Economy

China, toys and the tragedy of xenophobia

The Power of MaoOver the past two months a tragedy has been playing out in Europe and the US. Mattel, the world’s largest toymaker, has recalled more than 20 million of their products, including Fisher Price and Barbie.

The cause? Toys with paint containing too high a lead content and poorly attached magnets that could present a choking hazard to tiny tots.

Mattel was quick to cast the blame at their largest manufacturers in China. EU and US politicians promptly suggested unilateral bans on Chinese-made goods and trade restrictions at all levels. Zhang Shuhong, the head of Lida and one of the biggest Mattel suppliers, committed suicide.

Off the back of the melamine-pet-food scandal a few months ago China is taking severe punishment for their behaviour. Is it justified?

China is a developing nation. In the past 10 years China has begun one of the most dramatic transformations in human history, shifting an astonishing 350 million people out of poverty. The fact that Chinese manufacturing is still very rudimentary, environmentally hazardous, and with poor safety and health controls belies how far they have come. And how much worse it used to be.

China is also not deliberately foisting poorly made goods on the world as some weird act of terrorism or sabotage. What is exported is at a higher standard than what is consumed locally.This is a nation pursuing development as rapidly and with as much determination as they can. They’re not asking for a handout, merely a chance to sell goods that the rest of the world wants to buy. The “China factor” has held down inflation internationally and resulted in the long Bull Run that has driven up consumption and asset prices around the world. It has also lead to a lot of groaning from blue-collar workers that cheap Chinese labour will put them out of work.

Mattel has now admitted that they didn’t check until after the products were in toy-stores whether or not European safety-standards had been followed.

In this the real ugly nature of the protests against China are seen.

Imagine it differently. A few winemakers in South Africa have, on occasion, embellished their product by adding ethylene glycol (antifreeze) into it to improve its flavour and alcohol content. Some countries still consider South African wine of dubious value as a result of these recalls. Now imagine if South Africa posed a “threat” in the way that China does, soaking up low-wage jobs and exporting cheap textiles and toys. Perhaps some EU minister would suggest a general trade embargo against South African motor-cars as well. After all, if we put ethylene glycol in our wine, perhaps we fit poor quality breaks on our cars as well.

One correspondent suggested that this type of sweeping act of judgement is like charging a person who owns a firearm with murder, because they have the tool to commit it. South Africa is also concerned about Chinese imports undermining our manufacturing. Union leaders have frequently called for a ban on Chinese goods and scandals such as these make for politically popular fuel.

Keep something in mind though. South Africa, too, is a developing nation. Africa is still to follow the route that China and India are taking. The response from both Europe and America has been to question the ethical and quality standards of these countries and use these as justifications for trade restrictions and import penalties.

The trade advantage that China and India have is their unskilled and low-wage population working in unsophisticated manufacturing and service businesses. If the developed world gets into the bad habit of seeing this as a threat instead of an opportunity for both to profit then pity Africa.

China and India will get rich. Trade restrictions won’t stop them for long. They’re too big, too organised and have far too much to offer to be kept down. Africa is none of these things; fragmented, politically naive and entirely uneducated.

African nations can ride along on the coat-tails of these two giants by supporting their demands for open markets. If we don’t we’ll get left behind, and forgotten.

11 replies »

  1. Gavin,

    Remember that long period of time where you didn’t post anything? That was some of your best work.

    This post reminds me of the arguments levied against those who opposed the Dubai port deal–“You hate it because you’re racist!” No, I hated it because it’s a symbol of unrestrained capitalism at its worst, that presented a real danger to American lives, and this toy recall is the same thing.

    The idea that you see low-skilled, low-wage, low-educated people as an *asset* is just too bizarre for me to comprehend, so I can’t even address it.

  2. Thanks Martin, it’s good to hear from you too.

    So, you would prefer that poor, unskilled, uneducated people charge as much for their labour as do skilled US workers? Who would hire them?

    It’s very nice to talk about poverty and ways out of it as if charity (either by direct donations or paying people more than their ability calls for) … it is quite another thing to bring 350 million people out of poverty by their own hard work.

    What would you call being unskilled, uneducated and poor? An injustice? By whom? A disaster? Perhaps, unless one recognises the limitation and allows for it.

    My point is this: unskilled, uneducated poor people can work hard and produce products; these products are likely to be of an inferior quality to that which you may expect in the developed world (since they lack the expectation of better – they can’t afford it); it is the client (e.g. Mattel) who has a responsibility to ensure that the work matches their customer’s expectations.

    Otherwise, what do you want to do with the billion poor people in the world? Say, “You’re poor, you’re unskilled, you’re illiterate. But we’d like you to produce work at this really high standard you have no familiarity with and then we’ll pay you as much as our local workers. Because we BELIEVE in fairness.”

  3. Gavin,

    No, what I’d like is for companies that pour billions into outsourcing basic manufacturing to other countries to put some of those billions into providing the proper education, training, and resources to ensure the workers make good products. Look at the result of not doing it–thousands of toys recalled, lawsuits, inevitable regulatory crackdowns, and higher costs passed on to the toy buyer as a result. How does that benefit anyone?

    Of course, what I’d really like is for these jobs to stay in the countries where the products are sold, and where we have laws that guarantee not only better pay and working conditions for the employees, but ensure that the products are safe and usable for kids, pets, and adults alike.

