the blog of the guy who wrote

that book about china

When it comes to discussing sensitive subjects, folks in China are characteristically illusive polite. Interestingly enough, they can also come across as uniquely forthright.

On the subject of death, Mainland Chinese can be frank to the extreme. It’s fascinating, especially when you consider that this cultural trait was more than likely reinforced by the Cultural Revolution, a dark period of 20th century history during which tens of millions quite literally starved and the threat of death was everywhere.

The sign here is from a boulevard located in South China, and even those who don’t read Chinese can gather its meaning.

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Looks like a White House visit with the Dalai Lama has been cancelled. From this morning’s Washington Post:

“In an attempt to gain favor with China, the United States pressured Tibetan representatives to postpone a meeting between the Dalai Lama and President Obama until after Obama’s summit with his Chinese counterpart, Hu Jintao, scheduled for next month, according to diplomats, government officials and other sources familiar with the talks. For the first time since 1991, the Tibetan spiritual leader will visit Washington this week and not meet with the president. Since 1991, he has been here 10 times.”

According to some, the sudden change is about economics.

“Samdhong Rinpoche, the Tibetan prime minister-in-exile, has accused the United States and other Western nations of ‘appeasement’ toward China as its economic weight grows. ”Today, economic interests are much greater than other interests,” he said.

On the one hand, it is disturbing to see the White House may be bowing to political pressure. On the other, far too much importance has been placed on this religious leader. The Dalai Lama of course means a lot to Tibetans, but he has become a silly symbol for Americans, the point having once been suggested by Bill Murray.

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Speaking of boys who cry wolf, I’d like to return to a favorite subject. Seriously, there is still not enough attention being paid to the state of consumer product safety in this country, and I remain concerned that our biggest product quality failures from China are yet to come. Just this morning, USA Today published an article on the large number of policy “czars” that Barack Obama has in place. There was no mention of a quality czar anywhere in the mix.

“Depending on who’s counting, there are anywhere from 18 new policy ‘czars’ in the Obama administration to several dozen. Critics ranging from conservative talk show host Glenn Beck to moderate Republican Susan Collins to liberal Democrat Russ Feingold say President Obama is trying to centralize authority in the White House and shield his policies from congressional oversight.”

The czar pheneomnon is perhaps a little odd. For more background, here is a quick entry from Wikipedia…

“In the United States the title ‘czar’ is a slang term for certain high-level civil servants, such as the ‘drug czar‘ for the director of the Office of National Drug Control Policy, ‘terrorism czar’ for a Presidential advisor on terrorism policy, “cybersecurity czar” for the highest-ranking Department of Homeland Security official on computer security and information security policy, and ‘war czar‘ to oversee the wars in Iraq and Afghanistan…One of the earliest known usages of the term was for Judge Kenesaw Mountain Landis, who was named commissioner of baseball, with broad powers to clean up the sport after it had been dirtied by the Black Sox scandal of 1919.

Many in Congress are critical of Obama’s czar plan, according to USA Today…

“‘The question is: What do these guys do, and how much are they costing us?’ says Rep. Jack Kingston, R-Ga. He is sponsoring a bill to withhold funding from any top policy adviser not confirmed by the Senate, which signs off on Cabinet secretaries and other top officials.”

Others, of course, defend the President…

“Sen. Dick Durbin, D-Ill., complains the issue has been driven by ‘partisan commentators’ who are ’suggesting this is somehow a new phenomenon that’s threatening our democracy.’ The White House’s czars, he says, are just expert advisers, not part of a ‘Muscovite conspiracy.’

My own takes it that there is no problem to have a network of special advisors in the White House, but, if we do not already have a quality czar, we need to establish one as soon as possible. Such an official could advise the President while serving as a bridge among public and private groups with shared interests (e.g., FDA, CPSC, Chicken Council, Food and Water Watch). Product failures out of China are a new kind of beast anyway, and consumer product safety ought to be at the very top of the administration’s priority list.

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Thomas Friedman has a new Sputnik article out, and the suggestion in his opinion piece is that Red China wants to become Green China. “I believe this Chinese decision to go green,” he says, “is the 21st-century equivalent of the Soviet Union’s 1957 launch of Sputnik—the world’s first Earth-orbiting satellite.”

