Mattel’s Image Tarnished by Lead Paint

Posted on August 3, 2007
by Maureen Keene

Just days after the New York Times ran a story about Mattel, the world’s largest toy company, setting the “gold standard” for manufacturing in China, Mattel announced the recall of nearly a million toys due to the presence of lead paint. The recall included 83 different products made under the Fisher-Price name and based on popular Sesame Street and Dora the Explorer characters.

To their credit, Mattel acted swiftly to pull the dangerous toys, quarantining many before they even reached stores. The question remains, how was this allowed to happen? The Associated Press reports:

“We require our manufacturing partners to use paint from approved and certified suppliers and have procedures in place to test and verify, but in this particular case our procedures were not followed,” Jim Walter, Mattel’s senior vice president of worldwide quality assurance, said in a statement. “We are investigating the cause to ensure such events do not reoccur.”

Mattel was in China long before the rest of the West discovered the cheap manufacturing possibilities offered there, and other U.S. toy companies should follow their lead - and go a step further. One major difference between Mattel and other companies is that Mattel owns and operates a large proportion of its manufacturing facilities rather than outsourcing to local Chinese businesses. Thus they are able to maintain greater control over quality of goods and protect their trademark products - Barbie and Matchbox - from counterfeiters.

According to the New York Times, Mattel hired S. Prakash Sethi, a professor at Baruch College, as an independent auditor in 1997. He visits factories unannounced and Mattel consented from the beginning to let him make his reports public.

Ten years later, Mr. Sethi says Mattel, unlike most companies operating abroad, still gives him 100 percent independence in his reports, which are often critical. “Mattel is the gold standard,” he said.

From the same NYT article:

…many Western companies operating in China do not test their raw materials, even though suppliers are known for substituting cheaper material to pad their profit.

“This is very common,” said Dane Chamorro, regional director of Control Risks, a global consulting company. “The samples you get are always fantastic; but once they rope you in they can cut back. And a lot of Chinese companies will do anything to cut costs.”

So Mattel is doing things right, mostly, by controlling their manufacturing processes to a much greater degree than other Western companies making products in China. But what happens when they turn their backs for a moment? Clearly, as long as counterfeiting and using illegal and dangerous ingredients is business-as-usual in China, Mattel and other companies who wish to protect their profits - and their reputations - will have to control every single step of the manufacturing process or else move their operations elsewhere. The cost of doing business in China is low, until something goes awry.

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