Who's Making Your Toys?

Recent Recalls Suggest a Second Look at Imports

"China said on Wednesday (7/4/07) that nearly a fifth of the food and consumer products that it checked in a nationwide survey this year were found to be substandard or tainted, underscoring the risk faced by its own consumers even as the country's exports come under greater scrutiny overseas...Experts say aggressive and opportunistic entrepreneurs continue to take advantage of the country's chronically weak enforcement of regulations, choosing to blend fake ingredients into products; to sign contracts agreeing to sell one product only to later switch the raw materials for something cheaper..." —New York Times, July 5, 2007

For years domestic manufacturers have sat back and taken it on the chin: "American skill and know-how is unnecessarily expensive." American manufacturers have been chided, called quaint, "Making product in the US? How backward! Surely there are cheaper places to make your products."

Cheaper?
Advantage China (and much of the rest of Asia)

Even our government chimed in with logic that goes something like this: The best way to uphold the American standard of living is to buy our products where our standards don't need to be followed. Everyone loves a shortcut, everyone loves a deal.

A quick read of the latest headlines says it is time to pay the piper. Those of us paying attention to these matters have seen this coming. The shortcuts aren't just cheaper labor (doing jobs Americans won't do...gee, where else are we hearing this?). The shortcuts are in materials and ingredients, worker safety, pollution, natural resources, employee benefits, quality design, customer responsiveness...

A company that wants to save money by going abroad isn't going to stop at the mere benefit of lower wages. Clearly they are buying a package deal of shortcuts and it is not making this world a better or safer place.

Product safety and quality, worker welfare and safety, environmental protection?
Advantage USA

When America's advantages are bypassed, who is getting the benefit? With Chinese production costs being 70-80% less than those in America, are we seeing products priced that much cheaper? Of course not, but why? 1) Waste in production, errors, transportation, overproduction, 2) Profits in the pockets of traders and middlemen—arguably more waste, 3) Money to fund unending hype and promotion—definitely more waste, and 4) Corruption at the source—worse than waste.

But isn't capitalism and trade the American Way?

Well...yes. Uncontrolled capitalism and trade? No. Believe it or not protectionism is all around us. We have laws to protect all sorts of things we hold important as a nation. From safe products to safe employees to a cleaner environment, we don't let just anything and everything happen. We long ago decided that the conditions portrayed in Upton Sinclair's 1906 book, The Jungle, were contrary to the American way. We have spent the past century making this country a better place.

So why, then, if all of these rules are right, do we feel the need to skirt them to so we can buy things at "affordable" prices? Could it be we expect too much as consumers? Heaven forbid we deny The People. Imports are a convenient solution, cheap food and consumer goods are the new opiates of the masses.

We all know that products will continue to come from China, and someday the rules will be more balanced. However, it makes sense to let everyone know that there are basic standards that should be met now, no excuses. Call it protectionism or call it common sense.

Beyond the Headlines—Real Details

American companies work with certified Chinese factories
Factory certifications usually have two underlying goals: 1) no forced labor (children, slaves, prisoners), and 2) follow local laws with regard to wages, safety, etc. This sounds great but local laws are generations behind our standards and very often the local authorities have a financial interest in the factories. Workers, for fear of their jobs, are frequently taught to lie to inspectors. Certificates look good but they purposely leave huge loopholes for all parties to take advantage while having plausible deniability.

China is building gleaming, modern factories
New is great, but it is what is going on inside that counts. US = approx. 6,000 work related deaths per year. China = 150,000 government reported work related deaths per year. In mining, more Chinese miners die in any given day than in a typical year in the US. Hundreds of thousands maimed factory workers are dismissed and sent home, often back to the countryside where their injuries often prevent them from supporting themselves. They have to fight to get any compensation for their injuries.

No sweatshops there
Nicholas Kristof of the NY Times recently filed a series of video reports from China. In one remarkable story, he states that Americans often think of Chinese factories as sweatshops, but the one he was visiting was not, because "the workers were not sweating." In fact, one employee he profiled was happy to be able to work 12 hours per day, 7 days a week, to support her family. She was paid the equivalent of $130 per month!

China's burgeoning middle class
How many times have we heard these exact words? It can't be coincidence. Is it from a Chinese propaganda script? Sure China is developing but don't be mislead. Their "middle class" is the growing number of highly educated and business people. Their factory workers, who would be middle class in the US, cannot even afford a car. Cost for a low-end car, $6000. Autoworker salary, $250 per month. You do the math.

China leads in CO2 emissions...but the US pollutes more per capita
Now that China has passed the US in emissions, reporters insist on finding a way to declare that the US is still worse. China's problems are incomparable and getting worse by the month. Sooty skies, poisoned rivers, expanding deserts. It is a grim situation that is out of control. Sure they have a 5-year "green" plan, which the environmentalists fawn all over. However, their 5-year plans don't work any better than those of the old Soviet Union. If one wants to play with comparative statistics try this: Despite China's industrial march, the US gross domestic product is still leaps and bounds ahead of China, thus their pollution per output is disastrously higher than the US. We do more with fewer people and less pollution, how about that for a different perspective?

