Quality Issues Continue

Quality issues continue to make the headlines and the Chinese government continues to issue flaky responses. Here is the problem in a nutshell:

So far, Beijing's handling of the complaints over its exports has been mixed. While it has promised both stepped-up inspections and more stringent enforcement of regulations, it has also suggested that the problem is overblown by the foreign media.

The Chinese government said on its Web site Wednesday that the Cabinet had passed a draft food safety regulation that "strengthens the responsibility of local governments and increases the punishment for illegal activities." No details were given, or a timetable for adopting the regulations.

The government doesn't get it. They think the problem is created by the international community to keep China down and perpetuated by the media.

Pushing more off one the local governments will get them a great deal of nothing. Beijing has almost no control of local governments, and officials' promotions and pay are tied to growth and output. Quality isn't in the formula. Plus, the local governments aren't well equipped to tackle quality issues. They have had no formal training and most of their resources are committed to building infrastructure to attract more investment.

Multinational corporations who have invested in and closely monitor quality have brought an undeserved level of comfort to retailers back at home looking to increase profits.

But foreign retailers and distributors have begun cutting costs by buying directly from local manufacturers, using Internet-based sourcing and other means to bypass the multinationals. This came partly from market-opening measures agreed to under China's 2001 entry into the World Trade Organization. Prices fell, but quality has suffered.

Once the plaintiffs' attorneys in the US get their hands on a few of these retailers, some of this should change. I've always thought that plaintiffs' attorneys deserved a special place in purgatory. Then I moved here.

Toe the Party Line

The Chinese government is still scrambling in an attempt to manage the world's perception of China's quality "issues".

"Media workers must keep their political responsibilities firmly in mind, not bring shame upon their historical mission, carry out propaganda work on quality inspection well and escort and guide the "made in China" label," Zhi Shuping, deputy head of the quality and supervision watchdog

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This is going to be a slow and painful process. It is evident from Mr. Zhi's statements that the government doesn't understand the issue. They see this purely as a public relations problem. They think they can turn a sack of melamine tainted dog food into a Nike tennis shoe with the right PR.

"Zhi reminded the domestic media -- already tightly controlled by the government -- that they must toe the Communist Party line in reporting quality problems, and that it was their job to put a positive spin on things."

Food Wars

More signs that China is serious about health and safety:

"The quality wars across the Pacific have picked up speed, as Chinese government agencies now say American food is not suitable for consumption. According to local media, the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China and the Shanghai Entry-Exit Inspection and Quarantine Bureau have identified excessive use of red dye in drinks exported from the United States to China. AQSIQ says the sugar-free drink in question was produced by Sturm Foods and it did not meet China's relevant health standards. The drinks have been returned to the U.S. manufacturer."

More Work for the FDA

This isn't a problem.

"Dumplings stuffed with cardboard and bogus rabies vaccines are the focus of the latest health scares in China, where the government has banned an industrial solvent used in toothpaste after a spate of global recalls. The Beijing Industry and Commerce Bureau had uncovered an unlicensed snack vendor selling steamed dumplings with traditional pork filling padded out with cardboard husks, the Beijing News said on Thursday, citing an investigative report by state-owned China Central Television. Beijing was also investigating bogus rabies vaccines, the Beijing Times said, after a woman bitten by a neighbor's dog injected vaccine she bought from a local hospital. Authorities found the hospital had been selling phials of vaccine taken off shelves two years earlier for quality problems, the paper said."

Surprise!

"At a time when Chinese imports are under fire for being contaminated or defective, federal records suggest that China is not the only country that has problems with its exports. In fact, federal inspectors have stopped more food shipments from India and Mexico in the last year than they have from China, an analysis of data maintained by the Food and Drug Administration shows. The F.D.A. database does not necessarily capture a full and accurate picture of product quality from other countries. For one thing, only one year of data is available on the agency’s Web site, and F.D.A. officials declined to provide more data without a formal Freedom of Information request, a process that can take months, if not years. In addition, the F.D.A. inspects only about 1 percent of the imports that fall under its jurisdiction. So the agency may miss many of the products that are contaminated or defective. The F.D.A. database also fails to disclose the quantity of products that are refused, so it is impossible to know whether just a box of cucumbers was refused or a shipload. The agency, he said, was currently working on a plan to revise how it monitored food safety, both for domestic food and imported, which should be released in the fall. The plan will depend on the F.D.A. working with foreign governments and American companies to identify potential risks to the food supply before they reach ports in the United States."

It isn't surprising, but it is a bit unnerving. My hope and expectation is that importers pay attention to the quality of items they are importing. The federal government doesn't have the time or resources (nor do I want them spending my money to acquire the resources) to test every item that comes into the US.

A western manufacturer has federal/state/local agency(ies) standing over him applying pressure on quality issues. Right by their side are his insurance company, banker, a swarm of hungry plaintiffs' attorneys and any number of other social checks and balances to ensure that lease agreement on the Benz and the wife's Neiman Marcus card are always at the forefront of his mind lest his conscience go on holiday.

These checks and balances don't exist in third world countries. Most of the time, the only thing standing in the way of you and a faulty third world break system is the western importer.

There are a number of industries that require some form of testing certification; however, this concept needs to expanded to most other industries, even as it drives up costs. This would not only level the playing field a bit, but citizens of the China's of the world would start demanding the same level of quality in their own products.

And that would be a good thing.