I have not been writing about the toy wars (and toothpaste and dog food) because it has thus far seemed rather straightforward. Some shoddy products, some recalls, some political fallout. Big news for a slow month of August, but really nothing very special in the long run.

The PR aspect of it has gotten more interesting, pulling me out of my usual stupor. I think the underlying facts are still of little import (that was a pun).

Case in point, this article in Shanghai Daily last Friday. At first glance, this report on comments made by a MOFCOM guy seems quite boring. US anti-dumping and subsidy/CVD investigations bad, Chinese products good. Fair enough, that’s his job.

What struck me was not the odd little argument that concurrent AD and subsidy investigations amounted somehow to double taxation, but that while the toy controversy was partly the fault of Mattel’s poor inspection system, the issue was fundamentally not a product quality issue at all.

I think I’ve heard this a couple times in the past week. Certainly put some onus on Mattel, this I have heard both from Chinese and Western commentators. But claiming at the same time that there really isn’t a product quality issue? And to make things worse, you have other parts of the government here saying that new systems will be put in place to prevent this from happening again. Wow, lots of contradictions, to say the least.

Either this is a problem or it isn’t, and if it is, let’s stick with the theme of “this is only a few companies and we will do everything possible to make sure this doesn’t happen again.” I like that argument for the most part because it admits there is an issue yet looks towards fixing it. And you can keep criticizing the Mattels of the world for poor inspections, which is always a benefit if you’re the manufacturer.

There’s a problem here, but it should not freak anyone out. Look, developing countries that post double digit rates of growth are going to experience product quality issues, particularly those that have gobbled up such a huge part of low end global manufacturing. There just isn’t enough high end manufacturing experience here, let alone high end technology, to make that transition without such problems, and no one should be surprised at some of these QC bumps in the road.

Not to minimize specific problems. Obviously there can be instances of wrongdoing, and when this occurs, I can be just as vocal as the rest of the “Rule of Law” cheerleaders, exhorting the Chinese government to investigate and punish.

What I’m getting at is this should have been expected, and now that it has gotten such amazing press coverage, the Chinese government is in full PR mode. The upside is that awareness of the issue is certainly up - it remains to be seen whether new processes that will be implemented will make a huge difference in the short run or whether significant leaps forward in quality standards will only come about from market demand.

I tend to think that high quality products coming out of Chinese factories are a hell of a lot more common than they used to be and that the overall trend line is positive. No, I don’t have any statistical evidence, this is anecdotal.

The Chinese manufacturing sector is moving up the value chain as costs increase, and as low end work gets sucked over to Vietnam and other places, the only way for Chinese manufacturers to go on to bigger and better things is to produce quality products. No other way to go about it - the Chinese government’s economic development plans depend on this happening, so quality issues are a lot more important than the “China brand” stories out there would have you believe.

Sure the government cares about the “China brand” in the world marketplace and maintaining export levels, but they care just as much, if not more, in making sure that economic development in this country succeeds in the long term. Product quality is a key element, and Beijing is painfully aware of this.

So what to take away from the muddled message that has gotten to the press recently? Perhaps the best PR guys are still on holiday, or maybe the excitement of this story has flustered the establishment. The prospect of a new election cycle in the U.S. is also no doubt causing sleepless nights within the PRC government PR establishment - the next year will be tough on the “China brand” image, at least until Olympic fever comes upon us.

On the product quality side, for now let’s get the story straight and keep moving forward.

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