Source:blog.wired.com

Recalls are an inevitable byproduct when you’re in business, but China’s recent rash of export malfunctions in the past few months makes me wonder if doing business in China is worth the hassle, not to mention consumer deaths.

While for decades we’ve ignored poor work practices and horrendous environmental crimes in the country, we now can’t ignore the dangerous products imported from them. How many more recalls need to happen before we realize that the money saved on outsourcing just ain’t worth it?

It all started with bad gluten. This March, after family pets started dropping dead after scarfing down their meals, the F.D.A. found a poisonous food additive in millions of cans of popular pet food. The dangerous wheat gluten came from China, along with cyanuric acid, a chemical used in swimming pools, which may have also been added to the foods to increase profits.

In June came a recall of contaminated seafood. According to the New York Times:

The F.D.A. said it decided to take the action after years of warnings and even a visit to Chinese fish ponds that resulted in no signs of improvement. But Dr. David Acheson, the F.D.A.’s assistant commissioner for food protection, stressed that the seafood posed no immediate health threat, though long-term consumption could result in health problems.

Years of warnings?! Shouldn’t the food have been temporarily banned once they found a potential problem? Wouldn’t a halt in imports of the seafood by the US be the best way to convince these companies to clean up their act?

Then came light-truck tires made in China which were missing or had inadequate gum strips, which help keep tires on the road. The faulty rubber led to two deaths.

And now Mattel, who sent its Chinese manufacturer appropriate lead-free paint, found out their Cars toys were fully leaded, a second blow after recalling lead-tainted toys made in China earlier this month.

Why aren’t US companies more involved with what happens once they send out their product schematics? Why are we importing from companies we know aren’t producing food up to our regulation standards?

A few weeks ago Business Week ran a cover story on China’s vulnerability as a rising superpower as a result of ignoring foreign relations issues regarding the environment and its business practices. I highly recommend it.

We are currently watching a country with so much potential squander opportunities because of greed. It’s a lesson the US should take to heart.

Source: www.iht.com

Investors are overlooking the increasing risk in Asian markets from rising outsourcing and consumer debt, Citigroup said.

Outsourcing of manufacturing by companies in the United States, Europe and Japan to Asia has made the region “more sensitive” to a slowdown in global demand than at any time in the past 15 years, Citigroup analysts said in a research note. Demand could be hurt if central banks raised interest rates, it said.

Consumer debt is also rising, with domestic credit in 6 of 10 Asian countries equal to more than the gross domestic product. China, South Korea and India registered the fastest growth in domestic debt, the analysts said.

“If these concerns regarding credit quality persist, it would be heroic to believe that the consumer would be willing to take up more debt for consumption or that the loan providers would be willing to extend the loans,” they said.

In 2006, domestic credit was at 99 percent of the $13.4 trillion U.S. economy. In China, it has risen to 138 percent from 84 percent in 1995. In South Korea, it jumped to 107 percent from 54 percent, while domestic credit in India rose to 64 percent from 44 percent, the report said. In the euro zone, the level is 153 percent.

One of the side effects of outsourcing has been a rise in the operating leverage of companies as fixed costs increase, the report said. Operating leverage is a measure that compares fixed costs to variable costs.