The reference had a familiar ring. Turns out that it’s actually the NYT columnist’s fifth time referencing Sputnik in such a fashion (Earlier Friedman/Sputnik moments can be found in Dec 04, Jun 05, Jan 06, and Nov 06).

Could it be that recycling metaphors is Friedman’s way of helping save the planet?

I have less of a problem with tired historical analogies than with the way Friedman pins certain motivations on the Chinese. It is simply not the case that they have experienced a tectonic shift in thinking on the environment, that at the grassroots level everyone there is suddenly “going green.” And by no means are we the passive beneficiaries of any production trend.

“When China decides it has to go green out of necessity, watch out. You will not just be buying your toys from China. You will buy your next electric car, solar panels, batteries and energy-efficiency software from China.”

China’s Communist Party may have recently announced change for political reasons–the government want to be seen by the global community as doing something–but the motivation for the manufacture of so-called clean technologies is profit driven.

Most in China don’t worry about using anything but the cheapest forms of energy. Certain technologies are attractive to industrialist because there is demand abroad. While these technologies may eventually become widespread, the emphasis for now remains on export opportunities.

Friedman has chosen to write about environmentalism precisely because his (American) readers have the subject on their minds. In China, there is no similar concern. The level of environmental consciousness in the country is abysmal. Utterly.

There’s a point at the beginning of Poorly Made in China where I am standing with an industrialist outside a nickel-plating factory in South China, looking with him out over a polluted landscape. When I complain about the stench, the factory boss at my side criticizes me, suggesting there we have “cultural differences” on the subject of pollution.

Industrialists resent pressure to clean up their act, and even Mainland Chinese who are not directly involved in industry share this view (because they do not want to slowdown the dream of a China that is supremely powerful and very wealthy). China is gripped by a mania for money, and the emphasis is on growth at any cost. The rivers really do run black, and the only real concern over “greening” involves the pursuit of American dollars.

Battery power is taking off in China, not for philosophical reasons, but because it’s a dirty business. The technology behind batteries has changed little since the 1950s. They are made with lead. China’s manufacturing advantage in this area is cultural. Manufacturers are more than willing to jump into projects involving hazard to worker and community health. China is producing energy-saving devices precisely because the people there cares less, not more, about things like the environment and safety.

Friedman’s article was published over the same weekend that yet another lead scandal was underway. This time, 121 children have been found with the toxic substance in their systems. In recent months, thousands of children have been diagnosed with lead poisoning in China.

I would like to agree with Friedman, but when it comes to the environment, it is China–not America–that needs a Sputnik moment. I don’t know what might produce such a trigger, but Chinese ought to want a better quality of life. With too many there behaving badly, though, environmental risk is ubiquitous. In all honesty, there are few parks in the country in which one dares to sit on the grass…and there are fewer people who give a damn about it either.

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Following up on yesterday’s post, some new information…

My earlier suggestion that “cultural differences” play a role in the chicken trade was not far from the mark, but chicken feet are only a part of the equation. Actually, about half of all chicken exported out of the U.S. involves “leg quarters,” and something else I did not know: U.S., Canada, and Britain are the only primary economies where white meat is more popular than dark.

Chickens are normally heavy on dark meat, but growers in the U.S. breed chickens so that they have more white meat. Today, about 52% of our birds are white meat by weight. As a result of the imbalance between demand for white and dark, a surprising 30%+ of all dark meat chicken produced in the U.S. is exported.

One of the reasons that I highlight this new (to me) data is to back up yesterday’s assertion that it will be tough for China to prove “dumping” when there is a value differential based on cultural preferences. We export dark meat — our leftovers really — for a lot more than it will bring at home. While it might look like it from abroad, this is not dumping. The prices that exporters set have to do with market forces.

There was, by the way, a dumping claim out of South Africa against the U.S. poultry industry, and the home team came out on top. Cultural preferences for dark meat was mentioned as a part of that case, and the point ought to be revisited in any future China claim, as well.

The trade situation is different than some are making it out to be. It’s not exactly that a chicken probe may be launched in response to Barack Obama’s new tire tariff. China has for a long time been interested in exporting chicken to the U.S., which requires approval from the U.S. Department of Agriculture.  USDA was apparently close to approving cooked (presumably canned) product when Congress intervened and prohibited USDA from spending money on the review process, which brought the opportunity to a halt. China took the action as a slap in the face and complained about it to WTO. All of this happened, and then came the tire deal.

