On the evening of October 13, 2008, 22-year-old Fang Chen (alias) received a text message on her cell phone: "New orders came in. Production starts tomorrow!" She was so excited that night that she hardly slept.

A native of Hunan province, Chen had been working in Guangdong province for four years. She works at a plastics toy factory as a "production team leader," which means her monthly salary is 100 yuan [$15] higher than the average worker's.

Chen had been waiting for work. Due to the lack of business, production was off and on. By early October, the 60-person factory had lost half of its workforce.

On October 14, Chen went to the factory early and worked long hours. She returned to her shared dorm after 10 p.m., feeling exhausted but happy.

Two busy weeks passed, orders were finished, and Chen, again, had no work to do.

She used to make 1,300 yuan [$190] a month when she worked 10 hours a day. After deducting living expenses, she managed to put 300 yuan [$44] into savings every month. Now the work has been few and far between, pay has shrunk. Chen made less than 1,000 yuan [$146] last month, which means she needed to tap into her savings just to cover day-to-day living.

Chen couldn't afford to stick around for long. And she didn't.

On November 3, Chen left the factory. She saw the vicious circle beating up smaller toy makers: less business lead to loss of workers, and a smaller workforce further limited the chance of getting large orders.

Chen went down to Shenzhen and had no luck finding work there, so she finally decided to go home.

At the Guangzhou Railway Station, Chen met up with some friends from the same town. They are all very young, born after 1985. They never went to college and some didn't even finish high school. It's hard to tell if they regret choosing to be migrant workers or not. But Chen's friend shrugged and said: "So what? College graduates can't find jobs either!"

That's true. According to the Chinese Academy of Social Sciences, one million college graduates from 2008 and previous years are still on the market, while six million more will graduate by summer 2009. Lopsided supply-demand has slashed prevailing salaries and pushed more college graduates to attend graduate school or join the army.

After the Chinese New Year, Chen and her friends will give up on Guangdong and travel to Zhejiang province instead. Hopefully they'll find some work there.

[Part of this blog post is based on a Chinese-language story on Hunan Online.]

The PolyGreen plastic newspaper bags made and marketed by GP Plastics Corp. may not be living up to its eco-friendly claims. The Dallas, Texas-based company has been "recommended" by the National Advertising Division (NAD) of the Council of Better Business Bureaus to modify or discontinue certain advertising claims, including "100 percent oxo-biodegradable," according to NAD's December 8 press release.

The New York Times, which had planned to switch to PolyGreen bags next year, has responded to the findings and decided to postpone the move to the bags. The Times said it would not use the bags until "further analysis can be conducted and verified."

Mike Skinner, the chief financial officer of GP Plastics, told the Times' Green Inc. blog that the NAD's decision was "in no way a legally binding decision or precedent, and the level of scientific and other review that the NAD makes of advertising claims is less extensive than what would occur in a legal proceeding." In the meantime, the company told NAD that it "intends to appeal all findings adverse to GP Plastics in the NAD's decision to the National Advertising Review Board."

According to a February 21 press release from GP Plastics, the bag maker uses oxo-biodegradable additives supplied by Willow Ridge Plastics of Erlanger, Kentucky. And the PolyGreen bags have been confirmed by Willow Ridge's tests to "meet the specification of an oxo-biodegradable plastic."

The Green Inc. report pointed out that Mexico Plastic Co. Inc. of Mexico, Missouri., a rival maker of newspaper bags, has been challenging GP Plastics' marketing claims.

Is it the bag maker's "green wash" or NAD's paranoia? We hope to see more clarity on the issue in the near future.

Background link: PN Managing Editor Don Loepp's November 18 blog entry NY Times switching to biodegradable bags.

Chinese toy makers' quality scandals of last summer created a perfect opportunity for U.S.-made toys to reclaim market share. Toy companies that still have production in the U.S. quickly jumped on the bandwagon, pitching their "made-in-USA" label and associated quality assurance.

But unfortunately, the "made-in-USA" label may not be a guarantee for safety, according to Michigan-based Ecology Center, which published a report on its Web site HealthyToys.org.

