VZCZCXRO5414
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #1213/01 3180458
ZNR UUUUU ZZH
R 140458Z NOV 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6653
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEAUSA/DEPT OF HHS WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASH DC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 02 GUANGZHOU 001213 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH O'BRIEN/INTL 
PROGRAMS 
STATE PASS USTR CHINA OFFICE 
STATE PASS HOMELAND SECURITY COUNCIL 
STATE PASS IMPORT SAFETY WORKING GROUP 
 
 
E.O. 12958: N/A 
TAGS: ETRD EIND TBIO ECON PGOV CH
SUBJECT: MATTEL - MENDING FENCES AND FIXING PROBLEMS 
 
REF: GUANGZHOU 887 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. Not for release outside U.S. government channels. Not 
for internet publication. 
 
¶1. (SBU) Summary: Mattel's relations with Beijing are on the mend 
and there are no indications that provincial government authorities 
are planning to sue the company for alleged damage to the "Made in 
China" brand, according to Mattel executives based in South China. 
More frequent product testing and enhanced supply chain control - 
the lessons of the recall - have prevented further problems with 
lead paint in Mattel toys since August.  The executives also 
commented that China had strengthened its inspection system for the 
toy industry, with new Chinese regulations requiring toy 
manufacturers to get third party certification confirming that new 
toy lines meet safety requirements.  End summary. 
 
Mending Fences with Chinese Officials 
------------------------------------- 
 
¶2. (SBU) Mattel's relationship with Chinese national-level officials 
is improving, according to Theodore Pang, Senior Counsel and 
Director of Asia Pacific Legal Affairs.  Pang told Congenoffs 
November 9 that after a recent informal lunch with a high-level 
MOFCOM official, senior Mattel executives felt that Beijing no 
longer doubted the company's commitment to improving China's safety 
record.  Pang stressed that Mattel and China had a long history of 
working together and the national government is again relying on the 
company to play a leading role in restoring the international image 
of brand China. 
 
¶3. (SBU) Pang also said he was not aware of any lawsuits against 
Mattel for damaging the "Made in China" brand.  Media reports in 
early November cited rumors of provincial Guangdong officials 
considering a suit against Mattel for alleged harm to the country's 
reputation.  Subsequent news stories quoted officials clarifying 
that the government would not be filing any lawsuits of this type. 
Pang emphasized that his company had cooperated with government 
authorities at every level to correct Mattel's quality problems. 
This has included working with Guangdong provincial officials to 
organize product quality training for other players in south China's 
toy industry. 
 
¶4. (SBU) During the discussion with Congenoffs, John Trang, Vice 
President and General Manager for Mattel's south China operations, 
noted rising costs in the Pearl Delta River region and said Mattel 
was looking at other possible locations for expansion of 
manufacturing operations.  However, he emphasized that Mattel had no 
interest in relocating its manufacturing facilities out of China. 
 
Fixing Problems in Supply Control 
--------------------------------- 
 
¶5. (SBU) Expanded testing has been one of the key elements in 
Mattel's effort to strengthen product safety controls in its south 
China manufacturing operations.  The executives explained that 
Mattel had begun testing every new batch of toys for lead and other 
heavy metals, regardless of how long a particular line of toys has 
been in production.  Prior to Mattel's August recalls, it relied 
primarily on random sampling for well-established toy lines after 
they passed a battery of initial quality and safety tests.  The 
Foshan factory that Congenoffs visited, which makes die-cast Hot 
Wheels cars and plastic Fisher Price toys, employs approximately 150 
quality control workers out of a total staff of about 4,000 during 
peak season.  Mattel's product testing lab nearby occupies 2,000 
square meters with 60 technical staff.  The lab performed 15,000 
tests in 2006 and is working towards accreditation as a private lab 
capable of certifying toy quality for any toy manufacturer in China. 
 
 
¶6. (SBU) In addition, Mattel has tightened controls over companies 
authorized to supply paint for its products.  Mattel requires all 
factories and sub-contractors to order paint from one of seven 
certified Chinese suppliers.  Each new batch of wet paint is tested 
upon delivery to the factory before being released for production. 
Random testing also continues for dry paint during each production 
run.  All paint used in Mattel's products is coded by batch and 
 
GUANGZHOU 00001213  002 OF 002 
 
 
catalogued to allow traceability if test results reveal problems 
later in the production process.  The Mattel executives told us that 
no new cases of lead paint had been discovered since the new 
procedures were implemented in August. 
 
China Tightening Controls Too 
----------------------------- 
 
¶7.  (SBU) Chinese inspectors have also tightened their product 
safety controls, according to the Mattel executives.  Simon Tan, the 
Manufacturing Director at the Foshan plant, said that China 
Inspection and Quarantine (CIQ) inspections had become more 
frequent.  Previously, the Foshan plant had been inspected only on a 
yearly basis.  However, since the recent recalls, the plant had 
already been subjected to additional inspections.  He also noted 
that new Chinese regulations required toy manufacturers to get third 
party certification confirming that any new toy line meets safety 
requirements. 
 
GOLDBERG