Chinese commerce minister Bo Xi-lai claimed on 3 August that “over 99% of China’s export products are good and safe”. That’s not good news for buyers. Since China’s 2006 exports were $974 billion (Rs39.35 trillion), Bo’s remark implies there may be almost $10 billion worth of dangerous goods gushing out of the country. As China gets richer, it needs to clean up its act.
It’s not surprising that Chinese companies sometimes ignore product safety in their export drive. Growth has been so rapid that many manufacturers are new to export markets and the standards they demand.
Moreover, China is one of the world’s more corrupt societies—over 1,800 officials confessed to corruption in June, according to China’s Central Committee for Discipline Inspection. If officials can be bribed to overlook infractions, product safety will inevitably suffer.
While China was poor, this did not matter much. Foreign buyers purchased Chinese goods only for bottom-end uses, and inspected them carefully before selling them in more developed markets. As China grows richer and its products move up the value chain towards higher-end buyers, it must carry out these functions itself. Chinese manufacturers must ensure their products meet consumers’ standards of quality and safety so distributors will not be embarrassed by defects. Other Asian countries, notably Japan, South Korea and Taiwan, have made this transition. China must follow. That will require difficult changes in China’s legal system and its ethical environment. Product safety rules must be instituted, with a system of bribe-proof inspectors. That will not, however, be enough.
In export markets, product safety problems or defects from one Chinese manufacturer affect the export potential of all manufacturers. It will, therefore, be necessary for the Chinese business community to establish social norms, through the equivalents of the Better Business Bureau or even the Rotary Club, so that small Chinese companies understand that exporting defective products is no longer socially acceptable.
In very poor countries, the law of the jungle rules. As China gets richer, it must civilize the jungle and ensure that unwary foreign buyers are protected from its predators.