Global Connections Edition
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Product Safety Article

Product Safety: Roles and Responsibilities

State Policies and Urban Industrial Growth

In 2007, China-related product safety issues dominated news headlines around the world when a number of Chinese exports were found to be contaminated, including tainted melamine-laced pet food, toxic toothpaste, unsafe tires, chemical-laden seafood, counterfeit pharmaceuticals and medicines, and millions of lead-painted toys. While Chinese media report problems involving substandard food, drugs and other goods almost every other day, the issue gained worldwide attention when pet food contaminated with melamine, all traced back to China, sickened or killed thousands of pets in United States. In the summer of 2007, Mattel, the world’s largest toy maker, which manufactures about 65% of its toys in China, issued a recall of nearly 20 million China-made toys, although about 17.4 million toys were actually recalled due to design flaws that had nothing to do with lead paint or Chinese manufacturers.[1] China has also become known as the world’s biggest supplier of counterfeit (both unauthorized and substandard) drugs,[2] which have led to hundreds of deaths around the world in 2006 alone.[3] Such safety concerns, and almost-routine product recalls have helped fuel anti-trade momentum in the U.S. and Europe.

Why are all these issues emerging now? Hasn’t America been importing from China for many years now?

Increased Demand for Goods: While America has been importing from China for many years now, and the U.S. has some of the highest standards for product safety, American consumers’ increased demand for cheap goods in recent years ($2 trillion worth of goods in 2006, for example[4]), and China’s willingness to provide said cheap products has put pressure on a regulatory and inspection system in both China and the U.S. that has not been able to keep pace with demand and supply.

Cutthroat Competition and Complex Supply Chains: Globalization has led to increasingly complex supply chains, which in turn have increased the potential for contamination or mishandling along the way. In a country where the market forces have been unleashed, China’s brand of fast and furious capitalism means that many factories and manufacturers will cut corners to make a quick buck or just to stay ahead of all the competitors, even if many of them are fly-by-night outfits not around long enough to be held accountable. Hence product ingredients can pass through several companies or stages along the supply chain without being checked, and the ultimate Chinese manufacturer, who may be fully licensed or have been doing business with their U.S. counterparts for many years, may not even know if ingredients are tainted or came from uncertified companies, some of which are owned by the Chinese government itself.

Impact of Technology: Technology has now allowed Americans who cannot afford their medicines to purchase cheaper alternatives from Canada and Mexico via the Internet. Unfortunately, because of the complex sourcing chains described above and the existence of thousands of business-to-business trading sites online, a perfectly legitimate seller’s products may unknowingly come from countries to whom China has sold drugs and medicines that have not passed the U.S.’s strict safety standards. Counterfeit or contaminated products from China can also easily pass through free trade zones, where product safety rules and regulations are lax to non-existent, on their way to sellers in Canada or England, who turn around and sell it to American users who think they are getting products from countries with strict product safety standards.[5]

Overwhelmed Regulatory Agencies: China’s cutthroat capitalism means that producers often seek out new products or develop new markets at a much faster pace than China’s regulatory agencies can keep up with.

  • For example, as the New York Times reported in an excellent exposé, pharmaceutical companies in China are regulated by the State Food and Drug Administration, while chemical companies making fertilizers and industrial solvents are regulated by other agencies.
  • Chemical companies that sell drug ingredients, then, fall into a regulatory black hole as it is unclear which agency has jurisdiction over their products. In 2006, at least 138 Panamanians died or were disabled after a Chinese chemical company sold the poisonous drug ingredient diethylene glycol that was mixed into cold medicine.[6]
  • On the American side, the Food and Drug Administration, understaffed and under-funded, has become overwhelmed by its many responsibilities.[7] In early 2008, it was discovered that the FDA did not inspect a Chinese facility that supplied an active ingredient in the blood thinner Heparin because the agency confused it with another already approved facility. The possibly tainted heparin has caused four deaths and hundreds of adverse reactions in the U.S.[8]

The American Response

Prioritize Product Safety: The U.S. government has naturally put pressure on the Chinese government to step up its regulatory mechanisms. At the end of 2007, the U.S. government was able to negotiate agreements with China that among other things, would eliminate the use of lead paint on toys exported to the U.S., and would also allow the U.S. access to production facilities to inspect the safety of food, feed, medical devices and drugs that U.S. imports from China.[9]

