The Chinese government, on the one hand, is pruning value-added-tax (VAT) refund for low-value, labor-intensive plastic exports; on the other hand, it is offering tax incentives for plastic irrigation equipment, in order to encourage the production and use of water-saving drip irrigation.

According to the modified resin subcommittee of the China Plastics Processing Industry Association (CPPIA), China is waiving the 17 percent VAT for manufacturers, wholesalers and retailers of drip irrigation pipes and tubing, starting July 1st.

The subcommittee said in a news story on its web site, the number of manufacturers of plastic water-saving equipment in China has soared from six in 1998 to more than 110 this year, annual capacity from 30,000 metric tons in 1998 to 1 million tons.

However, only a handful of firms are capable of making high quality microsphere drip systems, with combined annual capacity of less than 30,000 tons. "That's far below the market demand," the story said.

Mattel's massive recalls were received with much surprise and regret, as the company has long cultivated a nice image of tight control of overseas production and reliable quality.

I don't mean to question its record of quality control in the past, but just would like to point out the impressive work of its public relations team, especially in this crisis management project for the recalls.

My experience with Mattel's media relations has been positive. They are very responsive and professional.

They also played a nice trick in the August 14th recall. The wording of "the nearly 19 million toys that either had excessive amounts of lead paint or had small magnets that could easily be swallowed by children" appeared in the press release, repeated in the press conference, and used by most media.

How smart it is to bundle the 18.2 million toys with magnets that had design flaw instead of sub-par production with the 436,000 lead-tainted toys!

I made the facts and details clear in my story for Plastics News. But unfortunately most publications I've seen used the round-up figure and didn't distinguish between the design and production problems.

The Chinese Ministry of Commerce officials tried to clarify by claiming "only 15 percent of Mattel's two recalls in August were related to lead paint." But the message didn't come clear or convincing. I don't think the Western audience like percentage points in general; also it failed to point out the remaining part of the recalled toys were poorly designed in the States, rather than having production-related problems.

The world's growing concern with Asia production is having a push on the strengthening of product safety standards and testing in that region. Underwriters Laboratories Inc., whose service covers plastic materials, just announced an expansion in Taiwan.

The UL Taiwan Material Lab now integrates a complete system of sub-labs related to materials and has become the center of UL's operation in Asia, according to a news release dated Sept. 3 on the UL Taiwan web site.

The organization also boosted the number of long-term-thermal-aging (LTTA) testing machines, from 137 to 377. The increased capacity will help reduce the long wait time for manufacturers in Taiwan, Mainland China, Japan, Korea, India, etc.

We all know that the enforcement of intellectual property protection in China is just not yet in place. You can see it everywhere in that country, from pirated DVDs found on most street corners to coffee shops with names that sound an awful lot like Starbucks, not to mention the large-scale "silk markets" selling top-grade counterfeit purses, watches and apparel in Shanghai and Beijing.

But to be fair, these "fake markets" have thrived largely on foreigners. The Shanghai Xiangyang market, which had US$60 million in annual sales before a crackdown in June 2006, claimed that 80 percent of its customers were Westerners.
Touring "fake markets" may be entertaining for the casual Western shopper, but the lack of IP protection really hurts when you are the one suffering infringement.

Battenfeld Extrusionstechnik GmbH in Bad Oeynhausen, Germany, is a recent victim in the news. It entered the Chinese market in 1996 by establishing joint venture subsidiary Battenfeld Chen Extrusion Systems Ltd. in Foshan, Guangdong province. Partner Chen Hsong was later phased out of the deal, and the company updated its name to Battenfeld Extrusion Systems Ltd. in 2006.

Battenfeld recently announced victory on an IP infringement case against three Guangdong subsidiaries of Hong Kong's Cosmos Machinery Co. Ltd. The case has come a long way from when Battenfeld filed it back in September 2003 at a local court in Foshan.

According to the verdict of the Dongguan Intermediate People's Court, dated November 8, 2007, the case was transferred from Foshan to Dongguan on November 30, 2004, and finally two hearings were held in April and June of 2007.

The copy of the verdict I'm referring to was supplied by Cosmos, who argued that Battenfeld's news release -- still available online at here -- contradicts the court ruling and is misleading.

The issue at point is how many of the defendants were judged guilty. Battenfeld's release pointed at all three Cosmos subsidiaries. Cosmos said only one was found guilty, and that was Donghua Cosmos Machinery Ltd. But the discrepancy is easy to solve. The court verdict clearly maintained that only the Donghua subsidiary infringed on Battenfeld's intellectual property by making single-screw extruder model P0450.

Cosmos also said it has appealed the judgment to the Guangdong High People's Court, so the case is not yet final. That's true. It might be a little early for Battenfeld to throw a party. But, even this preliminary success is encouraging to Western investors as well as Chinese companies that own patents, technologies and brands.

