VZCZCXRO8546
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #1249/01 3330653
ZNR UUUUU ZZH
R 290653Z NOV 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6703
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 WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 02 GUANGZHOU 001249 
 
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: CPSC RICH O'BRIEN VISITS FACTORY THAT PRODUCED TOXIC AQUA 
DOTS TOY ON SOUTH CHINA TOUR 
 
(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: How does a potential toy nightmare and company 
branding problem get underway?  In the case of Aqua Dots, it was 
partially caused by having just one manufacturing option.  The toxic 
adhesive formula used in the Aqua Dots was developed locally by the 
Chinese manufacturer after the Australian distributor asked it to 
increase adhesion in the final product.  A Wangqi Product Factory 
(Shenzhen) employee and local Chinese officials told Consumer 
Product Safety Commission (CPSC) and Consulate officials about their 
investigation during a November 15 site visit, only one week after 
the Aqua Dots were pulled off shelves and production stopped.  Tours 
of local CIQ offices and labs, as well as a high-end toy factory, 
all revealed how seriously China is working to reverse the effects 
of negative publicity after a string of toy recalls since 
mid-summer.  Public outreach at a toy safety seminar and meetings 
with the local toy industry association alerted many companies that 
new product safety standards are being debated in the U.S. Congress 
and toy designers should consider the possible changes when planning 
future production.  End summary. 
 
Visiting the Factory that Produced Toxic Aqua Dots 
--------------------------------------------- ----- 
 
¶2. (SBU) The toxic adhesive formula used in the Aqua Dots toy was 
developed locally by the Chinese manufacturer after the Australian 
distributor asked the firm to increase its adhesion, according to an 
engineer involved in the toy's production.  During a November 15 
tour of Wangqi Product Factory arranged by Chinese inspection 
officials, the engineer described to CPSC International Programs 
Director Richard O'Brien and Congenoff how the first Aqua Dots 
product sample was provided by Australian toy distributor Moose 
Enterprise via a Hong Kong intermediary in 2005.  The sample toy's 
adhesive properties required further extensive development before 
the Australian firm accepted the final design of the recalled toy. 
Moose Enterprise ordered commercial production in 2006, after a year 
of local R&D efforts succeeded in meeting the distributor's 
requirements to increase the adhesion of the beads when sprayed with 
water.  The Aqua Dots toy was recalled world-wide on November 7 
after Australian and American children who swallowed the small beads 
lapsed into a coma.  As has been well reported, a chemical in the 
beads metabolized in the children's stomachs as GBH, also known as 
the "date rape drug."  The factory engineer told us that Wangqi was 
the only factory producing Aqua Dots, a conclusion supported by the 
investigation of Shenzhen China Inspection and Quarantine (CIQ) 
officials. 
 
¶3. (SBU) This factory visit, just one week after the recalls were 
announced, showed U.S. officials first-hand how China's General 
Administration of Quality Supervision, Inspection and Quarantine 
(AQSIQ) and local Shenzhen CIQ officers responded to the 
international product safety investigation by seizing and locking up 
production materials and finished toy sets, as well as the molds 
used to produce the Aqua Dots toy.  An AQSIQ representative from 
Beijing described his agency's ongoing investigation; Shenzhen CIQ 
officials said they had revoked the factory's export license and 
seized the relevant evidence within a day of learning about 
world-wide product recalls.  Wangqi Product Factory is relatively 
small, producing 100 different toy products and employing 300 
people, who are now out of work while Chinese authorities conduct 
their investigation.  More than 100 of the unemployed workers are 
still housed at the dormitory on the factory premises. 
 
Guangdong CIQ Shows Toy Testing Lab 
----------------------------------- 
 
¶4. (SBU) During a visit to Guangdong's Provincial CIQ Technology 
Center, officials explained that the center's Toy Testing Lab 
performed 10,000 quality tests in 2006.  In addition, Liu Zhongyong, 
Director of the center, also noted that the CIQ facility includes 8 
other labs, employs more than 430 workers and has equipment worth 
RMB 120 million.  Separately, Guangdong CIQ Deputy Director General 
Li Qingxiang explained that 80 per cent of Guangdong's toy exports 
are produced by only 200 large factories, and CIQ inspects each 
producer and its toys regularly to ensure quality.  Comment: This 
 
GUANGZHOU 00001249  002 OF 002 
 
 
lab tested Aqua Dots for compliance with U.S. safety standards and 
as a result, Guangdong CIQ granted the company a permit to export 
the product.  The subsequent fiasco demonstrates that even an army 
of government inspectors cannot ensure compliance with all existing 
laws and regulations absent industry commitment to an end-to-end 
compliance assurance program.  End Comment. 
 
Silverlit Toys Literally Flying Off Shelves 
------------------------------------------- 
 
¶5. (SBU) One of Hong Kong's most successful mainland-based toy 
companies opened its doors to International Director O'Brien and 
showed off the factory's safety and quality testing facilities. 
General Manager Kevin Choi described Silverlit's design process as 
centered on product safety, reinforced by extensive onsite testing 
of each component.  The company employs 4,000 workers at its 
Dongguan factory, and the tour offered a glimpse at each major 
production department, including tools, plastic molds and injection, 
electronics, painting, assembly, testing and packaging.  Silverlit's 
toys are exported to the U.S. and many other developed-country 
markets in addition to being one of the top three toy brands in 
China's department stores. 
 
South China's Toy Industry Welcomes CPSC 
---------------------------------------- 
 
¶6. (SBU) Speaking at a conference sponsored by the Toy Industry 
Association of America, International Director O'Brien described the 
U.S. product safety system and previewed draft product safety 
legislation currently being considered by the U.S. Congress.  He 
noted that draft bills in both houses of Congress include lower 
testing thresholds for lead, increased third-party testing 
requirements for children's products and increased emphasis on 
traceability of production materials from initial procurement to the 
final sales in U.S. stores.  O'Brien contrasted differences between 
China's reliance on government pre-market inspections with the U.S. 
model, which stresses industry's responsibility to comply with 
standards and to report problems when they are discovered. 
 
¶7. (SBU) In a separate meeting with the Guangdong Toy Industry 
Association (GDTA), International Director O'Brien urged producers 
to demand the most accurate and up-to-date standards information and 
production requirements from U.S. importers to help prevent toy 
safety problems.  Association Vice Chairman Li Zhuoming described 
his organization's efforts to improve toy safety and increase 
awareness among the 5000 toy producers in Guangdong Province, which 
make 80 percent of all toys in China.  Frequent training and 
technical support seminars, an extensive website and an industry 
magazine distributing 10,000 copies monthly are just some of the 
ways GDTA works to educate toy factories and designers. 
 
¶8. (SBU) This cable was cleared by CPSC Rich O'Brien. 
 
GOLDBERG