Scandal and suicide in China: the dark side of a toy story

Scandal and suicide in China: the dark side of a toy story

Shanghai: They found the body hanging on the third floor of the Lee Der toy factory in Foshan, in southern China.

Zhang Shuhong, a 52-year-old businessman, had apparently committed suicide, just days after Mattel Inc. blamed his company, Lee Der Industrial Co. Ltd, for the recall of one million toys coated in toxic lead paint.

In a summer of high-profile recalls of Chinese exports—pet food, shellfish, tyres—Zhang’s suicide read like the latest twist in a morality play. Each week, it seemed, brought news of another faulty Chinese product; and with it, growing concerns about unscrupulous Chinese businessmen: cutting corners; pouring cheap, sometimes lethal, ingredients into their products; endangering consumers around the world, even children, to make a bigger profit.

But at the Lee Der factory in Foshan, an industrial city 140 miles (225km) north-west of Hong Kong, Zhang’s colleagues and workers tell a less familiar narrative. They say that Zhang was a victim, too—of his own duplicitous suppliers, of China’s faulty supply chains, and of the pressures of its loosely regulated brand of capitalism, where Chinese entrepreneurs feel squeezed between Western companies’ appetite for cheap goods and the fierce local competition to satisfy it.

Unmarried and reportedly devoted to his company, Zhang was one of the hundreds of thousands of entrepreneurs who had helped make China into the world’s factory floor, providing the inexpensive goods that fill the shelves of Wal-Mart and Target. According to those who knew him, he was anything, but greedy. In fact, in an industry with a reputation for mistreating its workers, he paid his employees on time and did not make them perform mandatory overtime.

“For the last 10 years, he lived in a humble 25 sq. m room in the factory," said Xie Yuguang, chairman of Lee Der, in a telephone interview. “He didn’t save too much money for himself. He put everything back into the company."

Family members declined to be interviewed for this article, but colleagues say Zhang grew up in Hong Kong, and started out running errands for Hong Kong factories as a boy. Eventually, he helped run toy factories in nearby Guangdong province, where China’s big toy producers are based.

After more than a decade with Lee Der, Zhang took over the company’s operations in Foshan a few years ago. He helped turn the money-losing unit around, colleagues said, reinvesting most of the company’s earnings in new buildings and equipment.

Xie says one of the contractors supplying for Lee Der received the lead paint from one of its suppliers.

Zhang, he says, had no way of knowing the paint on Lee Der’s toys contained lead.

Mattel’s investigation, so far, has found less clarity. The firm says it has tracked down three paint suppliers working for Lee Der. The primary supplier of the lead paint pigment—a firm called Mingdai—has disappeared, according to Mattel officials, who now believe Mingdai was a trading firm.

But it was Mingdai, Mattel believes, that sold the yellow paint pigment containing lead to Dongxin and Zhongxin, which produced the paint.

Jules Andres, a spokeswoman at Mattel, said the company was still trying to determine whether the three paint suppliers—Dongxin, Zhongxin and Mingdai—sent paint to other toy factories supplying Mattel.

But that does not explain why Zhang, who had lead-detecting equipment on his premises, according to Andres, did not detect the contaminated toys.

No one has shown clearly where Mattel’s and Lee Der’s supply chain broke down, but such uncertainty is common in China, too.