And who knows? Maybe Battenfeld will be able to supply more solid evidence and secure bigger success in the litigation. But this is all still up in the air, and it's pointless for me to speculate. What I can tell you, though, is that protecting your own products is no easy task.

The Dongguan court overruled some of Battenfeld's evidence, including testimonies from two of Battenfeld's Chinese mold suppliers. In written testimony, the moldmakers said Cosmos asked them for quotes for molds, and that Cosmos' drawings were almost identical to Battenfeld's molds.

The court also rejected photographic evidence that was taken at the 2007 Chinaplas show in Guangzhou. The court documents said, "Although it says 'Cosmos Machinery' and 'DEKUMA Welltec' in the photos, there's no way to verify whether these exhibitors are the defendants in this case. Also, the plaintiff can't prove this is relevant to the commercial secrets in dispute."

Battenfeld did request the court to collect evidence from Chinaplas organizers, including Adsale Exhibition Services Ltd., the China Foreign Trade Center, the National Light Industry Association and the Guangdong Plastic Processing Industry Association. But the court overruled the request based on Chinese laws, the same court document said.

So really, it becomes a heavy burden on the victim's shoulders to collect evidence that's acceptable by the local legal system. For multinational companies that operate in different countries, it's additionally challenging.

It's not easy even for Chinese local companies to defend their rights in their own country. Injection press giant Haitian commented on that in a speech at a Plastics News conference. In Haitian's headquarters city of Ningbo alone "there's another hundred companies that make machines the same as ours. Thirty of them use our logo to a certain extent," said Helmar Franz, Haitian International Holdings Ltd.'s executive director.

China also lacks an environment conducive to public opinion. Plastics News is the only publication in China that has reported Battenfeld's litigation with Cosmos. The state-owned media may fear pressure from the top, and private publications have been known to make compromises to keep their advertisers.

But if such information is not delivered to the public, violators of IP laws will never need to worry about their corporate reputation and branding. That's not fair to customers and the general public who deserve to be made aware of these happenings.

Stay tuned. With independent and unbiased principles, Plastics News will follow this case through.

For some reason, the Chinese government hasn't played tough on enforcing intellectual property protection. It makes you wonder how effective the recent ban on ultrathin plastic bags and free, thicker shopping bags will be. It seems like government officials need a reason to prioritize. For example, let's take a look at a recent issue in the media I've had experience with, but that's not related to plastic: bicycle theft.

A January 24 Reuters story said that police in China claim they have cut bicycle thefts by half over a nine-month period. The news story said that:

China has halved the number of bicycles stolen to about 2 million in the past nine months...following a campaign to clamp down on theft months before its capital hosts the Olympics.

The story continues,

To help battle the theft problem, the government introduced a system of identification numbers, and buyers must register their bikes using their real names as part of the effort to curb widespread theft.

In addition, an earlier story said the police also reward any tips that lead to an arrest of more than 15 bike pilferers and seizure of more than 50 stolen bikes.

Despite what the story says, the nine-month bike theft rate of 0.4 percent (2 million divided by 460 million) seems low to me. Bike thieves caused me constant headache during my college years in Beijing. I lost a total of eight bikes in four years. I was advised to buy cheap, used bikes (less than US$8) from special vendors to minimize loss caused by theft. (No, there's no comprehensive insurance for bikes.) And guess what? When I was shopping for my fourth bike, I actually found my first bike! Of course I had to pay to get it back. That's when I came to realize how the system worked.

Anyway, I'm glad someone is doing some sort of real crackdown now. It just shows that if the government wants something done, it can be done. Better late than never, I say.

Now, let's get back to plastics. What's the latest public reaction to the plastic bag ban? I gathered these interesting tidbits from various Chinese online media sources:

Plastics wholesalers have reported rising sales of ultrathin plastic bags to individuals. I guess these bags are being stocked up for family use, such as to contain garbage. Not sure whether and how the government will punish the use of ultrathin bags for non-commercial purposes.

Cashiers in supermarkets have reported that some customers have been asking for extra shopping bags. Get as many free bags as possible while they last! Stock up!

A gentleman in Beijing said he started using a cloth shopping bag, but supermarkets bagged his cloth bag with a plastic shopping bag. He thought it may be because of the advertising on the bags.

Vendors in farmer's markets told the press that they already de facto charge customers for plastic bags. "It's part of our cost. Plastics bags have never been free really." Of course, same thing with supermarkets and stores that list written prices.

A consumer reported that he was given a little extra vegetable when he declined to take plastic bags at a farmer's market.

As epic snowstorms continue to slam southern, central China, many Chinese have been stranded on their way home for the Chinese New Year, which falls on Feburary 7 this year.

Officially, the national holiday is seven days long, but most factories shut their doors for up to a month around the holiday, since it's the only time during the year when millions of migrant workers -- many traveling several days by train and bus -- can visit their families.

