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Safety Issues, Weak Dollar Squeezing Chinese Toy Makers

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Hurt by a series of safety recalls of Chinese-made toys this year, U.S. toy companies and retailers are pressing China-based manufacturers to use quality materials. But as VOA's Heda Bayron reports from Hong Kong, some manufacturers say this is squeezing them financially.

This year, U.S. companies were forced to recall tens of millions of toys because their Chinese manufacturers used toxic materials - like lead.

In response to safety concerns, the Chinese government closed more than 700 toy factories in Guangdong province alone because of shoddy manufacturing practices.

Across the border here in Hong Kong - headquarters to some of the world's biggest toymakers - the recall issue has done little to slow down orders from U.S. companies.

"The clients' requests on raw materials are getting more strict than before. That's what we are facing rather than quantity of the order," says Decca Yeung, the manager of Hong Kong toy maker Wai Kwong Industrial Products.

She says the pressure to use higher quality materials comes at a higher cost.

But manufacturers are complaining that U.S. companies are not willing to pay the price for quality.

Hong Kong-based Advance Bright Limited has been selling toys made of environmentally friendly materials - even before the recall. Managing director, Simon Lee, says using high-grade plastic materials is three times more expensive than PVC - which some consumer groups say is toxic.

"As manufacturers, we are quite concerned about the price. But you know, for the U.S. market sometimes the price is too low. U.S. buyers force us to lower the price no matter what," said Lee.

U.S. retailers are facing more economic pressures in an already cutthroat industry. American consumers - squeezed by higher energy costs and economic fallout for the home mortgage crisis - are expected to be even more price conscious coming into the biggest holiday shopping season of the year.

On top of this, Chinese companies are facing reduced export revenues from the weakening dollar.

Paul Yin, a vice president of the Chinese Manufacturers' Association of Hong Kong, says the financial pressures are mounting.

"When the costs are higher and our selling price cannot be increased, what is our choice? …It's a fact that many factories subcontract their work outside because of the cost factor, want to keep costs as low as possible, and many sub-contractors could use sub standard material, making products below the required standard," said Paul Yin.

Analysts suggest that comprise in quality isn't the only solution. Growing demand for higher quality toys could lead to a price drop in raw materials needed to make them. But for now, as millions of Americans browse through toy stores for the right children's gift this holiday season, toy manufacturers here in China wish they could charge more. - VOA News

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