DiligenceChina

This is getting boring. The only thing really new about this week’s DCE (Dangerous China Export) is that we finally have a confirmed body-count – 2 deaths and at least 1 wounded allegedly as a result of defective tires made by a company called HangZhou ZhongCe. We also have a lawsuit, possible criminal liability, and a probable bankruptcy. Are we listening yet?

You can see the original NY Times article at http://www.nytimes.com/2007/06/26/business/worldbusiness/26tire.html and the updated version with Hangzhou ZhongCe’s corporate denial at: http://www.nytimes.com/2007/06/27/business/worldbusiness/27tires.html

Here are the interesting bits of the NYTimes piece:

The defective tires join a growing list of problematic products with origins in China. A huge recall of potentially tainted pet food in March was followed by widespread reports of toothpaste manufactured with a toxic chemical and toys coated with lead paint.
Ms. Hopkins said the agency’s top officials were “outraged” that Foreign Tire Sales’ executives waited more than two years to pass on their suspicions about problems with the tires. The company first suspected problems in October 2005. Almost a year later, in September 2006, the Chinese manufacturer, Hangzhou Zhongce Rubber, a former state-owned company based in eastern China, acknowledged that a gum strip that prevents the tread from separating was left out of the manufacturing process.
Jeffrey B. Killino, a personal-injury lawyer from Philadelphia, said the company came forward only after it was named as a defendant in a lawsuit, filed in May, involving an accident in which two construction workers were killed and a third was severely injured when a van rolled over. The lawsuit contended that the accident was caused by tread separation in a Hangzhou Zhongce tire.
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Hangzhou Zhongce admitted in September 2006 that it had “unilaterally decided to omit the gum strips” in the tires, the report says. The Chinese company was “generally unresponsive” when asked how many tires were involved and what they were going to do to resolve the problem, the report says.

Beijing’s response to the epidemic of dangerous cross-border trade? Increase inspections and reject more shipments – of incoming goods from the US:

China rejects two substandard US food products
(AP)
Updated: 2007-06-26 17:13
Chinese inspectors have seized shipments of US-made orange pulp and dried apricots containing high levels of bacteria and preservatives, the government said Tuesday. Local departments have been ordered “to strengthen quarantine and inspections on food imports from America,” according to a notice announcing the seizures posted on the Web site of the General Administration of Quality Supervision, Inspection and Quarantine, China’s main food safety monitor. Importers have been asked to “make sure that food safety requirements are met in contracts when importing US food so that trade risks are lowered,” the notice said.

And just in case you think I’m being unnecessarily dramatic – or are giving in to conspiracy theories, take a look at the most recent Financial Times (a most level-headed bunch)

Beijing’s food seizure seen as retaliation
By Geoff Dyer in Shanghai Published: June 26 2007 20:02
China has impounded two shipments of food from the US on the grounds that the produce is unsafe and warned that procedures for monitoring American food imports should be tightened. Government inspectors seized separate shipments of orange pulp and apricots from the US because they contained excessive bacteria and mould, China’s food safety inspectorate said on Tuesday on its website.

Coming on the back of a series of scandals in the US over the quality of imported goods from China, the announcement will be considered by many importers as a form of retaliation by the Chinese authorities. The statement comes one day after regulators in the US announced a recall of up to 450,000 tyres manufactured by a Chinese company because of a potentially dangerous safety problem.

China’s General Administration of Quality Supervision, Inspection and Quarantine said it had impounded the orange pulp in the eastern province of Shandong and the apricots were seized in Shenzhen. The shipments contained “excessive bacteria, mould and sulphur dioxide”, the agency said, but gave no details about when they were impounded or how big the shipments were.
The agency’s statement said local departments had been advised to “strengthen quarantine and inspections on food imports from America”.

An executive at a European trading company based in Shanghai said: “We cannot say anything for sure without seeing details about the shipments, but it certainly looks like a way of deflecting some of the attention away from China and its own quality problems.”

The tyre recall follows a series of quality problems with Chinese goods in recent months in the US, including a recall of potentially poisonous pet food, the discovery of lead paint in children’s toys and reports of toxic chemicals in toothpaste.
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Last month Chinese customs seized 118 tonnes of Evian mineral water which officials said contained higher levels of bacteria than allowed. Danone is currently involved in a legal battle with the owner of its main joint venture partner in China over control of the venture’s brand name.

I don’t think we’ve seen the last of this.