The nonprofit organization and its partners examined more than 1,500 popular toys, purchased from retail stores in Michigan, with portable X-ray fluorescence (XRF) analyzers that identify the elemental composition of materials on or near the surface of products.

The good news is that 62 percent (954) of the products tested contain low levels of chemicals of concern, and 21 percent (324) of all products contain no chemicals of concern.

The bad news is that U.S-made toys are not immune to health hazard. Among the 17 U.S-made toys in the sample, six had detectable levels of lead -- that's 35 percent. Two items had levels above 600 parts-per-million (ppm) -- the federal recall standard used for lead paint. A Halloween Pumpkin Pin even had 190,943 ppm of lead, one of the highest in the entire study.

Ecology Center said 21 percent of toys from China and 16 percent of those from all other countries had detectable levels of lead in 2008.

Although the Toy Industry Association has called the HealthyToys.org report "misleading at the least," it doesn't seem like anyone can argue about the hard facts.

That's a real shame, because the disappointing news is not only alarming parents at the toy store but also tainting the made-in-USA label. Consumers may dampen their passion for supporting domestically made products, and that's not what this country needs right now.

No, Chinese dolls are not invading. Whew!

The fight in hand has been running here in America, between California-based toy makers Mattel Inc. and MGA Entertainment Inc. A breakthrough was made Wednesday (Dec. 3) by U.S. District Judge Stephen Larson, who barred MGA from manufacturing or selling its popular Bratz dolls.

Earlier this year, a federal jury found that designer Carter Bryant came up with the Bratz doll while working for Mattel under an exclusive agreement and awarded Mattel $10 million for copyright infringement and $90 million for breach of contract.

Mattel's classic Barbie dolls have been losing market share to MGA's edgy Bratz dolls since their launch seven years ago. It's got to be tough for Mattel, as the overall doll market has been shrinking in the same time. The New York-based Toy Industry Association said doll sales in the U.S. dipped 8 percent from October 2007 through September 2008.

The LA Times quoted court papers in saying that MGA has said that losing the Bratz dolls would be "lethal" for the company.

Larson said his order won't go into effect until after he has ruled on both sides' post-trial motions. A hearing on those motions is set for Feb. 11.

MGA said it has so far made $405.4 million on the Bratz line, but Mattel claimed it was as much as $777.9 million. Both companies have spent lofty amounts in legal fees on the case -- nearly $30 million in the first three quarters this year for Mattel, according to Bloomberg.

MGA bought rotational molder Little Tikes in 2006 from Newell Rubbermaid Inc. and put Little Tikes' plant and offices in Hudson, Ohio, on the block in February 2008.

It's not surprising that both Barbie and Bratz dolls are made in China -- most likely in the same factories. Back in 2006, U.S.-based China Labor Watch and the National Labor Committee revealed that Bratz dolls were manufacturered by Chinese workers who were made to work 94 hours a week and denied access to injury and health insurance. In response, MGA CEO Issac Larian said in a statement that MGA used "first-rate factories in the orient" and that "the same factories make products for the world's biggest toy manufacturers, including Mattel and Hasbro."

Fifteen years ago, 20 percent profit was less than the market average for toy exporters in Guangdong. But right now, just staying in business is success. Chonggao Toy Products Factory in Zhongshan city -- which, according to rumor, is cutting headcount and experiencing hard times -- said it will not go down.

The company said its 2008 sales will reach HK$700 million (US$90 million), slightly up from previous years. But undeniably, the balance sheet is still in the red, due to rising costs and the strengthening yuan.

Meantime, Chonggao is confident that its 2009 sales will be no less than HK$500 million (US$65 million). "That would be the worst scenario. If governmental bail out plans across the world lead to economic progress, our revenue will easily reach this year's level."

But the company needs to regain profitability. The way to do it, according to Managing Director Cen Lecheng, is to make a foray into the Chinese domestic market.

A long-time export-exclusive contact manufacturer, Chonggan doesn't have its own brands to sell in the domestic market. Cen said he is doing research and will get ready to contract manufacture toys for Chinese consumers.