    It’s not the job of Americans to take it on the chin by buying inferior, unsafe, dangerous crap just so developing economies can more easily take advantage of populations that have not been given better opportunities, Gavin.

  4. No, it isn’t the responsibility of developed nations to buy goods from developing nations just because you feel sorry for us. And the same goes for charity.

    You certainly don’t do it out of anything other than the benefits it brings you. And companies who do choose to source their goods in China have a major responsibility in ensuring the quality of those goods (as you say) if they intend selling them in their home markets. Which Mattel plainly failed to do and then blamed China for (my gripe).

    However, closing your markets entirely? Martin? “what I

  5. Gavin,

    Glad you’re back. Good provocative piece. I think the desire of capitalists to produce high profits for stockholders and executives at the top is the problem. The reason they’re blaming China is to avoid fiscal responsibility. That’s the current American way….

    I don’t give a good goddam about the rights of the rich to make a profit when the rights of the poor are trampled on to provide them.

    If the Chinese, South Africans, or anyone else want to compete in the world markets, they must understand what those markets expect. And provide it. According to the laws of the countries in which they do business. And if American corporations want to gain from using developing country’s work forces for cheap labor, they should have to pay for training those work forces. That should make them think twice about off shoring.

    Martin,

    Glad you and Gavin are raising hell at each other again. Makes this place feel more like home. 😉

  6. Jim, the disagreement isn’t about the poor standards (at least, not from my side). I demand high standards as well. It is the use of assumptions about poor standards to enforce trade protectionism.

    Remember US attitudes to the Japanese in the ’80s?

    Don’t use excuses around the working practices of developing nations to exclude their products. I can just see some form of environmental tax – “We won’t buy from Africa because they use coal power” – coming through at some stage.

    If you do exclude a nation’s opportunity for trade for some spurious reason then their people will migrate directly (legally or not) to find work. If you physically exclude them, then they may decide to attract your attention a little more violently.

    And don’t say it hasn’t already happened.

  7. Gavin,

    How is it not the responsibility of the country the goods are made in to ensure their quality as well? I’m not saying it’s all Mattel’s fault or all China’s fault–It’s the responsibility of everyone, up and down the chain.

    And you can chill with using Emma Goldman against me, Gavin, because being someone who wants America’s manufacturing base rebuilt is not the same as being anti-immigrant or racist.

    I approach the issue of illegal immigration from a slightly different tack than most–I have no problem with it in principle, since it brings in income, revenue, and new people to live their dream. But illegal immigrants have to use stolen identities to get work, and that contributes to cybercrime, identity theft, and fraud, which is a BIG problem of mine. This results in any number of problems which can only be solved by cracking down on crime rings that specialize in the information trade, and streamlining the path to citizenship for undocumented workers.

    But back to the point–We have gutted the industrial core of this country and destroyed our ability to build. Now everything is in the service sector, with jobs that require even less skill than your unskilled laborers in Africa or China, no benefits, no protections, and no hope of advancement. I want the global economy to succeed, but not if it means enslaving people in the Third World to back-breaking labor just to make countries look attractive to investors, and not if it means eliminating the jobs and careers that are so vital to a strong economy in this country.

    If that makes me a protectionist, I am okay with that.

  8. You know how many Chinese women were assaulted in the sweatshops in China? I wonder when I go to WalMart if I am actually involved in some kind of produce that came from slavery?

    Good post, good points, addresses the humanity of nations.

  9. Returning obsolete manufacturing jobs to the US to achieve some form of … what? Self-sufficiency? Protection from global markets?

    Dream on. There are more US dollars in circulation outside of the US than in. The Chinese have $ 1.3 trillion in cash; what happens to your market if they are excluded from it, can’t use that cash, and decide to dump it?

    And the notion that Chinese abuse of their labourers somehow justifies trade protectionism is spurious. Apply that to everyone, not just the Chinese, if it’s so important to you.

    But take note. Within a decade both China’s and India’s economies will be larger, in absolute terms, that the US. What happens if, once they constitute the bulk of world trade, they decide to exclude you?

    And some statistics on South Africa: There were 19,000 murders in the year to March 31, 2007, and an average of 144 women reported being raped every day in South Africa.

    Contrast that to Iraq, which is a war-zone. And then tell me why I don’t hear mutterings from the US congress about trade sanctions against South Africa for our government’s obvious failure to redress these heinous human-rights violations.

  10. I just came across the post and am so glad to hear someone acknowledge the fact that China has come as far in the past three decades as European nations did in a century or more. I think the views Martin is expressing are representative of a very common Western way of thinking that has NO IDEA what things are like in developing countries – and how unrealistic it is to expect that Chinese manufacturers are going to be the ones enforcing standards on toys exported to the United States – how much farther that is from reality than it is to expect the Western companies who import them to do so.

    Of course, ideally the whole world would be perfect and everybody would abide by the same high, Western standards of safety and whatnot, and I’m not saying that’s not the goal we should be aiming for in the long run. But to make it sound like it’s somehow weird that Chinese manufacturers are not at those standards show just how out of touch so many people in developed countries are.

    In a similar way (though not directly related to this example), when talking about something like how China is sacrificing the environment for economic development, I think many Westerners really don’t understand how different it is to go from having an outhouse to a toilet, from a well to running water, or from kerosene lamps to electricity.

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