When a Good Brand Goes Bad, Don’t Blame Globalization

When my children were younger, they were always thrilled to get the cheap plastic toys that came with their “Happy Meals.” They played with the figurines and other gee-gaws tied in to kids’ movies and television shows. While they played with them, I wondered what the Chinese who made these things thought about a country that manufactured Ninja Turtle miniatures and sealed them in plastic bags labeled “Plastic bags are not a toy.” As they grew up, the toys became less important than the burgers, but they could get their fill of imported plastic stuff at Wal-Mart. Fast-forward a few years and we find much of what we use every day manufactured somewhere else. Even most of our vitamin C now comes from China.

Earlier this year this “made in China” story started showing some cracks. Pet food was tainted with melamine that killed dogs and cats. A variety of foods for humans from China showed traces of illegal pesticides, bacteria and cancer-causing chemicals. In May, China executed the former head of the State Food and Drug Administration to show the world that it was serious about improving quality.

So it was no surprise when we all woke up in mid-August to Mattel’s announcement it was recalling nine million toys made in China, including some Barbie accessories, Sarge from “Cars” (the movie), Fisher-Price products, Batman, Polly Pocket, and others. The toys either had too much lead in the paint or magnets that could be ingested by small children.

Thus, Mattel and its biggest outlet, Toys ‘R Us, joined a rogue’s gallery of brands with quality problems that made it to the front page: Tylenol tampering (1982), Volkswagen ignition coils (2003), Ford Explorers with Firestone tires (2000), and Mead Johnson’s Nutramigen baby formula (2000), to name a few.

Each of these companies took a different approach to their brand nightmares: Tylenol immediately faced up to the challenge and removed all its products from the shelves. Mead Johnson did the same with its mislabeled baby formula. Ford and Volkwagen equivocated, making consumers wade through mountains of procedures and denials before finally taking care of the problem. Did Mattel accept responsibility immediately or ignore the problem? It took the middle ground, acknowledging its responsibility to its customers and to the children who use its products. But it pointed an accusing finger at China, the source of many of its products.

For a month, anyway. On September 21 Mattel apologized to China, noting that the “vast majority of the those products that were recalled were the result of a design flaw in Mattel’s design, not through a manufacturing flaw in China’s manufacturers.” It was Mattel’s bad.

Why did Mattel blame China in the first place? If consumer reaction was any indication, China was a convenient scapegoat. Feedback to Mattel’s blaming China for the problem ranged from hysteria to anger to extending the debate around offshoring issues (hello, Lou Dobbs!). Some were even gleeful (call it Schadenfreude). And some toy manufacturers in the U.S. and Europe, Playmobil among them, highlighted the fact that they make their products in countries with strong quality manufacturing laws. Brazil’s largest toy manufacturer reportedly began re-opening shuttered factories with the intention of offering its services to American distributors and retailers, pitching its high concentration of ISO-certified manufacturing facilities to build confidence among potential buyers.

How was the Mattel story different from Tylenol and other headaches for their manufacturers? Globalization. Like many companies that formerly manufactured their own products, Mattel now relies on contract manufacturers. Its supply chains gird the globe, forcing them to rely on an interlocking string of raw material suppliers, finished good manufacturers, transporters and distribution companies. With a global supply chain you just can’t get on a plane and go to check things out. Even if you could, your Chinese contract manufacturers may not understand what you’re saying. At least, that’s the story that came out first.

Mattel did the right thing by accepting responsibility back in August, but did itself and globalization a disservice by blaming China for the flaws. I don’t expect any executions at Mattel, but I am wondering about some resignations.

Don DePalma is the founder and chief research officer of the research and consulting firm Common Sense Advisory, and author of the premier book on business globalization “Business Without Borders: A Strategic Guide to Global Marketing.”