Maybe he can start with his existing customers like Mattel? China is an underdeveloped market for Mattel, itself. Perhaps it's time to change that.

[This blog post is based on a news report published in the Nov. 28 Zhongshan Daily.]

Miss Wu, who declined to give her first name, works at a large toy factory in Dongguan, Guangdong province. Compared to the 8,000-plus workers who were let go and underpaid by bankrupt Smart Union Holding Ltd., or the 500 protesters against Kai Da Factory, Wu knows that her situation is not too bad.

Originally from Hubei province, Wu has been working for the 3,000-person toy factory for years. Starting in October -- when most Christmas items were finished and shipped -- she noticed the factory started to reduce production. "My fellow workers and I haven't had anything to do at work for months," she said.

The factory owner finally decided that he couldn't afford idle workers and offered Wu a "paid vacation." That sounds like a luxury for a factory girl like Wu. She is used to working overtime, on the weekend, and during holidays.

But there is one problem: The pay during her leave is less than the minimum wage in Dongguan.

Still, Wu is lucky. Less experienced workers have been "talked into" quitting. As the factory is running on low capacity, workers don't get to work overtime -- an important part of their income. Their base salary is very modest, compared to living expenses in Dongguan. So many migrant workers choose to go back home and lay low for a while.

"I'm not included in the government's unemployment stats," Wu said.

Also missing from the government stats are workers laid off from small workshops that are not registered. In Guangdong province, there are many such workshops, where owners can give workers the pink slip anytime and workers just quietly leave.

But, to business owners' advantage, the once-threatening shortage of skilled workers in Guangdong has been solved. Wage increases are slowing down or disappearing.

As a matter of fact, the government announced in mid-November it decided to postpone enforcement of the minimum wage increase prompted by China's updated labor contract law.

Who'd have foreseen this a year ago?

[This blog post is based on information from the New Express Daily and the China Business Journal]

Businessman Ou Bochang has gone through a typical -- also lucky -- career path in the toy industry. He dropped out of high school in the early 1980s, left his hometown in Hunan province, and moved down to Guangdong province to work in factories. Ou gradually worked his way up to become a manager in a large toy company, and finally started his own shop -- Hong Fa Plastics Products Factory in Dongguan, Guangdong, a second-tier toy supplier.

His business was good until last year. "Since the second half of 2007, payment cycles started to stretch: from 15-30 days to 60 days or even longer," Ou said. He sensed the looming storm and adjusted his strategies. He declined orders from large factories -- Ou believe large factories carry the highest risk, took no more than three orders at a time, and limited the value of each order to no more than 80,000 yuan [$11,619].

His conservative approach has saved him from being dragged down in the current wave of toy factory closures. But still, Ou had to tighten his belt. He cancelled the night shifts, cut his workforce from more than 200 in 2007 to about 80, and is running only four of the seven injection presses in his shop.

Ou doesn't regret leaving his management position in large toy firm Jian Da Toys and starting his small business. Jian Da used to employ 15,000 but now only 2,000 workers are left, worrying about the future. Ou's future, albeit unclear, is at least in his own hands now.

(This blog post is based on information from a report in the Chinese-language business newspaper CBNWeekly.)

An early-morning blaze on Christmas Day leveled a three-story building at a Taiwan-invested Jinshun Plastics Products Factory in Shenzhen, Guangdong province, and killed three workers.

The workers' bodies were discovered 18 hours after the fire was put out, according to Nanfang Daily.

Police said the factory owner has been put "under control," as the company had been ordered by local authorities to eliminate fire hazard before resuming production. On September 26, a six-hour fire destroyed part of Jinshun's warehouse. Fortunately, no one was injured in that blaze.

The December 25 case is under investigation; foul play is not suspected.

Survivors said that the three victims -- 36-year old He Guangsheng, 26-year-old Qiu Duojian, and 30-year-old Wang Zhongfa -- were on the third floor of the building when the fire broke out.

A Chinese trade group official recently accused foreign resin makers of dumping plastic resin in China and "severely disturbing the market."

