Mattel apologizes to China
Andy Wong / Associated Press
Thomas A. Debrowski, Mattel's executive vice-president for worldwide operations, left, meets with Chinese product safety chief Li Changjiang during his visit to the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) office in Beijing.
The Chinese call it guanxi, and it refers to the relationships that are so crucial to doing business in their country.
To many observers, it helps explain why a high-ranking Mattel Inc. executive appeared with Chinese government officials Friday to publicly apologize for having to recall more than 19 million toys because of lead paint and dangerous magnets.
The toys had been made in China. So why was Mattel eating crow?
'It's the whole concept of guanxi -- cooperation -- and face saving,' said Mark Allenbaugh, a lawyer who consults with companies doing business in China. 'Mattel has developed relationships over the years, with the factories and with government officials. That can all disappear very quickly if Mattel went the other route and blamed the Chinese manufacturers as being the bad guys here.'
Few companies would know better than Mattel about the importance of guanxi.
The El Segundo toy maker imports 65% of its products from China and, unlike most others in its industry, owns the factories there that produce many of its goods.
Because so much of its business is based in China, it's especially important for Mattel to be on good terms with the Chinese government, noted Allenbaugh, who also owns an Irvine manufacturing company that imports products from China.
'The Chinese government can make it very, very difficult and expensive for a company like Mattel to continue to do business in China,' he said.
But as news of the meeting circulated Friday, Mattel had the difficult task of trying to quell a brewing storm -- a week before Chief Executive Robert Eckert makes a trip to China to personally inspect the company's new manufacturing safeguards.
'China should be apologizing as well to consumers around the world for exporting shoddy products and dangerous food,' said Sen. Charles E. Schumer (D-N.Y.) in a quickly issued statement.
Placed on the defensive, Mattel said the meeting between Chinese officials and Thomas Debrowski, Mattel's executive vice president for worldwide operations, had been 'mischaracterized.'
A spokeswoman said after the meeting that the company's appearance in Beijing was no different from similar testimonials before the U.S. Congress and European Union officials.