Power play abroad
Manufacturing overseas can pose its own set of challenges.
Karen E. Thuermer, reporting from Hong Kong -- Gifts and Dec, 3/1/2003 12:00:00 AM
Sourcing product has always been the task—and the risk—of the buyer.
Toys, of course, are no exception and odds are, most are manufactured in China's Guangzhou Province. According to a Hong Kong toy industry representative, 80 percent of the world's toys are made in this Canton's Pearl River Estuary and most are shipped to the United States.
But contrary to opinions that these factories are sub-standard, quite the opposite is true. This is taking some of the risk factor out of product sourcing.
"There have been dramatic changes," Ian Anderson, president of Hong Kong-based Toy Factory Audits, Ltd. (TFAL), told PLAYTHINGS. "Not only are the factories today, modern [but] the Chinese government has chosen among the best of the world's labor laws and put these in place."
Top supplier Forward Winsome Industries Limited, for example, operates factories in Guangzhou Canton. "We have full capability of accomplishing every part of the production process in-house," says Jeffrey Lam, Forward Winsome's managing director.
TFAL audits factories to make certain they comply with codes. Meanwhile, the Hong Kong Toys Council, an industrial group within the federal government and part of the International Council of Toy Industries (ICTI), works to educate manufacturers about best practices.
"The first thing we do is make certain that products being manufactured are safe," says Joseph Y.K. Li, secretary general of the Hong Kong Toys Council. The council is working closely with the Toy Industry Association (TIA) and ICTI on a uniform certification program.
"The problem is suppliers have to deal with codes developed by suppliers such as Mattel, Disney, Toys R Us and Wal-Mart," Li says. "While each might maintain a different set of codes, all cover environment, health and safety and workers' rights."
While the Chinese government has carefully introduced change, Anderson remarks there are too many codes. "People understand the need for codes," he says. "But implementing national safety standards, for example, takes a long time."
The big issue these days, however, is pay. Whereas China's labor law used to allow 48 hours with one rest day each week, now the law reads 40 hours per week, 60 hours maximum, including overtime.
"The overtime is the problem," Li says. "Many of the workers come from remote and poor areas of China to earn higher wages. They prefer to work 12+ hours a day."
Those salaries average between $100-$200 per month. Rent for company-provided dormitories costs 50 cents per month. "Some workers receive their meals for free," Anderson adds.
Given toy manufacturing's seasonal nature, manufacturers find it difficult to comply with labor rules during the high season. Compounding this, buyers are now reluctant to place orders early.
"The process is getting more just-in-time with zero inventory," Li says.
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