And because many plants are already closing for the holiday, I don't think the brutal blizzards should have too much direct impact on the plastics industry. A report from a Chinese plastics Web site confirmed my theory, sort of. In its forecast (viewable in Chinese at info.plas.hc360.com) on polyethylene pricing, the author says:

Almost all of the downstream processors have stopped production. Some trading businesses also have completed their annual plans and started vacation.

Although paralyzed transportation has caused a materials price hike on the seller's end, the report said, demand is staying low with little transaction being observed.

In the longer term, however, the industry will see impact. The Chinese government reported a direct loss of 22 billion yuan (more than US$3 billion) as of Jan 29. If the storms trigger higher inflation or a slowdown of the economy, the plastics industry will hurt as well. On a bright note, suppliers of plastic agricultural film and construction material might see a rise in demand.

To try to help Westerners understand how important the Chinese lunar New Year celebration is and why the snowstorms blocking holiday travel is such a big deal, let's take a common image we see here in the U.S.

Christmas is a time when many families gather, with the fireplace glowing, the Christmas tree trimmed and children anxiously awaiting Santa Claus. Now think of the family member who has to miss this annual gathering and multiply that by ten. Because odds are that the family member who misses the Christmas holiday will have other opportunities during the year to see his or her family. This is not the case for Chinese families, and many times it's the only time during the year that young families will see each other.

Unlike in the States, it's not uncommon for Chinese families to be located in different parts of the country. A typical scenario in China is one where a husband works as a laborer in a big city while his wife and child stay home in the village. The half-month Chinese New Year celebration is the time when Dad comes home, bringing hard-earned money and new clothes for the family, plus it's time for him to restore his energy for another tough year on the assembly line.

I read a story about a Chinese migrant worker who reportedly boarded a first class flight from Guangzhou to Chengdu with a packed comforter and plastic bucket. Some might question why he traded a big chunk of his annual income for a first-class plane ticket because coach seats sold out and trains and buses stopped running. But many others understand his choice, knowing how important a family reunion during the lunar New Year is to an ordinary Chinese man who works out of town all year round.

Mr. Kui Cai, a 20-something engineer with injection press giant Ningbo Haitian Group Ltd., is stranded in Ningbo by the snowstorms. But he's excited! He received help buying a new condo and a free vacation package as Chinese New Year gifts from his bosses.

Cai, a native of the Jiangxi province, joined the research and development department of Haitian in 2006 upon college graduation. He and his new wife, also from Jiangxi, were ready to go back to their home province for the Spring Festival this year, but were forced to cancel their trip because of the snowstorms lashing China. So they found themselves with nowhere to go in Ningbo for the holiday.

The couple had planned to settle down in Ningbo to be together near Cai's work, so they started saving for a down payment on a condo. But the money was not adding up as quickly as they had wished.

When Haitian management heard of the couple's situation, they offered Cai 80,000 yuan to cover the condo's down payment.

Now the couple is busy decorating their new place for the holidays.

"Without the generous help from the company, I wouldn't know how to have a decent New Year," he told the local newspaper.

Cai also can't wait to use his bonus vacation package. The company will pay for everything during a one-week trip to Hong Kong and Macau, he said. He's never been off the mainland.

But Haitian is not the only plastics company that's going the extra mile to make sure their nonlocal employees enjoy the Chinese New Year even when they can't spend it at home.

Hangzhou-based Wahaha Group, China's beverage giant with in-house bottle making capacities, said most of the nonlocal employees are staying in Hangzhou for the Chinese New Year. Company executives, including the president and chief executive officer, invited all employees to attend the company's New Year's Eve reception. Wahaha organized performances and other entertainment activities for the celebration. The employer also tripled the pay for those who work during the holiday, plus overtime allowances.

Processor Zhejiang Guangbo Group Co. Ltd. originally had planned to escort 800-plus migrant employees home via charter bus services. As the snow blocked the roads, the owner immediately ordered 1,000 comforters for the dorms and arranged for a holiday celebration and local tours.

Information in this post is based on Chinese-language coverage in Ningbo News and China Business Times.

Bob Kroshefsky's recent letter to the editor in the February 11 issue of Plastics News and on the PN Web site at here showed understanding and sympathy for the difficulties Chinese factories have undergone lately and also rightly pointed out that the lowest-possible-cost mentality is what is causing quality issues. Kudos for that!

However, his speculation that "Even if someone there raised the lead-paint-and-kids issue, well, hell, the toys are going to be exported, so it's not like we'd be endangering any of OUR kids" neglects the reality in Sino-U.S. trade. I have no way to prove that the Chinese don't ever have any nationalistic thinking in doing business with foreign countries. But I know for a fact that China's exports are of much higher quality than goods sold domestically. Market regulations and standards play a large role, in part because the Chinese, three decades ago, had very little merchandise in the Communist planned economy. Having started from scratch not long ago, the country has a long way to go before it pars its product standards with developed countries.

Products that contain lead paint and other hazardous content are very common in China. Even with the rising awareness of product safety, consumers in China are much more vulnerable than their Western counterparts, due to the lack of information and a consumer-rights system to back them up. A nationwide recall system, such as the Consumer Product Safety Commission in the States, is nonexistent.

