CPSC Orders New China Toy Recall

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CPSC Orders New China Toy Recall

• Mohammed Habib
• Katie Lombardo

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What we will discuss today

• Summary of Article
• Background Information
• Similar Toy Recalls
• Market Implications
• Relation to Global Marketing
• Questions

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Article Summary

• More than four million Chinese-made toys sold in
  the U.S. and Australia as Aqua Dots are being
  recalled.
• Aqua Dots are arts-and-crafts toys that feature
  small beads that stick together when they get
  wet.
• Consumer Product Safety Commission has received
  reports of children who swallow Aqua Dots and
  either slip into comas or are hospitalized.

It has been reported that children swallowed
beads which contain a chemical that imitate the
effects of the so-called date-rape drug.
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Bindeez/ Aqua Dots

• Commercial for Bindeez

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Common Practice in Chinese factories

• It is common practice in Chinese factories to cut
  costs by substituting ingredients.
• Shenzhen factory had substituted a toxic chemical
  for a non-toxic glue.
• This chemical, "1,4 butylene glycol, when
  injested, can cause seizures, coma or death.
• In July, Chinese Government said they closed down
  many companies that substituted industrial
  chemicals and additives in food products.

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Other Toy Recalls in November 2007

• Curious George Plush Dolls Recalled By Marvel
  Toys Due to Risk of Lead Exposure
• Schylling Associates Recalls Collectable Toy
  Robot Due To Violation of Lead Paint Standard
• Laugh Learn Kitchen Toys Recalled by
  Fisher-Price Due To Choking Hazard

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Market Implications

• Less Trust in Chinese Products
• Decreased sales for Christmas Season
• Wal-Mart ranked toy as Top 12 for Christmas
• Named Toy of the Year in Australia
• Tighter restrictions on Contract Manufacturing

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Ch. 9 Global Market Entry Strategies

• Contract Manufacturing
• Moose Enterprise, of Melbourne, Australia,
  contracted Wangqi Product Factory in Shenzhen,
  China
• The Shenzhen factory started to produce the bead
  toys after its trial products provided to the
  Hong Kong agent received no objection

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Increased Pressure on Exports and Competition

• Companies worldwide have increasingly outsourced
  manufacturing, often choosing Chinese factories
  for their cost and quality. But heated
  competition among factories and the rising cost
  of labor, land and fuel have sometimes put
  pressure on profits, causing some producers to
  cut corners.In the latest case, the Aqua Dots or
  Bindeez were supposed to have been coated with
  nontoxic 1,5-pentanediol, a chemical commonly
  used in computer printer ink. But that chemical
  generally sells for three or four times the price
  of the toxic compound found on the tainted toys,
  1,4-butanediol.

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China History

• Last month alone, U.S. government safety
  officials and retailers voluntarily recalled at
  least 69,000 Chinese-made toys over concerns of
  excessive amounts of lead paint, which can cause
  hazardous lead poisoning.

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Questions??