By  on August 20, 2007

WASHINGTON — Mattel just gave the fashion industry a wake-up call.

The toy company's massive recall of unsafe products made in China is a warning flare for apparel brands that source from outside factories but remain responsible to retailers and consumers for the quality of their goods.

The revelation last week that subcontractors veered away from product guidelines and used lead paint on 436,000 toy trucks from Mattel was just the latest in a series of mishaps at Chinese manufacturers that has caused consumer scares in products such as baby bibs, cat food and toothpaste.

Safety issues so far haven't impacted the apparel sector, but they always remain a concern given the close contact people have with their clothing. There are some flammability issues, particularly in children's apparel, and some dyes and other processing chemicals are prohibited for health reasons. Chinese imports at times have been guilty of mislabeling fabric ingredients, but the result has not been a recall or safety violations.

What the latest scares bring to the fore is the broader branding and supply chain issues, made all the more important given China's role as factory for the world, with a 32.4 percent share of the U.S. apparel import market.

For one thing, the recalls might leave a lasting impact on consumers' perception of Chinese-made goods in general, particularly given the nature of the products involved. A mom who has thrown out her cat food, checked where her toothpaste was made and taken away a favorite toy from her child might well take a second look at labels for country of origin as she shops to replenish her wardrobe.

"The impact of the recalls is undoubtedly going to affect the American psyche," said brand consultant Catherine Sadler, who was formerly chief marketing officer at AnnTaylor Stores Corp. "The fact that there could be a lack of control for vulnerable innocents that could affect our children, this is a hot button. This is the kind of issue that does permeate through, that does break the clutter. It has an emotional wallop."

The U.S. government might act to ease consumers' shaky nerves. Congress likely will look more closely into safety regulations when lawmakers return to Washington next month. There is no telling what impact this could have on importers or whether it could increase costs or paperwork."It's something that wasn't on people's minds before," said Andrew Jassin, managing director of the Jassin-O'Rourke Group, a fashion consultancy. "It's now on people's minds. When somebody thinks about ethical sourcing, they're thinking about the garments being sewn. No one has really thought about the raw materials piece. It's about the paint, it's about the cotton, it's about the sewing."

Chinese officials have tried to address safety concerns and to deflect criticism. On Friday, the government said it appointed Vice Premier Wu Yi, one of its most respected officials internationally, to head a previously announced Cabinet-level panel to oversee product quality and food safety.

"No country's products are immune to problems," said Zhao Baoqing, a spokesman for the Chinese Embassy in Washington, according to the country's official news service. "Food safety and product quality are an international problem and are also something that all countries pay attention to."

China also has taken even more drastic actions to try to prove to the world that it won't tolerate officials or factories that cut corners: It executed Zheng Xiaoyu last month for taking bribes as its chief food and drug regulator.

"A lot of the checks that have been incorporated into supply chains in other countries are not operating as well in China, particularly, in my view, the absence of a free press," said Georgetown University business professor Pietra Rivoli. "The Chinese government is very big on dramatic, scapegoat-type events, such as the execution of this regulator. But you kind of have to ask, ‘So now [that] they killed this guy, do we feel better about things coming from China?'"

With elements of China's civil society, such as a free press and independent judiciary, not yet caught up with its exporting power, she said companies are going to have to take action themselves.

"The broader issue is the integrity of supply chains," she said. "You have a chain of companies that are producing in textiles and apparel, for example, anything from the dye to the yarn and the fabric. If you look at it as a broader picture, there's a lot that's related to apparel."

As companies on Seventh Avenue have evolved from manufacturers to branding and marketing firms that coordinate the design and production of apparel, the industry may have lost skills and controls along the way."The apparel manufacturing firms of the 21st century know very little about manufacturing processes," said consultant Emanuel Weintraub, who works with fashion vendors. "The people who run these businesses buy product. They are concerned about human rights issues, with making sure there are no chains on the exit doors. On these arcane issues like quality control, most of them don't understand what quality control means. They don't fully invest the money to make sure that their specifications are being met."

It is not unheard of for a brand to send a fabric sample to a factory and for the factory to cut off a bit of that sample and send it back to the brand, falsely representing that they have reproduced the desired effect, he noted. It comes down to how deeply companies monitor their supply chain, said Weintraub.

"When everything blows up on you, the answer is you didn't go deep enough," he said.

Many firms in the industry feel they have a good handle on their supply chains, especially for private label programs, given that the stores buying the products often have strict testing requirements.

However, even companies that tout their commitment to labor rights for garment workers sometimes discover serious abuses within their own supply chain. For instance, Wal-Mart cut off ties with a factory in the Philippines this year after striking workers were alleged to be mistreated and the company was unable to negotiate a resolution.

Ultimately, controlling one's supply chain might start with good relationships.

"It's all basically a system set up by human beings," said Joe McConnell, senior vice president of operations at innerwear firm Biflex. "If you really want to get around it, if you're sneaking and you're a supplier, you can always find a way."

Part of the solution is to make sure to work with suppliers that are reputable and trustworthy.

"It's all on the other side of the world so you can't watch it 24/7," he said, noting that the emergence of full-package manufacturing, in which a producer is responsible for delivering a finished product to a brand, complicates things.

"We have to revisit that full-package scenario and ensure that the controls are in place [so] that the raw materials in the supply chain are safe," said McConnell. "It's a wake-up call to go back and revisit the process and make sure that checks and controls we have in place are working."

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