Product Recalls: American businesses affected by product safety issues, such as Mattel, recalled products; and while some American consumers were scared off Chinese-made toys, which in turn led to an increase in sales for American-made toys. Sales numbers posted at the end of the year, however, showed that after an initial scare and a lot of negative attention, American consumers continued to purchase Chinese-made goods in significant numbers, and sales of China-made toys to the United States actually increased in 2007 over the previous year.[10]

The Chinese Government’s Response

Stricter Inspections: After the pet food scandal, Vice Premier Wu Yi began a four-month “special battle” to improve the quality of goods and food safety by mobilizing hundreds of thousands of inspectors, and shutting down 47,000 illegal food factories and confiscating hundreds of tons of poisonous pesticides.[11]

The Ultimate Punishment: China also executed its former head of the State Food and Drug Administration, Zheng Xiaoyu in 2007 for accepting bribes to approve drugs, some of which turned out to be unsafe.[12]

Room for Improvement: Despite its agreements with the United States for stepped up inspections of products, Wu Yi has conceded that China has some way to go, and that given China’s size and nascent technical and management skills, it is unrealistic to expect China “to nurture good production and consumer habits in the space of a few months” or for China’s laws and scarce regulatory resources to be able to keep pace with its rapidly developing economy.[13]

Upgraded Health Ministry to oversee food and product safety: In March 2008, China’s State Food and Drug Administration was upgraded and put under the Ministry of Health, which is supposed to better coordinate food and drug safety management.[14]

U.S. Media Over-hype: At the same time, however, the Chinese government has also complained that the U.S. media has over hyped the product safety issue and caused damage to the image of Chinese products and China’s national reputation by scape-goating China, especially for product recalls that have nothing to do with China.

New Restrictions on U.S. Imports: Additionally, China has imposed new safety restrictions on imported food (beef, poultry and pork) and other products (such as medical equipment) from the U.S. that many in the U.S. see as a form of retaliation.

Who’s Responsible?

Manufacturers and Importers: While not denying responsibility for more stringent regulation and safety checks on their end, the Chinese government has carefully put the onus back on the U.S. government (for drugs and food) [15] and on U.S. manufacturers (for toys and other consumer products) by noting that U.S. retailers should visit their suppliers frequently and help them guarantee the sources of raw materials as there are too many factories in China and many companies still do not understand the concept of quality control.

Indeed, the U.S. Consumer Product Safety Commission[16] and the American Society for Quality[17] have both stated that companies that order and import consumer products are responsible for product safety and quality, a position shared by companies like Mattel, which acknowledged responsibility, and apologized in China for its recall of nearly 20 million toys in 2007.[18]

And yet, the prevailing behavior in America, fanned by none other than the 2008 candidates for President, is still that of blaming China for food and product safety issues, as both John McCain[19] and Barack Obama[20] have threatened to ban toy imports from China.

Eye to the Future

Experts agree that both the U.S. and China have work to do: the U.S. in increasing the capacity of federal consumer protection agencies, and China in expanding the powers and jurisdiction of their regulatory agencies. Although agreements have been signed that allow for greater information sharing, more sophisticated product tracking systems, and inspection of production facilities, the degree of success and efficacy will depend on having enough resources and quality personnel on both sides to carry out these reforms and safeguards. The U.S. Congress will likely increase the FDA’s budget, but whether the agency will be able to get what it needs to meet all its responsibilities is doubtful.

At the same time, while large American corporations have the resources to monitor their supply chains, smaller buyers seldom do. Given the sheer volume of goods imported a year, the nature of globalization and today’s complex supply chains, many of which pass through free trade zones around the world where regulations are often lax, U.S. consumers can expect that counterfeit or contaminated products and drugs will continue to make their way to the U.S.

1 Renae Merle and Ylan Q. Mui, “Mattel and China Differ on Apology,” Washington Post, September 22, 2007, http://www.washingtonpost.com/wp-dyn/content/article/2007/09/21/AR2007092100330.html (accessed 7/19/08).

