To hear the drumbeat in Washington, you'd think trade barriers are the only way to protect Americans from tainted Chinese products. But the good news is that individual companies and the Chinese government are getting a lesson in free-market branding and quality control that will do more to promote safer products than trade barriers ever will.Their standards improve or they lose out!
American companies have not always realized how expensive Chinese-manufactured goods can turn out to be once the cost of low quality is included. Naiveté is as much to blame as greed. Western companies sometimes fail to understand how Chinese manufacturers do business--especially the way many factories outsource some work that has been outsourced to them. Several supply-chain and quality-control consultants report an uptick in business over the past few years, especially among U.S. and European small- and medium-sized enterprises.
Government does have a role to play. In the U.S., the FDA has been working to disseminate information about dangerous products so consumers and importers alike can protect themselves. The Consumer Product Safety Commission has been working as usual to facilitate product recalls.
The least productive response is U.S. protectionism, which will lead to higher prices and less competition. Other countries will respond by also using quality as an excuse for trade barriers, the way they already have against U.S. beef after a rare case of "mad cow" disease. The best education for crooked Chinese capitalists is likely to be the harsh judgment of American business partners and consumers.
Saturday, July 14, 2007
Government can play an important role in the provision of product safety. There are other mechanisms that greatly aid correction of failings in this area with less chance of harmful side effects.