Made in China: Should You Worry?
Some of China's products might be subpar, but the government's theatrical abilities are top-notch. Consider this three-act performance: Last year, toxic toothpaste made in China killed dozens of people in Panama, causing worldwide anxiety about Chinese-made products. In May, the Chinese government convicted its former top food-and-drug regulator, Zheng Xiaoyu, of having taken thousands of dollars in bribes to approve untested products, including the toothpaste. Then, earlier this month, the government executed Zheng.
Hey, that gets my attention. The death penalty is certainly a decisive way to punish wayward bureaucrats. And that, no doubt, is the message China intends to export to its trading partners: The world's factory has a zero-tolerance policy toward fraud, bribery, and consumer abuse.
But does executing a criminal make Chinese products safer? Most of us probably need further convincing. In the past several months, major flaws in seafood, juice, pet food, toys, and tires from China have riled consumers around the world, forcing the Chinese government to act tough about lax quality. So should American consumers be worried about stuff that's made in China? Or is the Chinese government fixing the problems? To help figure it out, I called Marshall Meyer, a management professor and China expert at the University of Pennsylvania's Wharton School. Meyer has traveled extensively throughout China and consulted with several companies doing business there. Some of his thoughts:
Executing a government official for bribery—that seems pretty dramatic. Is that purely symbolic? Or something more?
Clearly, the central government is trying to send the signal that they're concerned. But the problem is, they may not have the means of regulating the economy the way the government does here. The central government shares authority with hundreds of provincial and local governments. There is no Chinese counterpart to the commerce clause of the U.S. Constitution, which reserves certain powers to the federal government. Policies made by the central government are subject to interpretation locally.
So executing Zheng was purely symbolic?
Given his high rank, it's an important piece of symbolism. But I don't know whether it will make dog food or cough syrup safer.
For years, the western impression of Chinese products was that the quality was poor. That impression has been improving over the years. Is this a big setback for the Chinese?
There are a lot of good Chinese firms, like Haier and Lenovo. However, some entrepreneurs still pursue what I call negative brand equity. They make inexpensive, low-quality goods and then change the label or shut the firm and open a new one. Several research studies suggest that the turnover of Chinese firms is extremely high. One study, if I recall correctly, found that fewer than 5 percent of firms survive 10 years or longer.
But we buy a lot of products from China these days that are pretty good, right?
Remember, most Chinese products that come here come from multinational corporations, like Motorola or Apple. They have their own quality standards. That Black & Decker power drill you get for Father's Day, if it blows up in your hand, well, Black & Decker has a lot to lose. So it's not going to blow up.
That suggests that brand-name products made in China by big companies are fine, but other products might not be?
The risks are probably greater with small companies. And more and more small Chinese companies are exporting. The small-company effect is exacerbated by the chen bao system—the contracting system—where Company A contracts with Company B that contracts with Company C that in turn contracts with Company D, leaving no one accountable.
So are there clear take-aways for American consumers? Things they should feel comfortable buying? And things they might want to stay away from?
It's hard to know what advice to give consumers. They should probably do what consumers do in China. One study showed that Chinese consumers are willing to spend more to buy goods from the local supermarket rather than the vendor on the corner. Buy brands you trust from retailers you trust.
There's always a concern about what's in a product. How do you know what the ingredients are? Are there small parts a kid could put in his mouth? This is one of the risks of the global economy. Consumers can't always chase these products back to their sources. It's really the responsibility of manufacturers and distributors to check up on their suppliers. They need to go there and see what they're doing.
You travel a lot in China. Do you worry about the food there?
I love the small, hole-in-the-wall restaurants in the neighborhoods of Beijing and Shanghai. I guess I take my chances.
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