Barbie, Don't Blame China

Poor Barbie is disconsolate as her dream house is emptied and her furniture recalled by Mattel for lead paint remediation. We hope that when she refurnishes she will do it with a bit more style and shop local. She will find it a bit more expensive, but perhaps it wouldn't hurt to go minimal and try living with less. And don't go blaming the Chinese for the required makeover; Professor Shih-Fen S. Chen of the Richard Ivey School of Business notes that:

The reality is that U.S. importers have failed to install a quality control system and reject any outsourced product that does not meet the benchmarks. We are not talking about a few random errors in production that escape the eyes of quality control managers, but about a colossal failure of the outsourcing firm that let 19 million pieces of unsafe toys slip into the marketplace.

He continues:

if we really need to find someone to blame, don't blame China for U.S. toy makers' failure to protect consumers. Let me explain why:

First, U.S. firms outsourcing products from China pocket most of the savings on production costs as profits. A recent study sponsored by the Alfred P. Sloan Foundation's Personal Computing Industry Center at the University of California Irvine found that it costs only $4 to assemble an iPod in China, using parts and components from South Korea, Japan, Taiwan, etc. Apple keeps $80 in the total price of $299. If subcontractors in China must split the blame for quality failure with Apple, their fair share should not exceed 5 per cent (i.e., $4 divided by $80).

Second, most buyers rely on product brands rather than country names in making their choice decision. They purchase a Chinese-made Barbie not because they value the country name, but because they trust the product brand. Thus, the liability for breaching consumer trust should be assigned to the party who brands the final product, regardless of its country of origin.

Third, U.S. manufacturers take full credit for the success of an outsourced product if their subcontractors happen to deliver high quality to consumers (as they do in most cases). Has Steve Job ever said that "a subcontractor in Taiwan makes my iPhone" or Phil Knight told anyone that "shoemakers in China assemble the Air Jordan line"? If not, is it acceptable that U.S. toy makers scapegoat a subcontractor for their failure in screening out unsafe products?

My answer is "no". The party who takes full credit for product success must bear full blame for product failure - it's as simple as that. ::Globe and Mail

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