China toy group says many workers losing jobs

BEIJING, Aug 17 (Reuters) Many Chinese toy workers have lost their jobs following Mattel's global recall of toys, an industry body said today, but insisted overall confidence in their products was high ahead of the key Christmas season.

China has been struggling to convince the world its goods are safe after a series of scandals over a string of products from tainted pet food and drugs to tyres, toys and toothpaste.

In its second recall this month, Mattel, the largest US toy company, recalled millions of Chinese-made toys on Tuesday due to safety risks from magnets and lead paint.

It warned it may recall additional products as it steps up testing.

The China Toy Association, representing about 1,500 manufacturers and suppliers, said in a statement that the production of poor-quality goods was not deliberate.

''The industry itself did not mean to produce poor-quality goods and paid a heavy price for its mistakes,'' it said.

''Most of the employees will have to leave factories they have been serving at for many years and are facing unemployment or reemployment problems. This has had a huge impact on the industry and society. The recent recalls were instigated by foreign brands. Nobody was injured.'' May Liang, the industry's secretary general, said orders remained strong at present, and that toys for the key Christmas season abroad had mostly already been shipped.

''Foreign companies still have a lot of faith in made-in-China toys,'' she told a news conference. ''We have more and more of the world toy market. This is an approval of Chinese toys.'' Liang added that it was unfair to criticise Chinese industry for reacting slowly to the recall, as compared with the apparently rapid U.S. reaction. Investigations took time, she said.

''The impression in the media is that they reacted very fast and we were very passive. But we had to understand exactly what the reasons were and related departments had to investigate.'' In previous export crises, Chinese warnings of factories going to wall were not borne out by the facts, as companies managed to pare costs and pass on some to customers.

''FANNING THE FLAMES'' The group also blamed ''unobjective whipping up of public opinion'' for the troubles which ''certainly led to excessive worries for domestic and foreign consumers''.

''Including our colleagues overseas, we do not agree with foreign media fanning the flames, as it is not in accordance with the facts,'' Liang said.

Rising costs and squeezed profit margins coupled with the current safety recall could drive some companies to stop exporting altogether and concentrate on the domestic market, she added.

Despite China's stepped up public relations campaign, the bad news keeps coming. today, Thailand's Health Ministry said about 10 per cent of 11,500 Chinese food products entering its northern border were not up to standard.

The Chinese government also said nearly 15 per cent of Chinese food products failed a recent quality check in a report which, nonetheless, sought to reassure rattled consumers that tainted products are disappearing from shelves.

''Through these efforts, the overall level of China's food quality is steadily rising,'' stated a 39-page paper from China's State Council Information Office -- the government PR wing.

''China is still a developing country and the general level of food safety, including standards and industrialisation of production, still has a certain gap with developed countries.'' China also said this week it would send officials to the United States to discuss product safety.

REUTERS ARB KP1627