While a recent rash of Chinese-made-product recalls has toy manufacturers in China wondering if their exports will drop, some industry watchers predict the scandals will not do much damage.
Hong Kong's Trade Development Council said it is concerned local toy makers could take a hit on exports in the second half of the year. And companies such as Hong Kong-based Playmates Holdings Ltd., maker of Teenage Mutant Ninja Turtles action figures, told local papers they are tightening quality control standards to avoid the kind of problems that have plagued Mattel.
But consultants and experts do not expect any decline in China's role as the world's toy workshop. They say the country is too entrenched in the global supply chain, and other low-cost potential competitors like Vietnam and India just don't have the infrastructure to be viable alternatives.
``I personally think this is just a ripple,'' said Peter Dean, a professor at Hong Kong Polytechnic University. Dean headed design and development in Asia for U.S.-based rotational molder Little Tikes Co. for two years in the late 1990s. ``It's very hard nowadays to buy anything that isn't from China, and China knows it.''
Still, it's incumbent upon toy-brand owners to take responsibility for testing products, he said. For example, when Little Tikes' suppliers would send him certificates saying their paint was lead-free, he didn't accept it.
``It's the supplier saying, `Trust me,' '' Dean said. He said Little Tikes would respond, ```No, no, this is an infant toy. It'll get sucked on, so we're testing it to the nth degree.' There are checks and balances and there are very systematic ways of getting toys into production.''
David Crossley, a former executive in China sourcing, toolmaking and production with toy makers Safety 1st and Hasbro, said he expects toy companies will tighten quality control standards.
He said that will work best if those brand owners assume direct responsibility for stepped-up testing and not expect factories to shoulder all the new responsibilities.
``I think that is what should happen ... but what I'm afraid of is, the money people in [the brand owners' companies will] wind up putting all the pressure on the factories to do that,'' said Crossley, who is now executive director of Hong Kong-based consumer product development consulting firm Pacific Providence Ltd. ``If it goes to the factories, it's still a conflict of interest. The factory is making the product and they are responsible for policing themselves.''
China's government also has announced improved inspections on toy exports from Guangdong Province, where most of the recalled toys came from.
Both Crossley and Dean argue it's easy, and overly simplistic, to say the problem lies only with Chinese manufacturers cutting corners, such as when a Mattel supplier in China apparently secretly switched to a lead-based paint.
``All things lead to Wal-Mart'' and the larger retail environment of constant cost cutting, Crossley said. Pressures from retailers to reduce costs have intensified, even as prices for raw materials like plastic and wages for Chinese workers have shot up, he said.
``So many factory owners I know are really struggling,'' Crossley said. The big retail chains are ``going to the factory directly and beating them up, and nobody is making any money.''
Both said they believe China's overall product safety record is no worse than other countries, although it can be quite difficult to make comparisons beyond anecdotes.
``I think China is actually one of the safest places to make toys,'' Crossley said. ``It's been my experience in product development that going into a new factory, the basic tenant of the factory is they want to do a good job.''
Dean said one potential pitfall can stem from foreign brand-owning firms ceding more and more responsibility to their subcontractors, and stepping farther back from manufacturing.
Those suppliers over time quite naturally move up the supply chain, from making molds to doing mold design, and later to building their own testing labs, for example, he said.
``They made the U.S. companies completely reliant on them,'' Dean said.
A Hong Kong government official said China makes about 80 percent of the world's toys, and while orders for this year's holiday season long have been in place, problems could start to show up next year, if there are going to be any.
Although lead in toys from China has figured prominently in several recalls, Ngai Wing-Chit, deputy director of Hong Kong's Trade and Industry Department, said some of the recalls have been over design issues, not problems with Chinese manufacturing.
He pointed to one round of Mattel recalls of more than 2.25 million toys. About 2 million of those toys were recalled because of the risk of children swallowing detachable magnets. That reflects problems in toy design - decisions made by brand owners in the United States and elsewhere - and does not reflect problems in the manufacturing supply chain in China, he said.
Still, he said the ultimate impact on local manufacturers will depend on what consumers in the United States and elsewhere do, which at this point is tough to predict.
``It's very difficult to speculate how the general U.S. consumer will react,'' he said.