A recent report from the Chinese-language financial newspaper 21CBN quoted unidentified "industry insiders" as saying that Chinese resin makers are preparing to request anti-dumping investigations.

The report pointed a finger at South Korean resin producers, especially LG Chem, SK Chem and Samsung. In September, South Korean-made resin accounted for 33 percent of China's total monthly PP import, 20 percent of its total polyethylene import, and 64 percent of polystyrene import. The South Korean prices were significantly lower than Chinese domestic market prices: about 700-3,500 yuan per metric ton (US$0.05-0.23 per pound).

In October, LLDPE imports averaged 8,511 yuan per metric ton ($0.56/pound), 8 percent lower than Chinese domestic market prices. PP imports averaged 7,234 yuan per metric ton ($0.50/pound), 16 percent lower than Chinese prices.

Price gaps are even wider for feedstocks such as propylene.

As a result, China's domestic resin companies are cutting back production. In October, PVC output dropped 33 percent and 49 of the 97 PVC resin producers in the nation ceased production.

China's major resin producers, Sinopec and PetroChina, both primarily state-owned, said their petrochemical derivatives businesses took a huge loss in October.

South Korea, itself, is also trimming resin production, but Chinese companies complain that South Korea is taking advantage of its depreciating currency to dump products overseas.

Have you noticed that the global green wave of anti-plastic-shopping-bags rhetoric and legislation is waning?

For instance, Bulgaria is postponing plans to levy a tax on plastic shopping bags, based on fears that the tax would burden businesses too much during the global financial crisis [see full report from Reuters].

China, the first and only country with a nationwide ban on ultra-thin bags and a nationwide mandate for retailers to charge consumers for shopping bags, is also showing signs of more lax enforcement. The central government appears to be concentrating on other priorities -- like measures to sustain economic growth, such as the adjustment of tariffs on imports and tax rebates on exports.

Here in North America, progress is still being made -- New York state recently adopted a law that mandates recycling of plastic bags at large stores. But the recession and gloomy outlook is holding up some localities from embarking on the bag tax. For instance, Santa Clara county in California (source: press release) decided earlier this month to postpone its vote on a new tax of 25 cents for every shopping bag. The reasoning seems to be that raising tax during a severe economic downturn discourages businesses and the public.

At this moment, the U.K is still going ahead with its bag reduction efforts. Seven large supermarkets in the nation have pledged to the government that they will halve the use of plastic shopping bags by spring 2009, through such methods as charging customers for single-use plastic bags or giving them extra loyalty points for bringing their own. But bag taxes will be reconsidered if retailers fail to fulfill their ambitious pledge.

In a December 16 webcast, General Electric Co.'s Chairman and Chief Exective Officer J.R. Immelt said, along with a cautionary outlook for 2009, that the company had dropped plans to sell its unit that includes lighting and appliances divisions.

Why? The answer is quite straightforward: No buyers.

"It's just a tough market to execute on this transaction," a Dow Jones news report quoted Immelt as saying.

When GE put the century-old appliances business on the block in May, the company hoped to focus on higher-growth businesses. The Fairfield, Connecticut-based conglomerate entered the business in 1907 and boasts of milestones such as introducing the refrigerator, room air-conditioner and toaster oven.

Industry insiders estimated the value of the business between $4 billion and $8 billion from a sale of the business, which lured interest from South Korea's LG Group, China's Haier Electronics Group Co. Ltd., Mexico's Controladora Mabe and Turkey's Arcelik.

In August, it was reported that Blackstone Group LP would join Haier Group Corp. to bid for GE's appliances unit. However, after Haier hired the consulting firm McKinsey to evaluate the deal, the company decided to shelve the plan.

Times certainly are tough for durable goods like appliances. Thanks to the housing slump and credit crisis, both demand and purchasing power have drastically declined.

So, GE will hang onto the unit "indefinitely," and Immelt estimated its earnings will be $300 million to $400 million in 2009. He told the press that, on the bright side, "We didn't lose any market share as we went through this process." GE is still the second largest appliance maker in North America.