Barbie doll’s cost rose little since ‘59

While Mattel has become the poster child of Chinese manufacturing gone wrong, its rivals should be scrambling to avoid being caught in a similar spot. That doesn’t mean just keeping better tabs on the manufacturers that they have direct contact with, but looking at every vendor, the vendor’s vendor, and so on.

“The transparency at the back end of these operations is hazy,” said Eric Johnson, professor of operations management at Dartmouth’s Tuck School of Business who has studied Chinese manufacturing. “Each layer becomes harder to manage and control.”

He sees how the situation at Mattel — and probably plenty of others — could have played out. With everyone up and down the supply chain so pressed to cut costs, factories that used to rely on brand-name paint found cheaper no-name options from local suppliers. And as those suppliers continually race to offer the cheapest alternative, lead paint lands on toys.

Toy makers have to figure out how to bring the standards and ethics of their Chinese partners up to acceptable levels, or threaten to take their business elsewhere if changes aren’t made.