Mattel Apologizes to China

Discussion
Sep 24, 2007

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?

Please practice The RetailWire Golden Rule when submitting your comments.

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19 Comments on "Mattel Apologizes to China"


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Don Delzell
Guest
Don Delzell
14 years 7 months ago
As an ex-sourcing professional, I am concerned about the potential “balance of power” exposed in this apology. On the surface it appears appropriate to assign responsibility where it should be. The design flaw, as others have pointed out, is a uniquely distinct issue from the lead paint. We still don’t know where the “blame” lies for the lead paint, except that the buck stops with Mattel no matter why the lead paint was used. Of greater import is the implication that Mattel needs to placate an entire country. Since when do suppliers within a country as large and geographical diverse as China act as a single entity? When the government gets involved…always a looming danger in China. Could the Chinese government make life difficult for Mattel in retaliation for the loss of face produced by the negative PR? Clearly. And, this exposes serious flaws in the global sourcing structure of Mattel. No multinational organization should have concentrated its sources of supply such that it becomes subject to geo-political stress beyond its control. Portfolio management is… Read more »
Mark Lilien
Guest
14 years 7 months ago

Mattel needs better publicity skills. Some of the confusion is due to 2 completely different issues: lead paint versus magnetic toys. The first issue is a manufacturing error. The second is a design error. Needless to say, Mattel’s brand name received 2 black eyes instead of one. The speech in China, according to Mattel, was to apologize to Chinese consumers about the inappropriate magnetic design. Mattel is a $24 stock. Five years ago it was around $19. Its 5 year price chart shows a lot of volatility: continual up and down cycles of as much as 50% over the course of a year.

Gene Hoffman
Guest
Gene Hoffman
14 years 7 months ago

Marketers such as Mattel begin by loving their low-cost suppliers. As they grow larger and more successful, they judge them–and sometimes, for whatever reason, they forgive them. No new lessons learned, just lessons practiced.

Mark Burr
Guest
14 years 7 months ago
Not that I am defending Mattel, but those claiming that they didn’t apologize to their customers, please carefully read the quote taken from the article: “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.” Looking deeper into recent events in China with respect to food safety, the fate of those held accountable was permanent. That is to say, they weren’t just fired they were ‘eliminated’. There is a completely different cultural consequence in dealing with those that might be held accountable for something like this in China. It’s entirely possible that Mattel’s apology may have given some who might have been held accountable the opportunity to work, or in fact live, another day. Whether or not they have handled the entire incident well… Read more »
Kai Clarke
Guest
14 years 7 months ago

This is clearly a situation of folly between an organization and the political ramifications of interceding on a country’s exports to such a large level that it impacts the political economic environment. This apology was not from Mattel to China, but really from the USA to China, since there were many other issues that arose from this folly. Mattel is responsible for accepting these products without full systems and checks that were in-place to ensure that each item met their stringent product quality standards. This has nothing to do with China as a country, except for the ramifications that the U.S. government built upon this incident (or several of these). Mattel is responsible for these items, and should be held liable for them as part of our consumer guidelines. How this plays out over the next 6-12 months will determine its impact on Mattel, China and our relations. I suspect that it will have little impact 6 months from now.

Lee Peterson
Guest
14 years 7 months ago

A classic rule of thumb for buyers on both sides of the fence is “don’t put all your eggs in one basket,” but apparently, Mattel forgot (or ignored) that simple law and is paying the price, however embarrassing.

To me, the fault also lies in large part with the American consumer’s obsession with anything ‘cheap.’ Driving cost and deflation has been suppliers and retailers only tact for the past 15 years, eventually to all of our detriment.

Clearly, it’s time to get off the ‘crack’ of cheap goods and start back down the road towards quality…which brings up another forgotten rule: you get what you paid for.

Bernice Hurst
Guest
14 years 7 months ago

Mattel seems to be handling this whole thing in every conceivable bass ackwards way. While a mea culpa for the design flaw should have been a good, reasonable and commendable action, separating it as an issue from the lead-paint recall, whatever the company’s intentions, the two problems have certainly been merged into a single, badly handled one. It seems to have given their Chinese suppliers a way to save face and shift liability back to Mattel while not going any way towards assuring consumers that the company will be producing safely designed and produced toys in future.

Art Williams
Guest
Art Williams
14 years 7 months ago

Well at least there is enough blame to go around in this mess. Safety has never been an equal to profit until it threatens the very core of the business. I wonder how many times in the meetings in the past where there was so much pleasure expressed about how cheaply goods could be manufactured for overseas that the words “product safety” came up? There is little doubt that it is happening today with all these shocking announcements and recalls. And as has been mentioned, the order of the day is damage control and salvaging reputations. Marketing is most likely the main department involved in righting the ship. Quality control and safety should be playing a larger role and hopefully will in the future to prevent reoccurrences. A lot of lessons to be learned here; I hope we are paying attention.

Ryan Mathews
Guest
14 years 7 months ago

Mattel’s “largest partners” are its customers. If they wanted to apologize to somebody that should have been the audience. As it stands, they have placed supply chain relationships over market credibility–a poor choice at best.

Liz Crawford
Guest
14 years 7 months ago

Yikes! Since when does a brand apologize to its supplier? I find this a scary development, politically speaking. Feels like the tail wagging the dog. Through sheer size, it is the dog, and maybe that’s the real point.

When I was in college, I took Mandarin because I believed that this will be the century of China. Maybe I should dust off my books.

Paula Rosenblum
Guest
14 years 7 months ago

Ryan and Liz have it exactly right. I am mortified by this whole affair.

The first apology should have been to customers, and in a world that isn’t turned upside down, it should have come both from Mattell AND its supplier (the factory owner really didn’t have to hang himself, an apology would have sufficed). The whole ecosystem was culpable.

