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SOUTH KINGSTOWN (Rhode Island) - THE chief executive of toy maker Hasbro says developing relationships with suppliers in China and taking the time to teach them how to meet stringent manufacturing and safety standards are among the keys for American companies operating there following a string of recalls.
'We've worked very, very hard over the years to teach the manufacturers how to make safe quality toys,' Alfred Verrecchia said on Tuesday during a panel discussion at the University of Rhode Island about doing business in China.
'For us the approach has been, you're not abiding by the code, this is what you have to improve, we're going to show you how to improve that,' he said.
The toy industry does most of its manufacturing in China, and this year has been plagued by the recall of millions of items - for everything from lead paint, to small magnets that can be swallowed and perforate children's intestines, to pieces tainted with a chemical that can turn into a date-rape drug if swallowed.
While it was not affected by those recalls, Hasbro, the world's second-largest toy company, had to recall about 1 million Easy-Bake ovens earlier this year after reports of about 250 children getting their hands caught in the oven's front opening. Dozens were burned, and a 5-year-old girl had a finger partially amputated.
Mr Verrecchia said after the talk that it was critical for American companies to work closely with their vendors in China.
'They have to learn things. They have to learn how to test product and why they have to meet certain safety standards. You have to build that into the culture,' he said. 'Once you do that and set up the inspection and safety procedures, you can control the environment.'
Pawtucket, Rhode Island-based Hasbro started doing business in the Far East in the 1960s, Mr Verrecchia said, when it began manufacturing the heads, uniforms and accessories of GI Joe action figures there, mostly in Hong Kong. At that time, Hasbro's office was in a hotel room, he said. These days, Hasbro has 700 people working in its offices in Hong Kong and China, and they work not just on manufacturing, but also on product development and engineering, he said.
Mr Verrecchia said he anticipates that Hasbro's presence in Chinese markets will continue to grow, especially as more Western retailers, such as Wal-Mart Stores, British grocery chain Tesco PLC and the French retail chain Carrefour SA open stores there.
'As they begin to expand in China, so too will we expand in China,' he said.
He also said Hasbro faces some challenges in China, including the rising value of the Chinese yuan, the rise in labour and energy costs, and the challenge to secure reliable energy. -- AP
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