VZCZCXRO1585
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #7485/01 3480624
ZNR UUUUU ZZH
P 140624Z DEC 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 4008
INFO RUCPDOC/USDOC WASHDC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RHEHNSC/NSC WASHDC
RUEAEPA/HQ EPA WASHDC
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SECTION 01 OF 04 BEIJING 007485 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH O'BRIEN/INTL 
PROGRAMS 
EAP/PD FOR NIDA EMMONS 
HHS FOR OGHA/STEIGER AND PASS TO FDA/LUMPKIN 
USDA FOR FSIS/RAYMOND 
USDA FOR FAS OA/YOST, OCRA/ALEXANDER, OSTA/BRANT AND SHNITZLER 
COMMERCE FOR ITA/HIJIKATA AND CINO 
STATE PASS TRANSPORTATION FOR NHTSA ABRAHAM/KRATZKE 
STATE PASS USTR CHINA OFFICE/TIM WINELAND 
STATE PASS OMB/INT'L AFFAIRS 
STATE PASS HOMELAND SECURITY COUNCIL 
STATE PASS IMPORT SAFETY WORKING GROUP 
 
E.O. 12958: n/a 
TAGS: TBIO EAGR ECON HHS ETRD BEXP CH
SUBJECT: ARMS WIDE OPEN, BEIJING WELCOMES U.S. CONSUMER PRODUCT 
SAFETY COMMISSION 
 
Ref: A. Guangzhou 1249 
¶B. Bejing 6264 
 
¶1. (SBU) Summary: Even after a week of United States toy recalls 
totaling almost 5 million units, U.S. Consumer Product Safety 
Commission's Rich O'Brien received a cordial welcome from Beijing 
authorities, private industry, and the China Toy Association during 
a four day November visit.  Meetings revealed that there is 
potential for cooperation with AQSIQ on new standards for toxic 
substances and with China Toy Association on outreach to toy 
manufacturers.  Industry association channels are critical to 
disseminating information on U.S. standards, and O'Brien encouraged 
Chinese companies to take a more active role in seeking standards 
requirements from foreign buyers.  In official meetings, the U.S. 
November 7 recall of the Aqua Dots craft toy and a surprise meeting 
with AQSIQ Minister Li monopolized the agenda, revealing the extent 
to which AQSIQ appreciated early notification from CPSC and the U.S. 
Embassy about the severity of the recall, enabling them to take 
prompt action on locating and closing down the manufacturer in 
Guangdong (Ref. A). 
 
¶2. (SBU) U.S. Consumer Product Safety Commission (CPSC) Director of 
International Programs Rich O'Brien visited Beijing November 10-14 
as part a three-stop visit to China.  O'Brien held official 
discussions with the General Administration of Quality Supervision, 
Inspection, and Quarantine (AQSIQ) and the Beijing CIQ, as well as 
private discussions with the China Toy Association, SGS testing 
company, and standards officials from the European Union. O'Brien 
also conducted a factory visit to Tong Niu apparel in northern 
Beijing. 
 
Aqua Dots 
------------- 
 
¶3. (SBU) AQSIQ Industrial Products Division Director General Wang 
Xin thanked CPSC for its swift communication about the severity of 
the Aqua Dots craft toy problem to his office after the recall was 
announced, enabling AQSIQ to pursue a trail that would lead to the 
manufacturer and the eventual closure of the Aqua Dots plant, which 
O'Brien later visited (septel). Wang sought further clarity about 
whether the CPSC viewed the product viewed as having a design flaw 
or a manufacturing problem.  To a child, the pellets resemble edible 
chocolate which could indicate a design flaw, but the toxic 
chemicals on the surface points to a manufacturing problem.  Wang 
asked to receive the medical records of affected U.S. children as 
well as pertinent U.S. regulations on the chemical so that China 
could ascertain the nature of the substance and its dangers.  Wang 
claimed the Aqua Dots manufacturer had sent product samples to 
testing firm Intertek in Hong Kong, which found the toy to be safe. 
With U.S. compliance experts still analyzing the case, including the 
substance's classification as chemical or narcotic, O'Brien said he 
would share the outcome of the investigation with the Chinese side 
as it becomes available.  Providing medical records to Chinese 
officials would be difficult because of privacy concerns, he said. 
 
 
¶4. (SBU) During a break conversation, AQSIQ officials pointed to 
cultural differences between the U.S. and China to explain why Aqua 
Dots would be less of a concern in China than they were in the 
United States. The intensive vigilance of Chinese parents over their 
children would prevent them from swallowing such toys in the first 
place, and officials noted that perhaps U.S. parents were not as 
careful. (Comment: Econoff raised the point that there was no data 
in China on the number of Chinese children who may have been 
poisoned by such toys. The AQSIQ officials, all of whom have 
children, conceded that it would be impossible to know. Still, their 
comments illustrate that Chinese parents have a higher threshold 
 
BEIJING 00007485  002 OF 004 
 
 
than typical U.S. parents for what constitutes a dangerous 
product.) 
 
¶5. (SBU) AQSIQ Minister Li in an unscheduled meeting went on at 
length about Chinese efforts to ensure product safety.  He also said 
that the U.S. and China should consider undertaking joint research 
into common standards for toxic substances, in addition to 
strengthening cooperation in special cases like Aqua Dots.  CPSC 
should also be more objective, he said, when identifying the reasons 
for a recall in its public communications.  O'Brien noted that the 
reasons for recalls are available to the public, but they are 
available long after the recalls are announced, and therefore do not 
receive much press attention. 
 
