By Tom Ryan
On Friday, Mattel Inc. made a public apology to China for damaging the country's reputation stemming from a spate of toy recalls over the summer.
The surprising move - which opens up Mattel to numerous lawsuits around the recalls - was seen by some as an extraordinary attempt to placate its biggest supplier, China, where it manufactures 65 percent of its toys.
In its apology, Mattel said its own "design flaw" was responsible for the biggest recall by far, involving around 18 million playsets studded with magnets that could break off and be swallowed by children. The company had been claiming the recalls largely involved excessive lead paint found in Chinese-made toys. As recently as last week, Mattel CEO Robert Eckert told Congress that the company's "standards were ignored, and our rules were broken" at Chinese plants, according to the Wall Street Journal.
On Friday, Thomas Debrowski, Mattel's executive vice president for world-wide operations, met China's product safety chief. After listening to criticism of Mattel's actions, he delivered a prepared apology.
"Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Mr. Debrowski said. "It's important for everyone to understand that the vast majority of those products that we recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in Chinese manufacturers."
Chinese officials, according to the Journal, have ratcheted up criticism recently of Mattel and U.S. regulators, believing they are putting too much blame on China in the recent recalls of toys and other Chinese-made products. Within the top levels of China's government, concern is growing that significant damage has been done to the "Made in China" label.
In a statement issued later on Friday in the U.S., Mattel sought to play down the significance of its statements in China. Without giving details, it said some reports "mischaracterized" Friday's meeting. The company said it "apologized to the Chinese today just as it has wherever its toys are sold."
Mattel's stark admission surprised M. Eric Johnson, a professor at Dartmouth's Tuck School of Business who conducts research on Chinese factories and has published studies about Mattel's manufacturing operations. "This is a first," Mr. Johnson told the Journal. He called the apology a "novel policy move" designed to avoid "potential friction."
Dara O'Rourke, an associate professor of labor and environmental policy at the University of California, Berkeley, told the New York Times that Mattel shouldn't have lumped the magnetic recall in with the lead-paint ones, and felt the company has been more focused on public relations rather than fixing its problems.
Management experts said that Mattel is in a tight position with the messages that company executives have to deliver to keep its partners happy.
"They have relationships with suppliers, they have relationships with customers, they have relationships with governments and with investors," said Steven D. Eppinger, the interim dean and a professor at the Sloan School of Management at the Massachusetts Institute of Technology. "But they cannot give them different messages."
Mr. Eppinger told the Times that it is more difficult maintaining good relationships with vendors abroad, and that communications can be misunderstood more easily.
Discussion Questions: What do you think drove Mattel's public apology to China? If it was done to avoid "potential friction" with its largest partner, was that the right move? What are some lessons learned from the incident in handling consumer concerns around recalls and working with China?