I worry about the U.S. more often than I probably should (life is short, after all). Where we once were a nation of innovators, we’ve become a nation of consumers. We still create ideas, but our innovations are perfected and mass produced by others and we buy them back, because we can’t produce them as cheaply. There is something very very wrong with that picture.

One wishes that our government would consider consumer product manufacturing as strategic as weapons production, and incentivize brand managers to actually MAKE things here, and make them WELL.

Instead, we go for low cost above all, and our country suffers for it.

Eric Weber
Guest
Eric Weber
14 years 7 months ago
As a former Mattel employee, I can tell you that this kind of honesty with China is something that is coming out of Bob Eckert’s sense of integrity, not Mattel’s code of honor (which is referenced as two hands crossed over the chest with fingers pointing elsewhere). Yes, this is a good move on Mattel’s part. Bob and his group should be proud of this. The Chinese however are still guilty of poor quality control. Their food chain integrity is sloppy at best and is fraught with expectation differences like the ones that beset the toy industry at the beginning of its transition to China. On this point, I think the Chinese can fix it, but there is nothing like a good scare to wreak havoc with your quality impression for decades. Look at Jack in the Box–a couple of e-coli outbreaks and their quality impression was in the dumps for decades. Don’t look for finished goods that are edible to have a quality impression if they are “made in China” for many years to… Read more »
Sh Luo
Guest
Sh Luo
14 years 7 months ago
Mattel’s apology seems to be delivered to China, the country, rather than its suppliers. This is understandable considering that the recalls have now been widely perceived as a “Made in China” issue, thus the “damage to China’s image” issue, rather than a supply chain problem of Mattel. I bet that Mattel did not foresee the amount of and the way of the attention it would get from these recalls. There are numerous suppliers of Mattel–some are long term suppliers–which have been discontinued because of the recall, which is a normal business practice. This recall has been blown out of proportion in the media. Mattel would need to create wonder to come out of this mess as it is now in an awkward position politically in both countries as well as being boxed (partially by themselves) into a bad position in the marketplace. I have been at both sides, a supplier and a buyer. The European buyers require many products to meet RoHS standard which restrict lead content among others hazardous materials. You typically pay $0.5-3/each… Read more »
Li McClelland
Guest
Li McClelland
14 years 7 months ago

I’m just guessing here but probably this whole “apology” thing didn’t come out in the press quite the way Mattel had planned. The headlines and pictures over the weekend were just plain weird and somehow I don’t think the whole thing lifted the confidence of likely consumers of Mattel’s products. Let’s see here…we’ve got lead paint in China manufacturing plants, admitted design flaws from Mattel corporate, and no quality control over either. Yes, let me run right out and buy Junior a new Mattel toy!

Jerry Gelsomino
Guest
14 years 7 months ago

I believe each of the commentaries reviewed previously gave some very valid points and raised questions that Mattel should have asked…or did they? I have to think that there is a much deeper story not made public here. Unless Mattel really didn’t think through what they we doing, they put their company and their stockholders into a lot of trouble.

Let’s first confirm that while the toys were unsafe by U.S. standards, did anyone get hurt by them? Who is to gain by any of the supposedly millions of dollars worth of lawsuits which are surely to come? At the same time, what about the ‘Made in China’ defamation angle if there really is any blame to be placed on the country’s manufacturers.

Is this another case where the media and even ourselves have more of a punishment hungry interest in finding and prosecuting the culprit rather than fixing the problem so it doesn’t happen again? The greatest sadness is that someone lost their life over this incident.

Camille P. Schuster, Ph.D.
Guest
14 years 7 months ago
Mattel has made it very clear that they are not focused on their end consumers or their own manufacturing processes but rather on the supply chain and publicity. First, Mattel’s first priority should be delivering safe and useful products to its consumers. Second, Mattel has responsibility for any manufacturing process it runs and/or outsources to provide those safe and useful products. Third, Mattel needs to understand cultural differences. In the U.S., signing a contract means we know who will do what with what consequences. That assumption is not widely accepted or practiced in China. A more typical assumption in China is that signing a contract means we want to do business with you and will begin negotiation. How do you manage a contract under those assumptions? You need to be present; you need to see what is going on in the manufacturing facilities; you need to be responsible for what is going on in those facilities. If you don’t provide the resources to manage the manufacturing facilities and processes, it is caveat emptor. What happened… Read more »
Dick Seesel
Guest
14 years 7 months ago

Because the two incidents were reported here essentially as one story, they were widely perceived to be a negative reflection on China’s quality control as well as Mattel’s. The original issue (the lead paint recall) led to the suicide of one of the factory officials involved. To use a cliche about Chinese factories and officials wanting to “save face,” the statement by Mattel allows them to do so…to some extent.

There is still a widespread perception in the U.S. (sometimes justified, sometimes not) that goods sourced in China are not of consistent quality. Mattel rightfully lays some of the blame for the recalls at its own doorstep, at some risk to its own brand credibility.

Craig Sundstrom
Guest
14 years 7 months ago

Mattel tells the public one thing, Congress another, and China yet one more: what’s the point of “saving face” when you have more than one?

Suffice it to say, this latest turn will do more harm for Mattel than good for China: there is indeed a “perception” problem with regard to (the quality of) Chinese goods, and whatever the specifics of this case–and whatever the merits of that perception–it will remain.

Odonna Mathews
Guest
Odonna Mathews
14 years 7 months ago

This apology seems a little late and probably won’t affect the negative publicity of toys made in China by American consumers. Better standards and regular testing are essential for toy manufacturers, now more than ever.

The holiday season is just around the corner and it leaves consumers wondering what to buy.

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