Mattel, China & New Sourcing
August 16th, 2007 by KierstenSo much has been written both in MSM and in the blogosphere about the Mattel toy recall that it’s almost not worth commenting on it in this blog. As far as we can tell, nearly every reputation/crisis management expert out there has applauded Mattel for how they’ve handled the crisis to date, and they really do seem to be doing everything right from a communications view. Some experts have commented (for example, in today’s Boston Herald) that this could be the worst thing to happen to a toy company, and they’re probably right.
The Mattel situation comes on the heels of concern over many things either made or sourced in China — toys and food being the most obvious examples. Clearly, China has a far bigger reputation problem than Mattel or any individual manufacturer who sources product from China.
So, here are a few predictions.
First, we believe that Mattel will weather this storm beautifully. The company has made much-loved toys for generations and they have a multitude of consumers who believe in Mattel, and will continue to buy their toys. Most people will have forgotten about all this by the time the Christmas buying season is here, particularly if Mattel can continue to anticipate the news cycle and respond to it in a smart way (they need to watch the blogosphere, which is one area where they may be falling down).
Second, there will be more recalls and crises coming from products sourced in China. This seems to be a tidal wave of negative findings regarding Chinese-made products, which puts the country and its businesses in an interesting position leading into the Olympics.
Finally, if China can’t fix its own problems — and fast — businesses in the US and elsewhere are going to have to re-think how they source their products. No company can afford to remain ignorant of how their products are made in China any longer. If Chinese businesses can’t guarantee safety, then their business partners in other parts of the world will need to find alternative partners to get the products made — it’s as simple as that.
Where will they find new partners? Could be another region of the world, or maybe in their home country. Will this increase manufacturing costs? No doubt, and chances are that it will then increase consumer costs. Will consumers pay more for a toy today than what they paid yesterday? If the toy is of value, yes.
This is an interesting house of cards to watch, and an interesting time for China, particularly with the Beijing Olympics just one year away.
September 1st, 2007 at 1:54 am
Kiersten,
Good, general overview and yes, Mattel is a strong company and yes, Xmas may wash away the recall memory and yes, a 50 or 70 million loss may not topple the company.
You mention the blogosphere, (a place I today visit for the first time) as a trap door, that if not carefully watche by Mattel, may open under its feet.
I see one other factor, fierce domestic competition from other toy makers/importers such as MGA Entertainment with its line of Bratz Dolls and general toy lines.
I watched a news program in which MGA owner and a Mattel executive were inteviewed and my feeling is the MGA is a hungry, fighting company and Mattel, an old soldier who thinks he has the battlefield conquered.
For what its worth, this is my view and I am open to be educated, so will visit this site often.
Wishing you a safe weekend,
Eli
September 7th, 2007 at 4:54 am
Eli,
You make a terrific point. Mattel is embattled both with its recalls (another one happened earlier this week), as well as its competitive issues, which have also resulted in lawsuits with MGA that are a distraction at best, and could be devastating at their worst.
I don’t know anything about the cultures of the two companies — Mattel and MGA — but it’s quite possible that you’re correct that MGA is more entrepreneurial at this point, while Mattel could be a bit “fat and happy.” But, since I don’t work for either company, I can’t really say whether that’s true or not.
Thanks for your post — I look forward to hearing more of your views.
September 10th, 2007 at 12:50 pm
Kiersten,
Thanks for your response, I am beginning to like the bloggosphere!
I too am not employed by any of these companies, yet have been in the gift and decorative accessories business for a long time, so am somewhat familiar with some of the players.
Addtionally, I am in a business that enables me to hear the other side of this recall storm, namely the Chinese end of it.
The latest recall enforces my thought that Mattel may not have had the “ground forces” in China, to look after their interests and above all, be very vigilent in the QC arena.
After all, I have not heard of any major recalls of other big players in the toy, gift or decorative and home accessories.
I like to look at things outside the box and one of my favorite observations has to do with
the saying “There are two sides to each coin”; Having lived on three continents and travelled the world, I can find many coing that can stand on their edge, hence “some coins have three sides”.
These are my thought now, maybe a little disorganized, but sitting at the O’hare airport is not conducive to good thinking.
Regards,
Eli
September 12th, 2007 at 12:57 pm
Eli,
Your comments are very interesting and enlightened. What do you make of the most recent Disney announcement that they plan to test their toys for lead paint?
I wholeheartedly agree that there are many sides to a coin, and like the idea that “some coins have three sides.” I’ll have to adopt that saying.
September 12th, 2007 at 2:34 pm
Kiersten,
You are welcome to the saying.
I made a point that Mattel is guilty of being less than vigilant in controlling the production process and today I found this on the web news -
http://news.yahoo.com/s/ap/20070912/ap_on_go_co/toy_safety
As to Disney, good move, they do not want to be soiled as the proverbial s–t hits the fan.
With Disney’s stand in the market, here and internationally, their move a a vote of non-confidence in Mattel and a warning to all their suppliers.
In general, though I see the histeria spreading to products like brass garden faucets, which I assume no normal person licks or uses for a stew, it does send a stark warning to all manufacturers of good imported to the US and even the Chinese government announced that they will “ban” lead paints from being used for exported goods.
Bear in mind that only a short time ago, historically speaking, the US had lead paints widly used.
That’s it for now.
I did not dedicate any time to studying your blog, so do not know what it is exactly you do.
Regards,
Eli
September 21st, 2007 at 2:17 pm
Is Mattel out of their mind? They apologized to China? Shouldn’t it be the other way around? The Chinese produced this inferior crap and we have to take it? Maybe Mattel should look for another place to manufacture their toys!
September 30th, 2007 at 9:23 am
Hello Andy,
When concrete is poured in a construction site, a testing company, employed by the developer, tests the concrete supplied by the contractor to make sure it is according to specifications.
As I wrote in a previous posting, Mattel may be guilty of not having that testing company to verify that the paints delivered to their contract manufacturers, (in China paints are manufactured with and without lead) are according to US specifications.
As to the apology, consider that if my contentions is correct, Mattel, in its lack of oversight, has greatly damaged the stability of the very manufacturers who enabled it to become successful.
Remember, some coins have three “sides”.
Eli