This year has been especially brutal to the reputation of China as a reliable manufacturer of goods heretofore produced in the United States and Europe. It seems like hardly a week goes by without news reports that some product coming out of China has been discovered to pose a danger to the health of U.S. consumers and their pets.
Whether it’s our pets being poisoned by Chinese-produced pet food, or our kids playing with toys coated with lead-based paint, or brushing our teeth with antifreeze-tainted toothpaste, or taking Chinese-produced pharmaceuticals, where the ingredients label and the actual contents don’t always match, the “Made in China” brand is taking a huge hit in the eyes of the American consumer.
Obviously, the relative costs associated with manufacturing a product in China makes it an attractive alternative for cost-conscious U.S. companies constantly looking for ways to remain globally competitive. For the past two decades, the Chinese manufacturing economy has steadily climbed the sophistication ladder, maturing from simple “Third World,” labor-intensive production to relatively high-tech production applications.
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At some point, this has to become a site location issue, with companies opting to pick other low-cost overseas locations in lieu of China for their future offshore manufacturing operations.
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All along the way, the Chinese have been able to maintain a reputation for delivering quality products at favorable prices. As a result, U.S. companies have steadily increased the volume, as well as the value, of production activity outsourced to China. Few observers felt that this trend would do anything but continue to increase steadily during the next few decades.
That is, until this year when our kids started getting sick from toys covered with lead-based paint. Lead paint, for crying out loud! Didn’t we quit using that on children’s products about three or four decades ago? And now even brushing our teeth has become as risky as bungee jumping.
Clearly, China has a consumer product safety issue it needs to address, and urgently. That goes without saying. But this is not just a Chinese problem. These are products that, while produced on the Asian mainland, are sold in the United States under the brands of U.S. companies.
Will American consumers, trained during the past few decades to at least look at the content labels of products, glance at the “Made in China” label and simply put the product back on the shelf, choosing a competitor’s product instead? Will the China brand itself become the kiss of death, particularly as long as the stream of product contamination reports continues to flow unabated?
It’s not very likely that consumers will grant these companies a “China Mulligan,” and not hold them accountable for defective products that are sold under their label but produced elsewhere. Rather, consumers will take their ire out on the familiar U.S. or European company under whose brand the dangerous or defective product is sold.
At some point, this has to become a site location issue, with companies opting to pick other low-cost overseas locations in lieu of China for their future offshore manufacturing operations. Sure, a few of these plants might come back to the United States, but these will be few and far between. Remember, they went offshore for a reason.
The cynical amongst us might suggest that the solution is to only sell overseas-made products in the country in which they are produced. That way, U.S. companies will be able to maintain their market access, while keeping the quality control problems safely offshore, out of sight and out of mind.
However, all that will do is cover up the problem, not fix it. The Chinese have to find a way to reassure U.S. consumers about the safety of products, and do it quickly and with great fanfare. Otherwise, U.S. manufacturers will have no choice but to move China down in the pecking order for future offshore production sites.