In the Mattel case, the paint supplier violated its contract with the factory and sneakily sent over substandard paint. The factory was completely unaware of it. Did the paint supplier ever reflect on the lead-paint-and-kids issue? We don't know. But if he'd thought his dirty trick wasn't going to harm his kids, he'd be wrong. Sadly, the recalled Mattel toys returned to China and climbed on its store shelves! Yes, consumers in China are still buying the products that America threw out because of the danger. Why do they remain stocked in China's stores? A Wall Street Journal article unfolds the complex situation:

In the U.S. and Europe, a wave of recalls of Chinese-made goods during the second half of 2007 led to heavy news coverage and a coordinated effort by regulators and the toy industry to pull dangerous products off the shelves. In China, it is a different story. The nation has no comprehensive rules governing recalls and no system for tracking injuries from defective products. Together with a thriving trade in black-market products, that means some of the goods that have caused alarm in the West are still available to Chinese consumers.

The situation is a reminder that often the people most at risk from China's public-health and safety lapses are the Chinese themselves. It raises questions about the responsibility of multinational companies to keep dangerous toys off the shelves in parts of the world where consumer-protection laws are weak and the threat of legal liability is relatively low -- but also about their ability to do so.

And the incentive for selling the hazardous toys rejected by the U.S.?

When U.S. companies cancel orders because products are defective, Chinese factories loath to lose money may resell the recalled goods out the back door. When the defect lies with the manufacturer rather than the design, the big brand may decline to pay the plant for the tainted toys -- often ensuring they won't be returned. Dangerous toys can wind up on Chinese auction sites like Taobao or in retail stores through a murky chain of suppliers.

Peter Humphrey, managing director of ChinaWhys, a Shanghai-based supply-chain monitoring firm, said the Chinese business-to-business world is 'full of shoddy, illegal goods.' He said enforcement is 'nonexistent, and people will sell whatever goods they think they can get. . . . There is a very lawless, unregulated Internet trade here in China.'

Back to Kroshefsky's concern on Chinese nationalism, who are the Chinese kidding? As the ancient idiom goes, harm set, harm get (Hai Ren Hai Ji).

Plastics News' good friend Dan Harris came up with a list of why Chinese companies are having a hard time penetrating the U.S. market in a recent post on his China Law Blog.

My eyes lit up when I saw the list. That's exactly what our readers in China want to know, I told myself. I am seeing more and more Chinese companies at international trade shows and conferences. Demonstrating typical Chinese low prices, they crave a piece of the U.S. market, which in their minds is associated with hassle-free transaction, stable supply relations and sizable margins.

Many of the points are sharp and insightful, but in order to shed some light on the deep causes of these market-entry blunders, I'm adding comments under each point. There are also things that I have a different opinion on, and I'll tell you why.

1. Chinese companies focus on a Chinese consumer, not an American one.

Comment: Chinese companies would like to find out more about their target American consumers, but they mostly rely on personal-level approaches to collect business information, lacking a systematic and scientific market investigation conducted by professional Westerners that understand the market.

2. Chinese companies fail to realize that one reputation -damaging mistake in the United States could doom them forever here.

Comment: This one is dead-on. And how come they don't realize this common sense? Because they get by in China and assume it's the same in the States. See my recent post A monumental blacklist for more.

3. Chinese companies fail to realize it will take time for them to make an impact in the United States and they are unwilling to spend the time and money necessary to do so.

Comment: Chinese people take such pride of the fact that industrialization, urbanization and modernization have happened in China in a much shorter period time than in the West that they believe, if you try hard enough, everything can be done fast and well. Why don't they invest enough money to lay the ground work for the new market? Well, they look at the exchange rate. The same exchange rate that makes the Chinese production cost in yuan seem so low magnifies the marketing cost in dollars in the States.

4. Chinese companies focus too much on the end result (making money), and by doing so, they sacrifice the professionalism that would allow them to achieve long- term success.

Comment: The Chinese would ideally like long -term success. But the drastic social, economic and political upheavals and changes in the past century have paralyzed Chinese people's long-term thinking. Fill the pocket as full as possible before the next change hits, be it credit policy, industry standards or consumer interest.

5. Chinese companies tell users what they want instead of listening to users.

Comment: This obnoxious mentality is a hangover of the old Soviet-Union-style "planned economy" (1949-1978). That period of time featured insufficient supply of necessities and one-sided propaganda. Although it's hard to question about China running a market, capitalistic economy today, the country skipped some vital steps in the development of the Western countries.

6. Chinese companies focus too much on making money in the short term, rather than on building the quality necessary to sustain themselves in the long term.

Comment: What pops up in my mind includes: vicious and endless price wars, a business environment that has deprived consumers their say, and lack of technology and craftsmanship.

7. Chinese companies fail to understand how beauty and design might distinguish their product from that of their competitors.

