall millions of toys over the past few weeks. Whether abandoning China as a manufacturing site is even an option for Mattel is open to question–reportedly 65% of the company’s toys are made there. That being the case, it’s likely the toymaker will instead look to ratchet up its quality control process.

It will be interesting to see how consumers respond, especially heading into the holiday shopping season.

And it will be interesting, too, to see what other steps companies selling products manufactured in China might take. I’ve long been interested in Apple’s labeling all its products with the words “Designed by Apple in California.”  Maybe many companies will start stamping their Chinese made products with the words “Made in China, Rigorously Tested for Quality in the U.S.”

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