Much of the information above was supplied to me by a source who prefers to remain anonymous. My source asked a good question at one point, which I will leave off with: Why should China not be allowed to ship chicken products to the U.S. when we ship so much of it to China?

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Ten years ago or more, the National Chicken Council came under fire for not meeting consumer demand for chicken feet in China. “What can I tell you,” the president of the U.S. council said, “We have a billion chickens, and each has only two feet!”

Why do I recall the anecdote now? Because Barack Obama has moved to raise tariffs on China-made auto tires, and China has responded by suggesting that it is going to launch a probe into U.S. “dumping” of chicken parts into China.

A couple of things. First, U.S. demand for (certain) chicken parts will always be lower than China’s, because Westerners do not place the same value on things like chicken feet (sorry, but true). Second, America is slaughtering around 9 billion chickens each year — that’s only 18 billion feet — and with a supposed 1.3 billion Mainland Chinese, demand still easily outstrips supply. (Imagine: “I’m sorry, Mr. Wang, but you’ve already eaten the September ration. You’ll simply have to wait until October for your next foot…”)

Bottom line? If China launches a retaliatory strike on U.S. poultry, it is going to hurt itself more than anyone else. U.S. chicken values are fairly low, and if our farmers need to increase prices because they can’t get parts out to China, consumers in the U.S. will survive. They will either pay a little more, or they will look to substitutes. I don’t think the same can be said about Chinese consumers, who have a strong affinity for certain bird parts, and who are more price sensitive.

China doesn’t want to retaliate, not really. Case in point from the China Daily; while talking tough, Beijing is throwing down the pity card. The propaganda broadsheet is “reporting” that new tire tariffs will lead to as many as 100,000 job losses for China. I don’t believe those numbers, and I don’t think that we will see China slow down the importation of U.S. chicken parts in the near future either.

[Note: There are approximately 1 billion chickens in the U.S. at any given time, while 9 billion are slaughtered each year. It takes only a few weeks to grow a chicken.]

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My editor reminds me that one of the purposes of this blog is the continued promotion of “Poorly Made in China.” To that end, a few links to recent book reviews with excerpts:

1. Forbes — “Some critics say ’Poorly Made in China’ is far too negative about China’s manufacturing record. I hope they’re right. My reading is that Midler faced the sort of challenges that can confront any foreigner doing business in China’s fiercely competitive economy. His insights about this one business subculture–export manufacturing–offer worthwhile lessons for anybody thinking of coming to China…” (Gady Epstein)
2. South China Morning Post (subscription req’d) — “Chinese manufacturers’ main tactic for increasing profits is ‘quality fade.’ This is the incremental, almost imperceptible degradation of a product by reducing the quality and quantity of raw material inputs. The product starts out built to specifications, but the longer the relationship continues, the more creative are the ways the manufacturer finds to cut costs.” (April Rabkin)
3. Now Toronto. “After reading this investigative travelogue, you won’t look at the  label “Made in China” the same way.” (David Silverberg)

If you’ve already read PMIC, please look for other books. Help support the publishing industry in this tough economy by spending more on the printed word. Whatever you do, stop reading blogger-dreck! Lots of great books in the marketplace these days, seriously…

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Someone forwarded me an article by Malcolm Moore of UK’s The Telegraph, and its theme is a familiar one:

“Doing business in China is getting harder, not easier, according to European businesses…the business climate is getting worse…[T]here had been ‘a slowdown, and in some cases partial reversal, of the reforms of recent years.’”

This trend is one of the points of “Poorly Made in China,” and it also coincides with the theme of an article I wrote eighteen months ago. For anyone who may find the view of interest, a small excerpt:

“One of the big questions going forward is whether the [Chinese] government will allow foreign companies to compete unfettered, or whether they will burden foreign firms with increased taxes, regulation and the unequal enforcement of laws that were meant to apply to foreign and domestic firms in equal measure. China has been more open than either Japan or Korea at comparable stages in economic development—but one has the sense that profit zero will play out on the macro scale, that the day will come when the nation will come to see the work of foreigners as largely done.”