Comment: Traditionally, domestic consumers simply can't afford beauty and design. Price is the only distinguishing point. Plus, the companies don't want to invest much on design, because it's bound to be copied by competitors right away, thanks to the absence of intellectual property protection in China.

8. Chinese companies rely too much on phone calls and face-to-face meetings instead of e-mail.

Comment: This is probably part of the Asian culture, underscoring personal communication instead of machine-generated and less interactive e-mail. I don't think it's necessarily a disadvantage though. Japanese companies have done well in the U.S. market, despite their preference for in-person meetings and phone calls rather than e-mail.

9. Chinese companies fail to use "simple and elegant designs."

Comment: Unfortunately, they are trapped in between complicated traditional styles and a blank page of modern Chinese inspiration. Again, they can't justify investment on design, because it will be copied by competitors overnight.

10. Chinese companies fail to realize their need to hire MBAs and those with local knowledge.

Comment: Call them cheap or arrogant. They don't trust MBAs or Western veterans unless foreseeable return is guaranteed. They also want everything under their control, not threats and risk brought by language barrier and different business values.

These are just my opinion. I welcome yours.

Christopher Devereux, managing director of consultancy ChinaSavvy, now resides in southern China. But he has a very interesting background -- specifically, extensive experience in the plastics industry in three continents, Europe, the Americas and Asia.

He first dived into the plastics business in the early '70s as a product development manager for an English investment bank that owned several manufacturing companies with extensive injection and blow molding facilities. Then he left his home in the U.K. and worked in the polymer industry in Central and South America in the mid-70s. In 1984, he returned to the U.K. to found a packaging company using injection molding and extruded foam thermoformed processes. Later he joined Packaging Corp. of America (Tenneco Packaging, Inc.) as business development manager for Europe and set up the company's first OPS packaging company in Belgium. He set up Chinasavvy in 2002 to help Western companies outsource and manufacture plastic and metal parts and products in China.

Hearing complaints every day here in the U.S. about China taking jobs away (especially in this election season), I wanted to pick his brain on the trends of geographical shifts of manufacturing. I'd like to share his reply with our readers:

Whenever labor jobs are lost, politicians scream. It's only natural. The United Kingdom politicians screamed as their automobile industry declined and as their manufacturing businesses slipped below the 50% mark (it's much lower than that now). Everyone said it would be the end of the British economy.

But what has happened there? The U.K. has now one of the most buoyant economies in Europe. The economy has shifted from a manufacturing economy to a service economy.

And the British, like the Americans, are good at inventing, designing and developing products. They know their markets. So what do they do? They invent. They design. They develop. Then they go to China and have it made and a third of the cost of making it in America.

The Chinese, on the other hand, are not good at developing products. They don't understand the markets. But they are good at copying and making to someone else's designs. It will be many years before they start producing home grown products that will beat American or British designed and developed products.

Remember the inflation of the last 20 years? Horrendous at times. Now we have low inflation. And why? Because the cost of goods coming in from China (and Asia) has brought down the cost of living and inflation.

If importing countries try to block these low cost imports they will find that prices will rise very fast.

What American producers and manufacturers need to do is to embrace the opportunities of an outsourced manufacturing base or setting up manufacturing within the China/Asia area. They will find that they can expand their sales and their exports through high quality/low cost manufacturing using their designs and IP.
There is a lot said about the lack of IP protection in China. This is changing but it only affects companies who want to attack the Chinese market. They have all the protection they need within the US.

Manufacturers who embrace the low cost manufacturing base in China will be the ones who will be laughing all the way to the bank.

If we look at economic history, the center of manufacturing shifted from the U.K. to the U.S.

The U.S. succeeded in overtaking the U.K. with higher productivity. Labor productivity in U.S. manufacturing was already roughly double the U.K. level in 1870, according to economist Stephen Broadberry. Measuring labor productivity by output per worker, the U.K. was still 36 percent behind the U.S. in 2000, according to a paper by the U.K. HM Treasury. About 65 percent of the gap was attributable to innovations, while physical capital accounted for only 31 percent, another research paper found.

How wide is the gap between China and the U.S. in innovation? As Devereux indicated, China doesn't excel in innovation at all. And the productivity is much lower than the U.S. level. Therefore, instead of seeing China as a threat, maybe it'll work better for all to respect the natural flow of manufacturing, especially the low-value-added, labor-intensive type. The future of U.S. economy can't depend on retrieving and retaining those low-level jobs. Expand the service industry and strengthen innovation, jobs will be recreated, and these upgraded jobs won't pollute the air and water either.

Plastics News managing editor Don Loepp pointed out the attention the Western media gave Chinese product-quality issues last year in a recent post, as a few U.S. news reports on the subject have become strong candidates for the 2007 Pulitzer Prize awards for journalists.

"China is a land of toxins and danger. Our homes may be full of made-in-China products, but we look at them suspiciously," Loepp wrote, summarizing the prevailing perception of China in the United States.

