The American toy retailer “Toys R Us” has recalled a large amount of Chinese produced plastic toys as well as textiles, because they could potentially pose a health and safety risk for customers. As a result China is being pilloried for these developments and is the target for what is perceived by many to be a justified media outcry. The very same people who yesterday praised China as the world champion of exports are today demonising the country for assaulting the health of our children. Essentially there is nothing improper with the media publicising product deficiencies, in particular when considering the magnitude of the cases in question. Such a media reaction is in fact necessary under these circumstances. Yet in my opinion it is not acceptable to so assiduously overlook the western nation’s complicity in causing this calamity, seeing that such behaviour greatly reduces the prospects for any improvement of the situation.

Complicity and a fair share of responsibility lies with those companies which, despite the problems that manufacturing in China creates, keep producing there simply due to the ever-cheaper prices, ignoring the wage dumping and appalling work condition. These problems will not remain limited to China, as well other Asian Countries will face such problems and they will emerge, which is why this BriefLetter is entitled “Made in Asia”. China is today still able to produce goods with barely acceptable levels of quality at low prices, which is due to the continuously high levels of demand. Any expert is able to easily determine, that raw material problems, skilled labour shortages, falling city population i.e. the return of millions of industry workers to rural areas, new tax laws, wage increases of up to 30% per annum, infrastructure problems and many other challenging developments will eventually lead to a quality catastrophe. This is without mentioning the continuously climbing cost of credits and loss of business orders for China when customers decide to move to other low cost production countries.

Beneath the label “Made in Asia” there is a ticking time bomb that has to be diffused. It will not be possible to realise this through elaborate criticism and even less so by continuing with “business as usual”. In case of market eruptions many seem to hope that they will be spared damages, trusting the rural German idiom: “Holy St. Florian, spare my house, burn my neighbours’.”

In our role as strategy consultants we are very aware of the subject matter and reached the conclusion that the approach of producing in the very cheapest location needs to seize. We recommend as well closing the abundant number of small sourcing offices in Hong Kong and elsewhere. As well, in our opinion, the majority of the futile trips of quality controllers between Europe, America and Asia should be stopped.

There are several decade- and even century old highly established Asian trading houses which offer comprehensive, competent and specialised services, including the complete development of products for American and European customers, up to their delivery to warehouses and even to stores directly. These trading houses are conducting research into new materials, their usability and their innoxiousness, as to avoid the troubles Toys-R-Us is currently facing.

Nobody is forced to contend with the risk and the potential dangers that Toys-R-Us has to cope with presently, as long as only appropriately experienced and reputable partners are selected for industrial production in Asia.

The time of simple sourcing where the prime motivation is to find a cheap producer is long gone. Today there is a multitude of possibilities in Asia to acquire “Total Market Solutions”. I sincerely hope that the cases of Toys-R-Us and Mattel will set an example and that it won’t lead to people in charge becoming imprudent.

Asia and China in particular in their role as suppliers cannot just be turned off like a TV program nor will one be able to just change the channel.

Schmid-Preissler will in line with our newly emerging “Tergernsee Talks” in January 2008 hold the first big European Sport-Retail-Summit, where we will introduce one of the great Chinese trading houses which can look back on 200 years of tradition and history. As well we will introduce a Market-Solution-House which emerged from one of the old European footwear trading dynasties. These companies show that there is indeed a very different “Made in Asia” than the one currently on display in the media.