Adrian Hamilton: We demand cheap toys and electronics, then blame the Chinese for delivering them

China's response to the scandals so far has been to lop off a few heads in public
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The Independent Online

One thing that journalism teaches you over the years is that events or incidents are rarely important in themselves. It is when they fit in with general assumptions and trends that they take on meaning.

The question raised by the scandal of the recalled toys is precisely that: is it a singular lapse on the part of the Chinese that will soon pass as the world's consumers press on demanding ever-cheaper products or is it one of those iconic moments when the Western consumer and the retailing industry decides that enough is enough in this endless search for the cheapest possible product?

One would dearly like to think that were true. In the great embrace of globalisation, so idly talked of by politicians and businessmen as if it were a moral good in its own right, capable of righting poverty and bringing happiness to all at the mere flick of an international trade agreement, it seems to be forgotten just how much damage it does wreak as jobs, investment and power move to the lowest possible cost centre. Globalisation is fine for the financier but it doesn't feel so good to the farmer wiped out by lower-cost imports or the worker whose job has just been replaced by an operation in Bangalore.

Mattel's decision to recall nearly two million Chinese-made toys has resonance, because it seems to provide the starkest illustration of the belief of many who fear that globalisation is going to far, too fast, to the benefit of the corporations and at the expense of people, in China as much as the West.

Now, we have been here before of course, It is only a generation ago that Hong Kong was accused of producing shoddy copies with cheap labour to undercut Western products, which, of course, were made by properly paid workers to high standards. Go back another generation and it was the Japanese accused of the same crimes, from cars to toys. And the same is happening to China now.

Much though its critics may wish China to fall at this hurdle by a string of scandals about its products, it has to be said that it is unlikely to happen. The rush of bad news may slow the rise in consumer demand temporarily and even persuade some retail companies to have second thoughts about sourcing in Asia, but on the wider stage it will do little to stop China's manufacturing growth. The West goes there particularly for clothing and toys, but go round Asia and every store is full of Chinese-made white goods. Televisions, cookers, refrigerators, air conditioners, you name it and China has now a virtual monopoly of the trade. As with Japan before it - and with similar single-minded determination - the country is moving upmarket. Next will come cars, engines and aircraft.

China is on a self-generating growth curve and it is difficult to see what, other than internal upheaval, can stop it. Certainly when it comes to manufactured goods rather than services, all the talk of India's rise to equal and even surpass it is simply wishful thinking. Other South-east Asian countries might manage it in bits, but not on China's scale and therefore cost competitiveness. Give or take five or 10 years and China will have sloughed off the really low-cost items such as toys and T-shirts to other countries. And be repeating the exercise at far higher-value products.

Nevertheless there are particular features that make China's growth as an exporter more menacing and more destructive than any country in the past. Chief amongst them is the sheer speed and totality with which it penetrates a market and then dominate it. And the reason is the way that wholesaling and retailing across the major markets has come to be dominated by giant corporations which use their purchasing clout to drive down prices and wipe out the competition. China's success as a low-cost producer is the result as much of the concentration of Western retail buying power as to its own efforts.

To this extent it is in our hands to do something about it. It is extraordinary that Mattel, like the other importers concerned with defective (and indeed dangerous) Chinese goods, acts as though it was something only to do with the Chinese. Surely if you have the buying power of Mattel, the second largest toy company in the world, you owe it to your customers if not yourself to check on the quality and safety of your products?

This week also saw Nokia, the largest maker of mobile phones in the world, warning its customers that 46 million of its sets had defective, Chinese-made batteries installed. It turned out that the items had been made in a Chinese plant of the respected Japanese company Matsushita. But if Matsushita is apparently not going to supervise the quality of its own factory and Nokia is not going to check the standards of its suppliers, then what hope has the consumer at the end?

The other problem posed by Chinese competition is more difficult to combat. It is the sheer ruthlessness with which which they pursue their chosen goals. Whether you are talking about the buying up of raw materials in Africa, or the integration of ethnic minorities into the greater China, or its exchange rate policy or its exporting onslaught, there seems no point at which China says "stay the last blow, it might rebound on us". Peking's argument - and it has some justification - is that all the criticism levelled at it is so much hypocrisy. The West industrialised on child labour, the deaths in tens of thousands of labourers in construction and an utter callousness with which it exploited its military and technical superiority to force itself upon Third World markets. Why should China behave any differently.

It's a fair question, and one which a West in awe of China's economic explosion is extremely reluctant to answer, or even raise in public. Just ask Gordon Brown, or George Bush or Nicolas Sarkozy, whether Taiwan should be allowed to become a member of the UN (which in all logic it should) and the silence will only be broken by the shuffling of feet.

And yet the 21st century is not the 19th, not least because globalisation has brought world communication as well as trade. China's response to the scandals so far has been to lop off a few heads in public in acts of disgrace and execution. But this is just a show, and particularly grisly one. The real change will only come with a change of culture down the line, when the people themselves are no longer willing to accept the corruption and abuse of human rights that has come with the economic miracle.

The recent, much publicised scandal of the slave children taken from their parents to work in the brick factories of southern China was exposed not by the purchasers or the government but by the much abused (and censored) press. Once the story was out, the government had to act for internal not external reasons. In that sense Peking is wrong. This isn't the 19th century and China can't behave as the British, Americans, French and Dutch did then.

a.hamilton@independent.co.uk

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