KEY POINTS:
Children's favourites Big Bird and Elmo feature large in the nightmares of grown-ups in southern China's booming industrial zones these days.
The biggest toy company in the world, Mattel, had recalled millions of made-in-China toys because of potentially hazardous magnets, just two weeks after it recalled 1.5 million toys over fears about lead paint.
The recalls have hit Mattel's share price and prompted fears about consumer safety. It also has people asking big questions: does this scandal spell the end for the "Made in China" brand?
Not likely, as long as Chinese goods remain competitive on price. But it does mean it could become more difficult to assign contracts based on price alone and increased watchdog attention means it will be harder to turn a blind eye to safety.
Consumers have also become increasingly alert to the Made in China tag. The recalls and international attention increases pressure on Western companies to behave ethically when assigning purchasing contracts to companies, and making sure they are not forcing companies to produce on wafer-thin margins, or even at a loss. And Western companies will be expected to do more to inform Chinese factory owners what safety standards really entail.
"There is so much pressure on manufacturers to keep costs down," said the head of one European company involved in outsourcing in southern China. "How is a guy in a small town in Guangzhou supposed to know about quality directives in the United States or new legislation from the European Union - that's the Western company's responsibility and they are pushing it all back here."
About 80 per cent of the world's toys are made in China, and most of them come from Guangdong province, just over the border from Hong Kong.
Alarm bells started ringing at the factories near Shenzhen and Dongguan, where Big Bird and Elmo come from.
It's not just toys - nearly half of all finished industrial goods in the world come from China and the country has been reeling from the impact of scandals involving tainted pet food, toothpaste, tyres, medicine and fish.
Consumers in the US polled this month said they were extremely wary of products made in China.
Driving through the industrial areas of southern China, where you can travel for hours past mile after mile of factory, it's hard to imagine the machines ever falling silent.
The key to its success is that it is a cheap place to produce, with lots of willing hands and cheap materials.
In effect, China has become too cheap, and something had to give. In many cases, the first sacrifice is a healthy working environment for the employees, but sacrificing safety standards is not long in following.
Mattel has withdrawn 18 million magnetic toys, including two million in Britain and Ireland, days after it pulled one million plastic Fisher-Price pre-school toys because of lead paint.
In June RC2 recalled about 1.5 million Chinese-made Thomas the Tank Engine toys because they, too, contained lead-based paint.
While attitudes are becoming more progressive as capitalist mores start to affect production methods, there is still a strong sense of "cha bu duo", or "near enough, that'll do" - which means many inferior products are shipped before they are ready.
But Western companies have also come in for criticism.
"Importers have got to have responsibility along the whole supply chain. Purchasing people are coming up with ridiculous cost demands," said a local businessman.
When contracts are being given out in southern China, they are often decided by e-auctions - sellers compete to gain business and the aim is to drive prices downwards.
It is only afterwards that they do their sums and realise they are operating for less than cost price.
After the first recall, Chinese officials temporarily banned Lee Der Industrial Company from exporting. The co-owner hanged himself.
"A man has committed suicide over this. There's no way he's 100 per cent guilty and there are hundreds more like him," said the entrepreneur.
But the picture is not all grim. Many foreign-owned factories in southern China have strict quality control measures. And the central Government is aware of how these product recalls are undermining confidence in exports. This month it allocated ( £500 million ($1400 million) to improving food and drug safety.
Chinese goods recalled
PET FOOD
At least 16 cats and dogs died, and more than 100 pet food brands recalled products in North America in March, after Chinese suppliers were discovered to have used the toxic chemical melamine in pet food wheat gluten and rice protein.
TOOTHPASTE, COUGH SYRUP
Two brands of Chinese toothpaste were banned in the Dominican Republic in May because of fears that they contained the lethal chemical diethylene glycol, held responsible for mass poisoning deaths in Panama in May 2006.
TYRES
As many as 450,000 tyres made by China's second-largest tyre maker, Hangzhou Zhongce Rubber, were recalled in the US in late June.
TOYS
The world's largest toymaker, Mattel, recalled more than 18 million toys made in China in mid-August and 1.5 million toys two weeks earlier.
- Independent