2 Walt Bogdanich, “Chinese Chemicals Flow Unchecked onto World Drug Market,” New York Times, October 31, 2007, http://www.nytimes.com/2007/10/31/world/asia/31chemical.html?pagewanted=all (accessed 12/20/07).

1 Jake Hooker and Walt Bogdanich, “Tainted Drugs Linked to Maker of Abortion Pill,” New York Times, January 31, 2008, http://www.nytimes.com/2008/01/31/world/asia/31pharma.html (accessed 1/31/08).

4 “Protecting American Consumers Every Step of the Way: A strategic framework for continual improvement in import safety,” Interagency Working Group on Import Safety, Report to the President, September 10, 2007, http://www.importsafety.gov/report/report.pdf (accessed 7/19/08).

5 Walt Bogdanich, “Counterfeit Drugs’ Path Eased by Free Trade Zones,” New York Times, December 17, 2007, http://www.nytimes.com/2007/12/17/world/middleeast/17freezone.html?scp=1&sq=counterfeit%20drugs&st=nyt (accessed 12/17/07).

6 Bogdanich, “Chinese Chemicals Flow."

7 Gardiner Harris and Walt Bogdanich, “Drug Tied to China Had Contaminant, F.D.A. Says,” New York Times, March 6 2008, http://www.nytimes.com/2008/03/06/health/06heparin.html (accessed 3/14/08).

8 Marc Kaufman, “FDA Says It Approved The Wrong Drug Plant,” Washington Post, February 19, 2008, p.A1.

9 Steven R. Weisman, “China Agrees to Post U.S. Safety Officials in Its Food Factories,” New York Times, December 12, 2007, http://www.nytimes.com/2007/12/12/business/worldbusiness/12trade.html?scp=1&sq=china+agrees+to+post+u.s.+safety+officials+in+its+food+factories+&st=nyt (accessed 12/12/2007).

10 “China’s toy exports grow rapidly in 1st 10 months of 2007,” People’s Daily Online, Jauary 6, 2008, http://english.people.com.cn/90001/90776/90884/6333010.html (accessed 7/21/08).

11 Calum MacLeod, “China talks introduce world of import controls,” USA Today, December 11, 2007, http://www.usatoday.com/money/economy/trade/2007-12-11-china-toys_N.htm (accessed 12/12/07).

12 “Former SFDA Chief Executed for Corruption,” China Daily, July 10, 2007, http://www.chinadaily.net/china/2007-07/10/content_5424937.htm (accessed 7/8/08).

13 Ben Blanchard, “China warns product safety still a worry,” Reuters, January 16, 2008, http://www.reuters.com/article/worldNews/idUSPEK289020080116 (accessed 1/20/08).

14 “China to upgrade Health Ministry to better monitor food and drug safety,” Xinhua, March 11, 2008, http://news.xinhuanet.com/english/2008-03/11/content_7766320.htm (accessed 7/21/08).

15 Elaine Kurtenbach, “China SFDA: Buyers Must Vet Drug Safety,” ABC News, February 27, 2008, http://abcnews.go.com/International/WireStory?id=4351713&page=1 (accessed 3/1/08).

16 Alan G. Hassenfeld, “The Myths of China and Toys,” Forbes.com, Commentary, November 12, 2007, http://www.forbes.com/opinions/2007/11/09/toys-hasbro-china-oped-cx_agh_1112toys.html (accessed 12/17/08).

17 “Importers Share Responsibility for Unsafe Chinese Products,” Reuters, January 10, 2008, http://www.reuters.com/article/pressRelease/idUS180204+10-Jan-2008+BW20080110 (accessed 7/18/08).

18 “Mattel apologizes to China, pledging to take responsibility for defective toys,” Xinhua, September 21, 2007, http://www.china-embassy.org/eng/xw/t365455.htm (accessed 7/18/08).

19 Ken Fireman and Mark Drajem, “Obama, McCain Lambaste China Now, May Court It Later (Update I), Bloomberg, May 19, 2008, http://www.bloomberg.com/apps/news?pid=20601087&sid=aWdHFcnN6CBA&refer=home (accessed 7/21/08).

20 “Obama retreats from call for China toy-import ban,” China Daily, December 24, 2007, http://www.chinadaily.com.cn/bizchina/2007-12/24/content_6344146.htm (accessed 7/21/08).