International scrutiny has pressured producers to take responsibility, if not evaluate flaws in the way they do business.

If we’re to do business, keep the poison away. Such is the message reverberating lately in the global marketplace.
Mercury tests of tuna sushi bought in October by the New York Times from Manhattan restaurants and stores revealed toxic levels high enough to warrant precaution for children and pregnant women. Some suppliers have argued that because mercury enters the oceans as an industrial pollutant, its presence in fish is out of their control and must instead be dealt with on a global level.
The West isn’t the only place calling for more transparency and oversight in global markets. Demand for goods and services free of risks and flaws is shared widely. Could this convergence of attitudes be a step toward more balanced globalization? That is, globalization in which poor nations have as much say about product and service standards as the Western nations that previously lectured them about quality and modernization, Reuters reported.
Take for example the parallels between China’s problems with toymakers and the financial turmoil tied to America’s mortgage market. In both situations, international scrutiny pressured producers to take responsibility, if not evaluate flaws in the way they did business.
During the summer of 2007, toys manufactured in China were found to contain unsafe levels of lead in paint, forcing major American companies like Mattel and Toys “R“ Us Inc to recall products. Among a series of safety-related recalls, these incidents aggravated the business environment between suppliers in the East and buyers in the West, with the bad PR spilling over to all things “Made in China“.
“China must deal with these concerns in a head-on and transparent way to preserve the made-in-China brand,“ said US Health and Human Services Secretary Michael Leavitt at a press conference last fall. Leavitt added that China’s regulatory system needed “to increase its vigor, its sophistication and its effectiveness“.
Around the same time, securities backed by risky subprime mortgages in the United States threatened to send the country into recession, impacting markets worldwide--America’s own toxic export.
While China was dealing with recalls of its manufactured goods, the country also suffered its first serious setback from exposure to subprime mortgages. The New York Times reported in August 2007 that shares in Bank of China, the country’s second-largest bank, fell 5.4 percent in Hong Kong a day after the bank reported holding nearly $9.7 billion in securities tied to subprime mortgages. Industrial and Commercial Bank of China, the country’s largest Chinese lender, was also impacted after it disclosed that it was holding $1.23 billion in securities tied to such mortgages.
It remains to be seen to what extent problems related to subprime mortgages in the United States will impact world markets. Nevertheless, leaders worldwide are alarmed. Just as the United States grilled China over its manufactured goods, leaders from Brazil to South Africa have called for more oversight of financial services in America and Europe.
Banks and investment funds from around the world bought mortgage-related securities and other financial products based on those securities in the United States. American rating agencies had given the products favorable ratings in many cases and led investors to believe there was minimal risk. However, a wave of foreclosures struck the country as homeowners struggled to pay for their homes. The glut of unsold property has depressed home prices in the United States. As a result of the subprime crisis, the banking industry suffered big losses.
The German government has called for more transparency of hedge funds, many of which were heavily invested in the subprime loans. Officials have gone as far as urging for a global register of hedge funds and demand that the financial products be subject to stricter disclosure rules about their risk exposure, according to the New York Times.
The blame game makes headlines. But international scrutiny can also promote accountability. With the interdependence of globalization, it is bad business to ignore the demands and wellbeing of trading partners large and small. The new atmosphere may force corporations and governments to be more transparent.

Between January and October 2007, China sold $3.06 billion worth of toys to the US, up 13.3 percent over the same period of 2006, and toys worth $1.72 billion to the European Union, up by 29.9 percent.

Huang Chunman, a Guangdong-based toy trader, was apprehensive about her overseas market ever since the spate of recalls of Chinese toys last year. But she was relieved to find her company still received heavy orders from loyal overseas buyers.
“An influx of orders before Christmas came as a big relief,“ Huang, general manager of Bright Spring Trading Ltd, told Xinhua.net.
Toy manufacturers generally think it is difficult to inspire loyalty in this competitive market. However, good quality and smart design always get customer interest.
“Quality and design are now the top priority of our production, it surpasses all other issues like soaring material and labor costs,“ Huang said.
Rapid growth in material prices and higher wages in Guangdong province have forced the Shantou-based toy group to raise its prices by 10 to 15 percent.
“Higher prices did not affect our overseas business. But what we were concerned about the most was better quality,“ Huang said.
Like Huang, thousands of Chinese toymakers have been through a turbulent year. In 2007, “Made in China“ experienced an unprecedented “crisis of confidence“, triggered by the recall of China-made toys by Mattel Inc of the US. This was followed by other similar recalls of Chinese exports ranging from toys to toothpaste and food.
Quality defects weren’t the only reasons for the recalls. Disputes over standards, technical barriers and trade protectionism also played a large role. The industry must be more inventive to survive and cheap toys can’t survive competition and trade protectionism, said Samson Chan, president of the Toy Manufacturers’ Association of Hong Kong.
“Toy producers should try a new business model; they need to attach importance to more value-added products,“ Chan said at a toy fair in Hong Kong, which is home to over 3,000 mainland toy company headquarters.
PP Bear Industry Investment Co Ltd brought to the market innovative and hi-tech toys and did far better than it thought. The Shenzhen-based toy manufacturer developed teddy bears that can imitate human expressions, which was an instant hit with customers.
“We have aimed to turn our products from ’Made in China’ to ’Created in China’. And our products with independent intellectual property rights have been well received in the overseas markets,“ said Hu Lantian, chairwoman of the company.
The company, which began developing the overseas market last year, realized sales revenue of nearly 1million yuan from abroad. “It is expected to reach 5 million yuan this year since we will strengthen efforts to upgrade design and develop new products,“ Hu said.
Jeffrey Lam, chairman of the Toys Advisory at Hong Kong Trade Development Council, said despite the toy recalls last year, it was a good year for Chinese toys as industry players adhered to the high standards of product quality. China exported $7.07 billion worth of toys in the first 10 months of 2007, representing growth of 20.1 percent over the same period of the previous year.
Customs sources said the growth was 13.9 percentage points higher than the previous year’s level despite all the bad press that “Made in China“ products got. The 10-month period saw Chinese toy exports to European and North American markets recover and those to emerging markets grow rapidly.
Between January and October, China sold $3.06 billion worth of toys to the US, up 13.3 percent over the same period of 2006, and toys worth $1.72 billion to the European Union, up by 29.9 percent, according to the National Bureau of Statistics.
The growth rate was 11.2 percentage points higher for the US and 24.9 percentage points higher for the EU. The two markets absorbed 67.6 percent of China’s total toy exports.
China also sold $390 million worth of toys to Latin America, up 42.2 percent. Hong Kong toy exports in the first 11 months of 2007 topped $11.4 billion, up 25 percent over the same period last year. Exports to the two main markets--the US and the EU--were up 4.7 percent and 24.2 percent respectively.
Toy manufacturers on the mainland and Hong Kong have been advised to develop the domestic market, which has very strong business potential.

