- The Washington Times - Sunday, September 16, 2007

ANALYSIS/OPINION:

Toys, toothpaste and pet foods are only a small part of the U.S.-China trade. But the angry public reaction to the sale of contaminated products demands priority attention from both nations.

Small issues can become major if not resolved quickly. In this case, the problem involves home and family. For those who argue for protectionism, China trade could be an emotional issue in what likely will be a bitter election year. If little is done, the problem can change U.S.-China relations.

Fortunately, the public uproar appears to have gained the attention of both countries.

With the growth of a global economy, both nations have focused on profits and volume, outsourcing and trade deficits. But little attention has been given to quality control of inexpensive products. Even in the United States, we have had many contaminated foods, and many of the companies under question in China have at least part American ownership. Multinational companies are big in China.

The current controversy involves China, but in the future as the United States and Europe import more products from countries where manufacturing costs are cheap, quality control will become a world issue. Quality could become a problem with goods from Indonesia, the Philippines, Thailand, Vietnam, India and other countries widening their scope of manufacturing.

Quality control has not been a big problem with high-tech products or other specifically engineered products where demands and precision guidelines are carefully designed and monitored. Lack of quality controls comes from cheaper products for highly competitive U.S. retailers and distributors.

China’s culture and history is far different from that of the United States and Europe. American tourists tend to visit sophisticated cities such as Beijing and Shanghai and rarely gain insight into the vast rural area of the country where living standards, pollution and corruption are bigger problems.

Ronnie Chan, a prominent business leader in both Hong Kong and the Chinese Mainland cities, notes: “The country only began to practically move out of communism in 1979. Before that, China was so ‘left’ that it made Khrushchev look like Reagan or Brezhnev like Margaret Thatcher. The economy for the last decade has been growing very fast and social changes are numerous, but the question is: Do the Chinese have time to take care of food safety, let alone lead poisoning? Most Chinese officials say there are tons of much bigger and more urgent issues to tackle.”

Culture makes a difference. Americans demand the best, Chinese often settle for less.

Mr. Chan believes the West underestimates the caliber of top Chinese leaders, “but they operate under a set of constraints considerably different from those in the West. That is because of China’s own cultural, political and societal past. First and foremost, top leaders must keep the economy growing.”

Mr. Chan add: “Dealing with such problems as contamination is advantageous to if not necessary for China in every direction. Relying on the market alone will not solve the issues; strong actions on the part of the government are the only way out.”

Baizhu Chen, a professor at the Marshall School of Business at the University of Southern California, says that when the Chinese government moves, it often takes strong action. Recently, the head of the Chinese Food and Drug Administration was convicted of corruption in dealing with pharmaceutical companies and was promptly executed.

Mr. Chen notes that a major standard for promoting mayors and other political leaders has been how much their region’s economy has grown. The result has been lax attention to the environment. Mr. Chen says mayors recently also have been challenged to cut energy usage, a problem involving economics and the environment. He adds that if China embarks on a new program of quality control, it would have a shortage of trained manpower.

He observes that with China’s increased demand for private housing, cheap lead-based paint is commonly used. New tenants usually wait six months for the paint to dry before moving in, he says.

The USC professor comments that transparency is a major problem in China. He recalls that a few years ago perhaps one-third of Shanghai’s residents were stricken with hepatitis caused by infected clams. “The government never gave out any real figures of the epidemic,” he says.

China also has become a major producer of pharmaceutical products. For these, quality control is essential. China is the world’s largest producer of vitamin C products, and recently discovered polluted water was used in manufacturing. That problem was resolved, but the price quadrupled for all affected Vitamin C.

Researcher Josh Newell of Los Angeles has been monitoring where the wood comes from which is used in furniture sold in U.S. stores such as Ikea. The Chinese are among signatories to a treaty preventing destruction of old forests. He says the Chinese seem to be obeying the international treaty, but sometimes use wood from Russia which may come from old forests. The Chinese ambassador to the United States, Zhou Wenzhong, says China is rapidly expanding its reforestation projects, particularly in the northwest provinces.

In today’s globalized world, China clearly is the most amazing country of the new century. Its rapid economic growth far outstrips the record of the United States during the early days of the last century. The communist government today is far different in its outlook from that of the time of Mao Tse-tung and Cho En-lai. It still is a communist one-party government with a poor human rights record, but it is emphasizing Western free enterprise. No one knows how that government will change, but as it slowly becomes more democratic, at least locally, it seems unlikely it will be modeled after the United States.

As the Christmas buying season approaches, China is showing some signs of urgently seeking to regain its credibility as a producer of quality products. Ambassador Zhou has frequently left Washington to make speeches in various cities. More importantly, the Chinese vice premier for economic affairs has become involved, and China has announced on its Web site a national examination of toy producers. “Export toy certificates will be revoked for those companies which have serious problems in quality management and product safety control,” the government says.

The Chinese have embarked on a four-month program to quickly improve quality control in drugs, food and consumer products, according the Chen Xitong, a Chinese administration official.

In the United States, the current crisis points out the need for new policies that include closer inspection by private companies importing goods, as well as action by our government. U.S. retailers will be hurt if they do not undertake remedial measures.

Reps. Rick Larsen, Washington Democrat, and Mark Kirk, Illinois Republican, who recently met in Beijing with officials of the General Administration of Quality Supervision, Inspection and Quarantine, have led in seeking action in Washington. They introduced a bipartisan Import Safety Act that could inflict a penalty of $50 million for violations of law on the import of food or toys if the infractions result in deaths. They seek more funds for the U.S. Consumer Product Safety Commission and the Food and Drug Administration offices overseas. Skilled inspectors overseas are needed.

We have a strong ambassador in Beijing, Carl T. Randt, Jr., but any action must come from Washington. Our embassies are not manned by technicians with the skills to solve these problems.

China exports 22 billion toys a year, and those recalled represent only a small portion. But this is a warning that as global economics increase, both private enterprise and governments on both sides of the Pacific must become more active in quality control. Action is needed now in Congress and in China and with private businesses. Quality may cost a little more money, but cost is secondary when human and pet lives are involved. A failure to resolve contamination problems could undermine product credibility and seriously damage world economic growth.

Herbert Klein is a national fellow of the American Enterprise Institute, retired editor in chief of Copley Newspapers and former Nixon White House director of communications.

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