What do we make of a place that is becoming increasingly difficult to work with over time? What does the trend suggest about things to come? China was supposed to become a more convenient partner as it grew and became more successful. This was the promise made by U.S. politicians and advisors.

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Financial Times published an article last week that led me to learn about “The Foreign Manufacturers Legal Accountability Act of 2009.” First, something about the article. The 3,000-word piece highlights an accident that involves China-made fireworks and a related legal battle:

“The story of the accident that maimed Robert Silverman, and his subsequent quest for damages, starts in 1994, during an Independence Day fireworks display he was mounting in Annapolis, Maryland, and winds through interminable court hearings, depositions and writs. It tells us much about how – in a world where anyone can sell into any market – domestic legal systems are ill-prepared to protect consumers damaged by foreign-made products. And because the company that Silverman sued is Chinese, it tells us much about modern China and the way it does business.”

The case was brought to a Pennsylvania court, which awarded the plaintiff millions in damages — $7 million — but the Chinese company responsible for the fireworks chose a “do nothing and hope that it will go away” strategy, which effectively worked.

The article’s conclusion…

“Past chances to bring China to heel — in the days before it became the manufacturing powerhouse it is now - have been missed…”

…is similar to a point made on the last page of my book:

During the Clinton Administration…there was a chance for the United States to hold out for political and economic reform in China, but the opportunity was lost.

Curious about the article, I got in touch last week with one of those interviewed. Thomas Gowen is an attorney who practices out of Philadelphia. He has testified before Congress, arguing that we should pass laws that make it possible to hold foreign companies accountable for faulty products. He told me about the recently introduce bill – The Foreign Manufacturers Legal Accountability Act of 2009 — proposed by Senator Sheldon Whitehouse earlier this year, which may close a “loophole” that an increasing numbers of lawyers have been taking advantage of.

Gowen explained that foreign companies sued for product failure are using something called the “Asahi Motion” as a defense. Asahi, which was decided by the U.S. Supreme Court in 1987, enables corporations to get out of product liability by claiming that they had no idea their wares would wind up in a given jurisdiction.

For example, a consumer in Massachusetts who suffers injury from a product made in China may sue the overseas supplier. The supplier responds by saying its importer was not based in Massachusetts, but in California. It had no idea the product sold to California might wind up in a state on the U.S. East Coast. (So much for Thomas Friedman and his “flat world” thesis.)

The number of cases that cite Asahi, according to Gowan, has risen sharply in recent years. This is due in part due to the success that attorneys have had with the defense. While on the phone with me, Gowan did a search on Lexis and noted that Asahi has been cited 5,953 times. The figure was up sharply since his congressional testimony given just a few months ago.

Many have criticized me for not offering solutions in my book, but I have made suggestions — in talks and online. To improve the quality situation in China, one thing that we can do is make it easier to bring suit against those who originate quality problems. Importers are not to blame, but those who produce faulty goods. There is a carrot in China with no stick. It is in our interest to support a bill like the Foreign Manufacturers Legal Accountability Act, and, if China knows what’s good for it, it will provide leadership that makes such legislation unnecessary.

____

Note: Image at the top is an advertisement from the New York Times this past week. It is part of a “cash for clunkers” program launched by Toys R Us. The campaign invites consumers to bring in old baby products in exchange for those made by certain branded firms. The move is related to safety concerns, and I have previously written about the link between China and baby product failures. I’ve also written something about problems with Chinese fireworks.

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Drywall has been a big story, but not all media outlets have handled it in the same manner. I thought that it would be instructive to do a side-by-side comparison of two newspapers and their coverage.

For those who don’t have a clue about the failure, bad drywall imported from China has been placed in as many as 100,000 homes. The level of property damage is on a par with a major hurricane disaster, and there are likely to be untold health effects, as well.

CASE A: Wall Street Journal

Wall Street Journal took a recent, sharp turn in its coverage of the drywall case. For the longest time, it denied or downplayed any threat. To see WSJ’s turnabout, we start at the beginning of the year.

January 12: WSJ mentions China drywall for the first time, noting only that it has been cited in “building woes.” Health officials were quoted as claiming that there was “no immediate health threat.”