He also rightly pointed out that a Pulitzer may trigger Washington to take a closer look at Chinese manufacturing and product quality.

The same issues also have been recognized in China with the country's Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) listing the Mattel recalls as one of the "Ten Most Influential Events of 2007."

Besides pressure from its overseas buyers, Chinese manufacturers now face enraged domestic consumers who've read about Western countries' reactions to unsafe products and realized that their own domestic goods are much worse but nobody is there to safeguard them!

AQSIQ and other authorities have, since June, fast-tracked a few projects targeting better product information transparency and stricter quality control. The newly launched online database "Product Quality Credit Records" is empowering the average Chinese consumer in an unprecedented measure.

The same agents are also building a "China Import and Export Products Inspection and Quarantine Information Bank." The Chinese version is expected to go live online March 15 and the English version on June 15.

With such a system, Chinese users will be able to have one more reference before they make a purchase. Profit-driven manufacturers will no longer be able to pass off their recalled products onto domestic consumers.

All of this, without the recalls in the West, wouldn't have had a chance to be accomplished any time soon.

So, in a sense, Chinese consumers owe Americans, the biggest importer, a thank-you. Thanks very much for heightening China's awareness of consumer rights and helping clean up the marketplace, whether it was intended or not.

Billionaire Zhang Yin, who topped China's wealthiest citizens' list in 2006 with a fortune of US$3.4 billion, appeared the other day as a political figure and told the press that the country's new labor law could use some amendment, according to a news report.

Zhang is going to submit a proposal to the Chinese People's Political Consultative Conference (CPPCC) at the upcoming annual conference in Beijing. She is a member of CPPCC's national committee.

"Requiring employers to give contracts of infinite length to workers is going back to the old times in China," she told the Chinese press, adding that the new labor law, which came into effect January 1, has already increased unemployment and impacted low-skilled and undereducated people in particular.

China's new labor law requires all employers, whether foreign or domestically-owned, to enter into written labor contracts, either fixed-term or open-ended, with the employee.

The law also stipulates that open-ended contracts must be signed if the employee has been working for the employer for more than 10 years or if the worker has already completed two fixed-term contracts.

Employers will be subject to a penalty (double the severance pay) if they fire workers without "good cause" before their contracts expire, according to the new law.

There has been wide speculation by consultants and economists that manufacturing in China will lose much of its competitive advantage under the new law.

But if Zhang's amendment proposal gets through, it will be a different story.

Although she has been living in the United States for almost two decades, Zhang remains well-connected in China in both political and business senses. Her father was a lieutenant in the People's Liberation Army.

Zhang built China's largest paper recycling business, Nine Dragons Paper. Although China's latest richest person is Yang Huiyan, a Ohio State graduate whose father handed her the real estate family business, Zhang still is the richest self-made woman.

Like it or not, now that Blu-ray has become the default next-generation disc format, the prices are already sneaking up.

An online report said that prices of Blue-ray disc titles have gone up on Amazon.com and Sony's new Blu-ray players will cost more than the old models.

But what if China is to make Blu-ray discs?

Word has it that a Chinese manufacturer is about to start production of Blu-ray discs. "Everything is ready. Once molds and the master disc arrive, mass-scale production will begin," according to a leading IT Web site in China.

That may be good news for global consumers, as China seems to always be able to offer low costs.

It is also speculated that this company will either be Henan Kerry Digital Co. Ltd. of Anyang, Henan province (100 percent Hong Kong ownership) or Dalian Hualu Group Co. of Dalian, Liaoning province.

Panasonic, a shareholder of Hualu, also makes Blu-ray discs.

The blaze that killed 15 last week at LongFei Recycling Co. Ltd. has been brought to the attention of China's central government. Head of the State Administration of Work Safety (SAWS), Li Yizhong, told the press that an investigation is under way with joint forces of a few ministries, according to New Express Daily. But no further information is available at this point.

Plastics News reported on the incident with extensive details in a February 29 story.

SAWS is one of the most closely followed national agencies in China, especially due to notorious coal mine disasters. Chinese workers in general are more vulnerable than their counterparts in other countries where safety measures are better enforced. A study revealed that China's casualty-GDP ratio goes up as the economy accelerates its pace.

The image of SAWS has become so negative that one of its spokesmen complained about being deemed a jinx. This official, Huang Yi, said February 26 during an online public chat that, "if the public feels that I bring nothing but bad news, I really hope I have less and less chance to appear... I'd rather disappear."

Well, it's my hope, too, that the country will cut down workplace accidents.

Yi added that he is sad about how the public equals work safety to accident/disaster. What he meant was, the public is earful of striking work accidents but doesn't hear about how preventive safety measures are put in place or how violators of safety regulations are penalized. Therefore, the terms of "work safety" and "work accidents" mean pretty much the same thing to them.

That is sad indeed.

