Troubled Times for The Chinese Toy Industry


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Case Details:

Case Code : BENV013
Case Length : 18 Pages
Period : 2005-2007
Pub Date : 2008
Teaching Note :Not Available
Organization : -
Industry : Toy
Countries : China, USA

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"If this flood of dangerous products continues and retailers are forced to pull toy after toy from their shelves, China will become the Grinch that steals Christmas this year."1

- Richard J. Durbin, Democrat Senator from Illinois, commenting on the recalls of Made in China toys, in August 2007.

"This is the last warning. If there is an unsatisfactory report in October [2007] we will [impose] the next layer of measures. Among them is a ban on products."2

- Meglena Kuneva, the EU commissioner responsible for consumer protection, in response to recalls of Chinese toys.

"It's quite urgent that we re-construct the Chinese toy industry. Otherwise, we will not only lose the domestic market, but also the global market in the long term."3

- Shi Xiaoguang, president of the China Toy Association4, in 2002.

Introduction

On October 4, 2007, the Consumer Product Safety Commission (CPSC)5 in the US recalled more than half a million toys made in China as they contained dangerous levels of lead.

The CPSC announced that the recalled toys included 'Pirates of the Caribbean', 'Baby Einstein', and 'Totally Me! Funky Room Decor Set' decorating kits, imported and sold by Toys "R"Us Inc.6, and a variety of wooden toys imported and sold by KB Toys Inc.7 "A lot of what is being recalled is because it violates the law, not that there is an imminent health risk,"said CPSC spokeswoman Julie Vallese (Refer Exhibit I for more information on toy recalls in October 2007).

Troubled Times for The Chinese Toy Industry - Next Page>>

1] Louise Story, "Toy Makers Brace for a Chill in Sales,"www.nytimes.com, August 16, 2007.

2] Elitsa Vucheva, "EU could Ban Unsafe Chinese Products,"www.businessweek.com, September 14, 2007.

3] "Toying with the Future,"http://app1.chinadaily.com.cn, 2002.

4] The China Toy Association is an industry association, with Chinese toy companies as its members. It has four committees for each toy category - wooden toys, plush toys, plastic and mechanical toys, and prams.

5] The United States Consumer Product Safety Commission (CPSC) is an independent agency of the United States federal government. CPSC was created in 1972 through the Consumer Product Safety Act that was framed to protect the public from unreasonable risks of serious injury or death from more than 15,000 types of consumer products that come under the agency's jurisdiction. (Source: www.cpsc.org)

6] Toys R Us Inc., headquartered in New Jersey, USA, is one of the largest retailers of toys and baby products in the world. A public limited company between 1978 and 2005, Toys R Us was acquired by an investment group. As of 2007, it had around 1,500 stores, with 830 stores in the US.

7] Founded in 1922 by Kaufman brothers, KB Toys Inc. is a large mall-based retailer of toys. As of 2007, this privately-owned Massachusetts company operated around 600 stores in the US.

  

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