Progress on Lead Paint Plan 
and Support for Traceability 
---------------------------------- 
 
¶6. (SBU) Wang described AQSIQ's efforts in its lead paint action 
plan, including a new requirement for third-party testing, closer 
inspections of violating factories that export to the United States, 
and increases in training and dissemination of standards information 
to manufacturers.  O'Brien noted that these were all important steps 
to take, but emphasized the need to sustain such measures.  Wang 
replied that these efforts were sustainable, as long as the United 
States did not ask China to test every single toy, since China 
exports 22 billion toys every year.  Although some businesses do not 
want a system that imposed traceability, Wang said AQSIQ supported 
the concept. 
 
Tong Niu Apparel: A Model 
of Standards Awareness 
--------------------------------- 
 
¶7. (SBU) On an AQSIQ-sponsored trip to Tong Niu apparel in northern 
Beijing, company executives described their aggressive safety 
standards in manufacturing clothes for Columbia sportswear and H&M. 
Before acquiring H&M as a customer in 2000, the company had little 
awareness of high safety standards of premiere foreign labels. H&M 
then supplied Tong Niu with volumes of detailed standards 
information and undertook a thorough testing regime with the 
company.  Tong Niu also hired a full time standards officer to track 
compliance with and changes in buyer country standards. The firm has 
since become a contributor to the China National Garment 
Association's efforts to educate other textile firms about 
standards.  Tong Niu's higher wages and a regular 8-hour work day, 
which distinguish the company from its southern competitors, may be 
two factors that contribute to high production quality. 
 
¶8. (SBU) Tong Niu's early days in the 1950s shed light on the 
origins of quality control in state-owned industries in China.  In a 
system where all material and labor inputs were controlled by one 
single entity (the state), and all profit incentives were 
suppressed, tight quality control was seen as the only way to ensure 
a good product. (The firm even received praise from Chairman Mao for 
its quality.) The modern Tong Niu appears to have inherited its 
progenitor's business culture and emphasis on quality output despite 
its numerous acquisitions and expansions. 
 
Testing Firms Face 
Tighter Industrial Control 
------------------------------- 
 
¶9. (SBU) Executives from joint venture testing firm SGS said that 
the third party testing business in China was becoming more 
unpredictable because of new qualification certificate and 
examination requirements.  Qualification certificates were required 
 
BEIJING 00007485  003 OF 004 
 
 
starting in 2001 upon China's WTO accession, while the competency 
rules mandate that two-thirds of employees pass an annual technical 
examination.  Market access is also a concern.  Local CIQ offices 
must endorse the establishment of private testing company branches, 
resulting in a lengthy registration process that can take up to six 
months.  Testing firms are still restricted from offering China 
Compulsory Certification (CCC) services, while AQSIQ subsidiary 
companies, which may have access to CIQ facilities and staff, are 
granted exclusive product certification rights in specific market 
areas.  These restrictions and privileges are the result of AQSIQ's 
dual goal to impose industrial control while preserving market share 
for itself. Still, despite competitive pressures, private firms can 
benefit from government relationships.  Some local governments have 
recommended manufacturers to seek out SGS testing services. 
 
China Toy Association Seeks 
Further Engagement with CPSC 
-------------------------------------- 
 
¶10. (SBU) Despite concern over critical media reports about China's 
toy industry, China Toy Association (CTA) President Ms. May Liang 
said her group was pushing ahead to encourage toy manufacturers to 
achieve a 100 percent safety target for toy exports.  CTA studies 
show that awareness of importer safety standards must be raised, she 
said. Initiatives such as CTA conferences and expanded web-based 
resources are intended to accomplish that goal. Liang said CTA is 
working through AQSIQ's system to force small companies to develop 
product safety standard awareness. CTA is also encouraging companies 
to move away from a passive approach to standards toward an active 
approach to learning about them.  Chinese companies lose financially 
when recalls happen, regardless of the reason for the recall; a more 
active approach to standards can actually prevent financial losses. 
CTA supports mandatory third party testing, but Liang expressed 
concern about increasing costs. She acknowledged that the definition 
of "independent third party" in any new U.S. legislation and whether 
state-owned or state-affiliated testing companies would be 
considered as such will be of great interest to the Chinese toy 
industry.  She said there is potential for redundant, costly testing 
if these state-owned/affiliated firms are not considered as 
independent. 
 
Comment 
------------- 
 
¶11. (SBU) Foreign governments are already contributing to improved 
standards dissemination in China to assist regulatory authorities 
and industry. USTDA through its U.S.-China Standards and Conformity 
Assessment Cooperation Program has funded standards workshops with 
the American National Standards Institute and other organizations 
engaged in China.  Through its Quality and Standards Project, the 
European Commission conducts training and safety compliance work for 
toys exported to the European Union.  Still, ensuring consistent 
application of standards in China will require a sustained effort by 
all parties involved to implant a culture of product safety inside 
every industry and to provide industries with the tools to self 
regulate. Promoting and supporting industry self-regulation, as 
opposed to greater market surveillance, is a better way for China to 
guarantee safer exports, particularly since the size of the AQSIQ 
workforce remains static in the face of growing exports (Ref. B). 
 
¶12. (SBU) CPSC's cooperative approach to engaging with Chinese 
regulators and industry will benefit its future activities in China. 
China Toy Association invited CPSC to visit toy factories and 
contribute content to its trade publication. Similar interactions 
could be sought with trade groups across product categories and 
would likely reveal varied levels of awareness about consumer 
product safety rules, as well as gaps where technical assistance and 
 
BEIJING 00007485  004 OF 004 
 
 
government-to-government cooperation could make a difference. 
 
¶13. (SBU) This cable was cleared by CPSC Rich O'Brien. 
 
 
RANDT 
 
 
 
 
 
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