Unsafe at Any Speed

“Unsafe at Any Speed

The downside of China’s manufacturing boom: deadly goods wreaking havoc at home and abroad…

“A good system for guaranteeing quality control simply doesn’t exist in China,” says Wang [a Chinese consumer watchdog and writer], who’s been on the consumer-rights warpath for more than a decade. “Even confidential informants who report to authorities about someone selling fraudulent goods can wind up dead, under suspicious circumstances.”…

…just a few years ago, pundits and the global press were marveling at how quickly China had come on as a major manufacturing export power able, or so the thinking went, to build just about anything fast, cheap and well.

Now the true picture is emerging, and it isn’t pretty. Far from the disciplined and tightly controlled economy China was thought to have, the ongoing scandals have revealed an often chaotic system with lax standards, where the government’s economic authority has been weakened by rapid reforms. This sorry state is not unprecedented—other economies, such as South Korea’s and Japan’s, experienced similar growing pains decades ago. The difference, and the danger, is one of scale, since Chinese goods now dominate the world in so many sectors. Unless Beijing can improve its image fast and turn “Made in China” into a prestigious—or at least reliable—brand, consumers will remain at risk and the country’s export-driven economic miracle could face serious trouble.

China today resembles nothing so much as the United States a century ago, when robber barons, gangsterism and raw capitalism held sway. Now as then, powerful vested interests are profiting from murky regulations, shoddy enforcement, rampant corruption and a lack of consumer awareness. In the United States during the early 20th century, public outrage over bogus drugs and contaminated foodstuffs, fueled by graphic accounts such as Upton Sinclair’s “The Jungle,” finally prompted passage of the landmark Pure Food and Drug Act. China needs a similar revolution today if it is to protect its competitiveness and its consumers.

The problem is especially pressing at home. Bad as the export scandals have been, conditions are even worse inside China…

Three decades ago, all of China’s big manufacturers were state-owned enterprises, and the government could guarantee quality control. Now, however, many manufacturing companies, including formerly state-owned enterprises, have slipped into the loosely regulated private sector. These big businesses often get preferential treatment from local officials who are supposed to monitor them. And companies commonly bribe local police forces, even paying cops’ individual salaries. Then there’s the problem of regulations themselves. Experts say China should adopt an EU-style Basic Food Law and streamline its overlapping rules and jurisdictions. For the time being, different agencies still issue and follow different guidelines/

 

China also lacks a system for properly recording quality complaints, which makes it easy for authorities to later deny knowledge of a transgression. And according to Zhang Bing of the consulting firm AT Kearney, China has little means for tracking defective goods back to the source after they are distributed.

As a result of such gaps, China’s many lapses are undermining the country’s reputation as a juggernaut that will soon compete head-to-head with the likes of Germany and Japan in the most sophisticated sectors of industrial manufacturing. China’s high-end exports are more comparable with those of South Korea and Taiwan, says Oded Shenkar, a professor at Ohio State University’s Fisher College of Business. In other words, they rank somewhere between Mexico’s and Japan’s. And the Chinese government must figure out how to improve quality if it hopes to keep the economy humming. The recent U.S. recall of defective Chinese-made car tires suggests more such discoveries may be forthcoming, which would further tarnish mainland brands and dent their overseas ambitions. For example, the Chinese manufacturer Chery Automobile, in cooperation with Chrysler, plans to start exporting small and subcompact vehicles to the United States in less than a year. But a scandal there could prove crippling. Other Chinese automakers, such as Geely, have already postponed plans to export to the West because ensuring safety and performance standards has proved so difficult. The Chinese-made Landwind SUV recently received the worst crash rating a German auto club had awarded in two decades.

The real problem may be that some parts of the Chinese bureaucracy have become so used to quality problems at home that they are waking up too slowly to the damage these lapses do to their reputation in Europe, the United States and Japan. The mind-set of the demanding consumer society has not yet taken hold. When U.S. officials tried to raise the product-safety issue during a recent session of the Sino-U.S. strategic dialogue, held in Washington, D.C., in late June, Chinese delegates seemed caught flat-footed and asked to defer discussion until the next round….

This is worrisome, since China is already so big and globalized. The mainland’s mushrooming road system, for example, makes it easier for Chinese eels and wheels to travel from East to West. “All of those farmers at the end of all those brand-new highways are suddenly connected to the rest of China—which is now connected to all of us,” says Drew Thompson, China studies director at the Nixon Center in Washington, D.C. “But getting all those farmers up to international standards is a Herculean task.” To accomplish it will require a clear-eyed recognition of the problem, not a stifling of Chinese critics following in the footsteps of Upton Sinclair.”

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