Everyone knows labor is cheap in China. Unfortunately, it's not just the hourly pay that's cheap. It's also their health and lives. Every time a coal mine explosion happens in China, we hear how victims' families have a hard time getting any compensation and a "decent" settlement on a dead body only requires a few thousands, sometimes even just a few hundreds, dollars.

In my opinion, China won't have world-class manufacturing until the labor condition is improved.

One of China's richest women, Zhang Yin, is in Beijing attending the annual session of the national political advisory body--Chinese People's Political Consultative Conference (CPPCC)-- March 3-14, but her proposal for amending the new labor contract law doesn't seem to have a chance.

Zhang has suggested the law exempt labor-intensive companies from having to sign permanent contracts with staff with 10 years' service. She was criticized by some CPPCC members.

China's Ministry of Labor and Social Security quickly responded to the press coverage Zhang's controversial proposal received. "Whether to amend the law contract law or not is not a question. The question right now is how to enforce this new law effectively," said deputy minister Sun Baoshu at a March 9 press conference, according to China News Agency.

"Some companies believe the new law is increasing their cost. That's because they didn't have to provide social security taxes. ... It is not right or legal to chase profits by scarifying workers' rights," he said.

It remains a mystery whether Americans will buy more made-in-USA products during the economic slowdown or recession to protect the domestic economy, or buy more imported, cheaper items, to hold on to their wallets.

I asked exhibitors and attendees at the three-day International Home and Housewares Show in Chicago what they think will happen. Their response was mixed. I guess nobody really has the answer, they just hope to survive the hard times.

Meantime, although made-in-China has become a synonym for cheap imports, rising costs--including stricter quality control and inspection--in that country may raise commodity prices in the U.S. market.

Will the U.S. ditch or reduce imports to invigorate its own manufacturing at this critical point in time? Or will it rely more on imports to keep inflation down and maintain living standards?

Dell Inc. recently said it will purchase large amounts of components from China to help reduce cost, according to a Reuters story. The computer hardware manufacturer plans to buy US$23 billion of components from China this year and US$29 billion in 2009.

It looked like it's a clear upward trend, until I did some simple math.

Based on the fact Dell will buy a total of US$70 billion of computer-related supplies and equipment from China over the 2007-2009 period, also according to the Reuters story, we can easily figure out that Dell actually spent US$38 billion outsourcing from China in 2007. From $38 billion to $23 billion to $29 billion, would you say it's a boost of spending on outsourcing?

We need a bigger picture here. Is Dell's overall spending on outsourcing going up or down? At what kind of rate? Is China's share of Dell's outsourcing total rising or dipping? What are Dell's other major low-cost import countries? Where is the ratio of Dell's U.S. manufacturing versus overseas procurement headed? These are the questions multinational corporations need to answer, to provide the public with a better idea of what's going on in the economy.

It was only a couple of weeks ago that I wrote a blog item about Blu-ray discs. The question came out about whether counterfeit Blu-ray players exist (got to be more profitable than knocking off Blu-ray discs, right?). Click here for the original posting.

Guess what? Blu-ray disc players themselves may have infringed a patent owned by a Columbia University professor emeritus. The U.S. International Trade Commission is going to launch an investigation into some 30 U.S. and foreign companies on possible patent infringement related to Blu-ray disc players and other products, Reuters reported.

The commission posted a news release Thursday on its Web site, explaining the issue in dispute:

The products at issue in this investigation are short-wavelength (e.g., blue, violet) LEDs and laser diodes that are used in products such as hand-held mobile devices, instrument panels, billboards, traffic lights, HD DVD players (e.g., Blu-ray disc players), and data storage devices.

The list of involved companies highlights big names including Sony Corp., Nokia, Motorola Inc., LG Electronics Inc., Panasonic maker Matsushita Electric Industrial Co. Ltd. and Sony Ericsson Mobile Communications AB.

I thought readers of my China blog would not only be interested in plastics in China, but also China as a country, a culture, a business battlefield and a phenomenon. Therefore, from time to time, I'm going to share bits and pieces of news and facts that may help you understand the ever-changing China better. And sometimes, the news and facts out of China can be odd, like this one below.

Oriental Today reported a striking proposal by a real estate giant in Beijing, who suggested demolishing the Forbidden City, the Chinese imperial palace from the Ming and Qing Dynasties located right in the middle of Beijing.

"Instead of spending billions [of yuan] every year on renovating and maintaining the palace, why don't we blow it flat and build real estate? It will significantly help skyrocketing housing prices in Beijing caused by lack of land," the unnamed businessman said.

What's more, the statement was backed up by an industry group official. Hu Yunjing, president of Beijing Real Estate Business Association, explained that, if the land the Forbidden City sits on now can be used for residential construction, it will provide 24 million square meters of housing for at least 1.2 million residents. "That will bring down the housing prices," he claimed.

I was speechless. Do they really believe it's a smart idea? By their logic, New York City should convert the Central Park to high-rises and Paris should transform Musee(sorry, the blog editing tool doesn't support accented letters) du Louvre to hot-selling condos.

