Mattel’s Chinese Sourcing Crisis of 2007
Chinese Sourcing Crisis of 2007 Regarding to this case study there are three parts involved, which are the Mattel Company and the Chinese manufacturer, the regulation party of Chinese authority and the governments of America and China. To each part it relates to one of the issues that involve in this case study. The first issue that was found in this case is the reputation crisis of Mattel worldwide and its sourcing failure. The failure of their partner of using over level lead paint is the starting point of series of recall.
It leads to the reputation crisis of Mattel product, thousands of parents are concerning about the safety of the toy their children are playing, lawsuit are made to against the failure of Mattel. Mattel is the largest toy company in the world, and it has been practicing the outsourcing policy from China for decades due to the cheap cost of labor and intensive production there. Mattel and its Chinese suppliers had maintained a partnership over decade. Due to the trust toward to the Chinese partner, Mattel has lost its regulation to the Chinese supplier.
Mattel’s Chinese Sourcing Crisis of 2007 Essay Example
However due to the increasing cost of the labor and material of production, the manufacturer has no choice but to switch to a lower cost material to replace to maintain their profit. Rather to blame the evil mind of the manufacturer in China, the rising price is also one of the key factor which drive them to lost their ethics after so many years of cooperation with Mattel. The second issue that involved in this case it the Chinese government failure of regulation Due to the failure of Mattel in China, it caused not only the crisis of Mattel Company but also the product made in China.
Zheng Xiao Yu, the head of Chinese State Authority who is responsible to ensure of the safety of Food and Drug was found of taking bribes to approve inferior products. The transparence of government censorship is obviously needs to be improved. In a result, People are less trust about China product and the reputation is getting worse. There are likely more strict trade restrictions or barriers toward China Products when they want to enter into foreign markets. Beside the political purpose behind it to be blame, the failure of regulation by the Chinese authority is also a big reason why the crisis may happen.
The third issue is that the Trust crisis of Product made in China, and its political plot behind the screen. Regarding to the second recall, the majority of the 17. 4 million toys were due to the failure of the American toys’ designer rather than Chinese manufacturer. However the truth seems to be covered by the western media and more blame was given to the china made product, which cause the discrimination about Chinese product. A survey of consumers in UK found that around 37% of the audiences lose their trust over Chinese product.
There are rising anxieties over Chinese product. This can be explained by the increasing trade deficit of American toward their trade with China, the rapid increasing Chinese economy has cause the panic of American government. Due to large number of American companies move their production to China in order to seek a lower cost, huge amount of worker domestic lose their job opportunities, and cause great social instability. This is the problem the American government has to solve. Therefore, beside the problem it can be view, we can say it has political purpose at the back.
Overall in this case study, the failure of Chinese manufacture industry is a great lesson for all the parties. For the manufacturer in China, in order to survive in the increasing competition environment, the cost advantage is not the only way to dominate the market, but quality does too. For the Chinese authority of regulation, their failures of taking their responsibility to ensure the safety of product made in china will cause China lose the cost advantages. For the American government, shift the crisis to another country it is a way to solve its own problem.