How will China Recalls Affect Imports?
Question
What do you think about all the China recalls… the bad dog food, toys, etc… even the recent “Aqua Dots” recall… do you think this has hurt the import business, or will hurt the Chinese import business in the future?
Answer
I have a daughter myself, so the recalls from China were a big deal to me. It seems like every toy she owns comes from either Taiwan or China, and I hated the thought of going through and tossing/returning the toys that she loves.
On the other hand, I’m just not that surprised that it happened. With the cost-cutting mindset of corporate America, we see corners like this get cut all the time. The fact that it came from China just gives the media a focal point. Those toys could have just as easily been coming from domestic industrial facilities.
My rant aside, you asked if I think it has hurt or will hurt import businesses in the future. While I think it has affected import businesses in the short term, I think the long-term effects of recalls from China will be minimal. In the short term Customs will probably increase inspections on certain profiled shipments which will lead to import delays and rejections, but I don’t believe those will have a long-term impact. Of course, we’ll also see some of the larger importers under scrutiny lose suppliers. That in itself will have its own positive effect on their competition.
In the really far out future, the biggest benefit will probably come from the importers themselves as they tighten their quality control on imported products. Do keep in mind, however, that quality vs. costs in business tends to be cyclical and we should be on the lookout for more of the same once the media attention dies down.
To answer your hidden question, I don’t think we’ll see a decrease in imports. China is still one of our largest trading partners and will continue to be for as long as they can keep their production costs below ours.