By Steve Toloken
HONG KONG (Jan. 27, 1:45 p.m. ET) — Chinese toy makers should not compromise product safety amid tough economic times, as governments around the world continue tightening safety rules, said government regulators and toy industry officials at a recent Hong Kong trade fair.
Next month marks the first deadlines restricting phthalates in plastic toys and lead in children’s products, under new U.S. toy safety legislation. Also in February, the European Union will publish the first details of a new toy safety overhaul it approved in December.
By some estimates, more than 5,000 Chinese toy factories have closed in the past 18 months, casualties of more difficult economic conditions, and of 2007 recalls of Chinese-made toys over safety concerns in the U.S.
The changes, along with tightening regulations in mainland China, have pushed higher costs on to the toy industry in China and Hong Kong — together the world’s largest exporter of toys.
New product testing rules in China, for example, have caused toy factories to triple spending on testing in the past year, said Lawrence Chan, chairman of the Hong Kong Toys Council and chairman of Hong Kong-based plastic toy maker Wynnewood Corp. Ltd. As a result, some firms report squeezed profit margins. Sebring, Ohio-based American Classic Toys Inc., which subcontracts manufacturing to firms in China’s Guangdong Province and Mexico, estimates that the new testing has cut its profit margin by 20 percent.
“It squeezes our profit margin because the retail price is very often fixed by the price point a consumer will pay for an item,” President Jay Horowitz said at the Hong Kong Toys & Games Fair, held Jan. 5-8.
Other toy company officials said complete testing can cost US$20,000 for a single product.
Still, governments plan to continue implementing the new standards.
Export permits have been revoked for about 500 toy factories in Guangdong province — China’s major toy-making center next to Hong Kong — for not meeting regulations, said Zhang Xiao Lue, chief director of the province’s Entry-Exit Inspection and Quarantine Bureau. At a toy safety conference during the fair, Zhang warned local industry to maintain a focus on safety and quality, use safer materials and work closely with government.
As well, an official with the U.S. Consumer Product Safety Commission reminded the group that new U.S. regulations go into effect Feb. 10, including new restrictions on lead and six kinds of phthalates used to soften vinyl. Some in the audience questioned the hazardousness of phthalates and asked whether there were exemptions to those new rules. But Richard O’Brien, CPSC director of international programs and intergovernmental affairs, said the phthalates law does not allows his agency any such flexibility.
CPSC does have flexibility, however, to give exemptions for lead, if the lead is contained in a product and it is not accessible to children, O’Brien said.
Chan told the audience: “As far as safety is concerned, nobody can afford to compromise. We as manufacturers should not reduce our costs to compromise quality.”
He suggested that the wave of factory closings in China has improved safety, because many of the worst offenders were the smallest, lowest-cost operations that were among the first to close.
“Those small factories had a higher risk of producing undesirable products,” Chan said. “As the Chinese government tightened regulations, those factories simply could not survive.”
U.S. toy industry statistics show that 7.5 million toys were recalled in 2008 through early December, compared with 29.1 million in 2007.
Other Hong Kong toy officials suggested that the toy safety problems in 2007 have helped show large toy makers and retail stores that rely heavily on Chinese factories that they may have pushed too hard on reducing costs.
“Our customers and the consumers have to realize that if you want a safe toy, you have to pay for it,” said David Chu, president of the Toy Manufacturers Association of Hong Kong.