Mattell

Integrative case 4:

Not a Toy Problem: How Chinese Toymakers Respond to Recalls

This case is about three Chinese toy making manufacturing companies who have responded differently in the face of toy recalls. China Central Television statistics in 2008 revealed that 75% of the toys in the world were made in China and approximately 10,000 factories in China export toys.

Chinese toymakers dominate the world market but they are vulnerable because they depend on their partners such as leading Western toy companies like Mattel for survival. They do not have their own established brands and instead produce toys or toy parts for their buyers such as Mattel.

In 2007, Chinese toymakers attracted attention with the large-scale toy recalls released by the Consumer Product Safety Commission (CPSC). As the number of Made-in-China toys has increased, so has the number of recall announcements over the years. The magnitude of the toy recalls in 2007 in the media resulted in a spike in online searches for “toy recalls” in Google and Baidu (China’s most popular search engine).

Western toy companies such as Mattel have pigeon holed suppliers as one homogeneous bloc of “Chinese toymakers”. However, Chinese toymakers are diverse and have each responded differently in the face of the toy recalls.

| Background | Breaches, consequences and responses | Strategy |

Lee Der | * Founded in 1993 in Foshan, Guangdong * Produced toys and parts for Mattel for over ten years. * The second largest toy manufacturer in Foshan. | * On August 2, 2007, Fisher-Price, a subsidiary of Mattel, reported the recall of 967 000 pieces of plastic toys made by Lee Der to CPSC. * They reportedly contained an excessive amount of lead in the paint and Lee Der’s name was revealed to the public under pressure. * Lee Der’s paint supplier Dongxing New Energy Limited supplied “fake paint”. * Mattel had requested its Chinese suppliers to use paint from its contract paint suppliers or test...