Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

 Chinese imports may be cheap, but be wary of quality control

- by Alan Duvall 

Published in Dayton Daily News  July 15, 2007 

“Plenty of cheap stuff out there”  Bob Dylan 

America owes much of its latest prosperity to the massive influx of cheap foreign products entering its shores.  If the same income can acquire twice as many goods, an individual’s standard of living has basically doubled. 

But Buyer Beware!  One cannot expect Cadillac quality from foreign products bearing YUGO prices. 

Recently, China has had to close 180 food factories for safety violations (largely attributed to misuse of industrial chemicals) and executed its Food & Drug Department Head for bribery.  These harsh actions came hard on the heels of huge recalls of Chinese-made pet food (contaminants), toothpaste (antifreeze), fish (antibiotics), children’s toys (lead paint) and auto tires (lacking safety components). 

Foreign companies desirous of exporting foodstuffs to the U.S. must go through a government application process to ensure compliance with American standards.  But the U.S. Federal Drug Administration lacks sufficient resources to adequately test the suitability of imports, instead relying on the quality control of domestic companies. 

Considering the fact 1986 Chinese exports to the U.S. totaled only $5 billion compared to 2006 volume of approximately $288 billion, it is not surprising China’s meteoric commercial growth has outstripped its own ability to internally monitor quality standards. 

Despite set-backs, incredibly low pricing is still encouraging America’s appetite for more Chinese goods.  Chrysler has just revealed a joint venture program to introduce Chinese automobiles into the U.S. market in the next two years. 

Based upon recent test crash results, the two-year timetable may be overly ambitious.  Two Chinese vehicles flunked German crash tests in spectacular fashion (“crumbled like a beer can” according to Autoblog.com) leading to a retreat from the market by one SUV and a definite reconsideration by the other.  Does anybody recall the YUGO?    

Meanwhile, U.S. companies seeking entry to Chinese markets have encountered firewalls of government regulations, and active violations of American patents and trademarks.  China must learn to pay proper respect to its international trading partners. 

“Dirty Deeds Done Dirt Cheap.”  ACDC

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.  Previous articles archived at www.duvallcpa.com.