February 6: Casting the problem as all but insignificant, WSJ blogs asked: “Is Chinese Drywall the New Mold?” and they made attorneys on the case out to be predators:

“Florida lawyers have filed at least three separate lawsuits against the manufacturers and installers of the problematic drywall, including one case seeking class action status. A law firm in Bonita Springs, Fla., has created the Web site, www.defective-chinese-drywall-lawsuit.com, trolling for plaintiffs. ‘Victim of defective Chinese drywall in your house? We can help,’ the Web site beckons.”

March 30: In a piece about a bill promoted by two U.S. Senators, WSJ emphasizes the “rotten-egg smell” coming from the bad drywall, but then they toned down any threat to health:

Florida’s health department said preliminary tests show there’s no “specific” health hazard associated with the sulfur-based gases coming from the drywall, but the agency is conducting additional tests.

March 31: WSJ’s Asia offices post a blog piece offering, “A Chinese View of Drywall Issues,” and details from a report released in China.

The report quotes Xu Luoyi, head of the National Building Materials Industrial Technology Supervisory Research Center, extensively as defending the quality of Chinese drywall. He notes that there haven’t been reports of people suffering negative health impacts from Chinese-made drywall in any places where it has been used, either inside or outside of China. Xu said the problems could also be attributed to environmental factors such as climate.

July 16: For the first time, WSJ hints at the scope of the problem, suggesting by way of a quote that as many as 100,000 homes may be affected. The article details a few health claims and mentions in passing that the gypsum may be synthetic. The minor mention of fake gypsum is what they call in journalism, “burying the lede.”

August 6: Boom! WSJ publishes “The Prisoners of Drywall,” in which the full extent of the problem is revealed. WSJ’s turnabout has them putting a human face on the suffering by zeroing in on one family affected by the defective product. This is months after lesser publications have highlighted the problem:

“The Cramers—along with thousands of other homeowners in Florida and elsewhere—now believe that imported Chinese drywall is making them sick and destroying their property. The drywall, which is used in walls and ceilings, is emitting sulfur-compound gases that homeowners have described as giving off a sour or “rotten egg” odor. Many blame the fumes for eye, skin and breathing irritation and nosebleeds, as well as the corrosion of copper pipes, electrical wiring and air conditioners.”

The tone change is striking. This last piece was done as exposé, and you have to wonder where WSJ has been all the previous months. For the timeline comparison, coverage by a South Florida newspaper comes next.

CASE B: Sun Sentinel

The newspaper was successful in providing great, early work, but it pulled the plug on coverage. Sun Sentinel not only stopped, but seems to have gone so far as to scrub their website.

Note: Every one of the articles listed below is currently unavailable at the newspaper’s site. I managed to find approximate dates, partial article titles, and original links anyway.

April 6: America Needs to Send a Stronger Message to China

“So it’s time for our government to send the message loud and clear: Enough is enough, China. Fix the problem or else. Drywall imported from China during…”

April 6: Crist Asks for Help Studying Chinese Drywall

“The drywall, imported from China during the building boom of 2002 to 2006, has been blamed for foul odors, corroded copper pipes and wires, and respiratory…”

April 6: Gov. Charlie Crist Says He’ll Seek Federal Aid to Test China

“Once he determines the air quality is dangerous for citizens, we hope the next step is a state of emergency.” Parkland Mayor Michael Udine invited Wexler…”

April 9: Residents Seek Help for Chinese Drywall Issue

“Espinal is one of the many homeowners in Heron Bay whose lives have been thrown off the rails due to the use of Chinese drywall in the construction of their…”

April 13: Wexler No Resident

“After touring neighborhoods tainted by effects of Chinese drywall, US Rep. Robert Wexler said, ‘I’ve never seen anything like this’…”

June 12: What’s Known About Chinese Drywall

“Some drywall imported from China between 2002 and 2006 seems to cause problems. In the past year or so…”

June 14: Bad Drywall Leaves Owners Frustrated, Fearful

“After hurricanes, foreclosures and dizzying price declines, contaminated drywall from China is the latest hardship facing homeowners…”

I don’t know which is worse, now — that WSJ has been slow in coming around, or that Sun Sentinel, early in running with the story, may have later got cold feet.

Sun Sentinel’s missing-link problem, by the way, is a very good argument for not cutting library microform budgets. No matter the reason or excuse in the case, newspaper articles like these should remain accessible to the public. Or, am I wrong?

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