Pressure remains on the European Central Bank (ECB) to cut interest rates in the first half of this year as the negative effects of financial market instability feed through, despite the bank’s decision to keep its key rates unchanged, analysts said.
According to AP, the ECB decided to hold its key interest rates steady at 4 percent, ignoring calls from European economic circles to follow the US Federal Reserve’s lead to lower rates to promote economic growth.
However, volatile financial markets will further affect the real economy in Europe, leaving the possibility open for a cut in the ECB’s benchmark interest rate in the first half of the year, analysts said.
The main pressure, which builds on the ECB to cut rates, includes the Bush administration’s tax-relief plan and the US Fed’s monetary policy of lowering interest rates in recent months, as the US central bank has reduced rates five times since September to the current 3 percent in a bid to stimulate the economy.
Other factors which have helped turn up the heat on the ECB include forecasts by the International Monetary Fund that European economic growth would slow down to 1.6 percent in 2008, down from an estimated growth rate of 2.6 percent in 2007.
In addition, the Bank of England on Thursday lowered its benchmark rate by a quarter percentage point to 5.25 percent, its second cut in three months.
However, knowing that the euro zone is not immune to any global slowdown, the ECB seems more concerned about prices and high inflation, fearing that a cut in rates to boost growth could also spur inflation as consumer demand rises, the analysts said.
Analysts said the ECB left its interest rates unchanged for a number of reasons.
First of all, the ECB’s primary concern remains to curb inflation in the euro zone which jumped to 3.2 percent in January due to soaring prices of energy and food, its highest level since the euro was adopted and far above the ECB’s comfort level of around 2 percent, according to the European Union’s statistics bureau Eurostat.
The rising inflation has made it hard for the ECB to do what the US Fed has done to spur the economy. The decision made by the 21-member governing council of the ECB signaled that the overriding concern of the bank is curbing inflation rather than supporting a weakening economy, economists said.
Another reason deals with the brisk economic activity in the euro zone. The latest economic data show that production, consumption and employment in the euro zone remained in a relatively sound state in January.

Competition between carriers in the Middle East is strong and any wrong strategy could be costly.

The Middle East airline industry has been witnessing a stiff price competition to lure more customers as the region saw the advent of Bahrain Air, the first privately owned Premium Low Priced Carrier (PLPC), earlier this month.
According to Middle-East-Online.com, competing with the likes of Etihad Airways and its chronic loss-making sister Gulf Air, Bahrain Air, the kingdom’s second designated national carrier, vows to shake the airline industry with its low price strategy while offering customers a safe and comfortable flying experience.
“The airline plans to make 140 flights a week to 13 destinations in the Middle East and Africa, including Dubai, Alexandria, Beirut and Doha,“ Bahrain Air Managing Director Ibrahim al-Hamer said.
“Bahrain Air will offer on all its routes a two-class service (Business and Economy) and will offer its premium class passengers, complementary snacks and refreshments as well as invitation to Business Class Lounges at all departure airports. All Bahrain Air premium class passengers will be automatically enrolled in the airlines’ Frequent Flyer Program,“ he added.
Traveling to and around the Middle East has never been easier and the choice has never been wider for customers as more airlines launch new routes to further expand their business.
Competition between carriers in the region is strong and merciless and any wrong strategy could be costly to Bahrain Air. Gulf Air was losing more than one million dollars a day in April 2007, and managed to reduce its losses to $600,000 a day, which was one of the reasons the airline shelved plans to float on the stock market last month.
The airline’s initial public offering (IPO) will be postponed until the business is in a stronger commercial position.
“The airline will be privatized when it is financially feasible,“ Bjorn Naf, Gulf Air’s acting chief executive officer, said last month.
Bahrain Air has three aircraft already in place and plans to introduce a further four by the end of the year. The airline plans to have 10 aircraft by 2010.
The carrier’s plan is to serve the Persian Gulf Corporation Council, the Middle East, Africa and the Indian subcontinent.