China has a right to go through the same stages of development as other now-developed countries did in the last century
Baloney! We live in the current world. They have no more "right" to pollute and foul the earth than anyone else. The knowledge and technology to operate cleaner is fully available, where it wasn't 100 years ago. China is leapfrogging crank telephones, Model T's, and 8-track cassettes. They certainly shouldn't get away with piping sewage into their rivers and soot into their (our) skies.

Modernization takes time
China is always said to take the long view and they say change takes time. Funny, when they want to copy someone else's designs, their companies can do it in a matter of days, or even hours. Apparently it depends on what your priorities are.

China is starting to respect its natural resources, its forests are regrowing
This is in large part because they are importing ever more natural resources from other countries. Specifically when it comes to lumber, Chinese industry is literally stealing forests from neighboring Burma and Russia through payoffs and corruption.

Engagement is the best approach to change China politically
Do we really think that capitalism inherently brings freedom and democracy? Did anyone ask the Chinese government what they think about change? They are specifically betting against the thought. The Soviet Union collapsed because it was bankrupt, however trade is funding China's status quo. The government believes that its authoritarian rule can continue if they can maintain rapid economic growth. No one believes we can continue down the current path indefinitely and the longer we do the greater the likelihood of a major bump in road. The more we are involved, the more we will experience the pain.

Discouraging imports from China will not bring jobs home, they'll go to other countries
This is largely correct, work will go to lower cost areas. If all countries followed appropriate modern standards, work will be more fairly dispersed around the globe, benefiting more people more broadly. This would be a more secure situation than giving so much business to one country.

The US government says that everything is okay
The current government opinion is being driven by large international traders and by economists who look at aggregate numbers and grand theories but do not consider geo-politics and human factors. In fact, our government has numerous reports that say very dangerous things are happening in our trade relationship with China. They just are not concerned.

We need to encourage China is rise peacefully
We have pretty limited ability to influence China. They are using the benefits of trade to give themselves a full range of options. China does intend on promoting peace, as long as it gets what it wants. Hong Kong and Macao have been "rightfully" returned. What will happen with Taiwan? We can hope that economic ties make conflict more difficult but that may be more our perspective than theirs. They do not have a record of doing what is in the best economic interest of their own people. Their goal is to maintain the power of the party, which sometimes does require measures to appease their own people. We also see them testing the nationalist card from time to time to measure the power of nationalism in the stead of economics.

China's example as a rising power
Are they the example for other developing countries? Are they proving that success can be had while oppressing their own people? The technology they use to block Internet sites is now proliferating around the third world.

But (it) just isn't made here any more
Well, that comment is a self-fulfilling statement. Once it becomes the excuse to buy what is at hand, another American company is hurt. It is a vicious cycle, arguably started by large retailers who first saw the great profits in going overseas, or in driving their suppliers overseas. Consumers never had a chance to make a decision on this matter, beyond buying into the attraction of price "rollbacks" deceptively pitched under a flying American flag. Once the consumer attraction was cemented, the flag disappeared.

Lower prices due to imports help to many American make ends meet
The potential for this is undeniable, as long as those benefiting aren't losing theirs jobs in the meantime. The largest retailer likes to claim they save the average American family $2500 per year. This is impossible unless they provide everyone what they buy at half price since the average family spends about $2500 per year at their stores. The store knows the answer is not in less spending, but more for the same money spent. Buying more stuff feels good, until you have to replace it because it breaks far quicker than it used to.

Rapid growth is necessary
This brings up China's greatest internal hypocrisy. They know their rapid growth is economically dangerous. It is also causing major strains on resources and infrastructure. However, the Chinese government feels it needs it to keep their people content, and distracted from their lack of political openness. So at one moment they are expressing concern about growth and saying they intend to limit it, the next moment they say they can't afford more responsible policies because it might limit growth. Sounds like their own internal problem. However, if they are headed on a collision course with reality, the more we are tied to them, the more we will catch their fallout.

To be sure, the United States of America is far from perfect. We buy more than we need, often more than we can afford, and then we dispose if it all to easily. We do not always make the best international decisions. This, and more, does not disqualify us from taking a stand on principle and protecting our current health and future security. Globalism is going to continue and we'll need to trust, but also we'll need to verify. The companies going "global" are not doing it because they have your best interest in mind.

This information was gathered by the folks at Maple Landmark using sources such as AP, New York Times, UPI, Reuters, and Ethical Corporation. We are proud crafters of American-made wood products. For more information on how we operate, click here.