And the truth is, Beijing's housing prices, some parts of which are catching up with Manhattan, won't come down no matter what. People from all over the country continue to flood in. And the real estate people know this the best. Their goal certainly is to make more money (as if they haven't made enough by doubling and tripling prices in the past few years), not to reduce or stabilize prices.

It's chilling to see how some Chinese people and businesses are becoming more relentlessly capitalistic than barons in the Enclosure Movement in Europe.

They seem to see nothing more important or meaningful in this world than money. If that's the case, it's no wonder that toxic products continue to be manufactured, substandard buildings continue to be constructed, workers continue to lose their health in poorly regulated factories, and the air, waters and land continue to be polluted.

What does it take to get a "gold bowl" -- a permanent, prestigious and well-paid job and become a government employee in China? The short answer is "a lot," even more than what it takes to get hired by a Fortune 100 company's Chinese operation. Since I write for Plastics News, I'm not going to tell you all the unspoken secrets about Chinese government's human resources practices.

But here is a tip about what some Chinese government employees have to do to keep their jobs, which I bet their American counterparts can't even imagine. Next time you go on a trade mission to China, you can feel more knowledgeable about the society.

Government employees in the Dongpo District of Meishan City in China's southwestern province Sichuan (known for its spicy cuisine) are required to recite at least 10 poems written by ancient poet Su Dongpo, who the city district is named after, according to Sichuan News Web.

The local government organized a training session on the poems and distributed study materials.

What is the point of doing this? An official said: "When receiving foreign and domestic guests and potential investors, if an official couldn't even recite some Dongpo poems, wouldn't it be embarrassing?"

I don't think any businessman will base an investment decision on local officials' knowledge of ancient Chinese literature.

But the official also said something more telling, "[studying the poems] won't affect their regular work, we just encourage people to spend some of their drinking and card game time on studying."

There you go, drinking and card games. They are not just personal hobbies. Believe it or not, they can be work. Recently, a Chinese local official, Mr. Guo, died from drinking at a late-night reception (this is considered overtime work) and received an award, according to Oriental Today.

Mr. Guo, age 46, died "at work," according to a report. After it was revealed to the public that his death was by alcohol, the government said it would take back the award. But I actually feel very bad for him, because drinking is part of a government job, and he did die for his work.

If you refuse to drink to "bottoms empty" at a traditional-style reception in China, you are deemed disrespectful to the host or the person who toasts you. Mr. Guo and his family deserve something from the government, maybe not an award, but perhaps a change in the system?

Speaking of change, the local government had introduced an alcohol ban long ago. After Mr. Guo died, officials interpreted the ban to the questioning press: "the ban is only for lunch, not for dinner."

I guess I'd prefer the poems to drinking. But nothing is optional in the political world.

This year's International Home and Housewares Show in Chicago featured an unprecedented collection of eco-friendly products. I hope you can get a feel of the green trend from the fresh photos I took at the March 16-18 show. Read my story Green Movement is in full force at 08 show for more information.

Perf Go Green Inc. of New York touted itself as the first to mass-market 100 percent degradable trash bags to consumers. The green-tinted, low density polyethylene bags have a shelf life of two years and will break down completely in a landfill in 12-24 months.

Perf Go Green also offers a unique dispensing system that's stored in the bottom of a trash can and dispenses bags one after another.

Design Ideas Ltd. of Springfield, Ill., launched a line of bath products made of EcoGen plastic, a copolymer known as polyhydroxybutyrate valerate, or PHBV.

Dirt Devil, a brand owned by TTI Floor Care North America of Glenwillow, Ohio, unveiled the industry's first cordless vacuums to receive the U.S. government's Energy Star label: the Dirt Devil AccuCharge hand (featured in the photo provided by TTI) and stick vacuums.

Casabella Holdings LLC of Blauvelt, N.Y., launched a line of dish drains, cutlery trays and soap dishes made of PLA.

Bissel Homecare Inc. uses recycled plastic in the brush block and parts of the solution tank of this Little Green compact, multipurpose cleaner.

Iris USA Inc. of Pleasant Prairie, Wis. showcased a recycling organizer that is stackable.

Hong Kong firm A&T International Co. touted biodegradable tableware and bags with a variety of materials including PHBV, a mix of 60 percent PP and 40 percent starch and natural materials such as bamboo and sugar cane.

Eastman Chemical Co. showcased bottles made of Tritan-brand specialty copolyester, which the company touts as being free of BPA.

Base Brands of Atlanta introduced water bottles that are made from a styrene acrylonitrile copolymer and prominently labeled "BPA-free," since the product is not made of polycarbonate and does not contain bisphenol A. The company promotes the message that people can use these colorful and attractive bottles to bring beverages from home to work, instead of consuming bottled water from vending machines. The SAN bottles come in packs of five, with an easy-slide base for refrigerators.