China export fair thronged, despite quality scares

GUANGZHOU, China, Oct 16 (Reuters) Overseas buyers thronged China's biggest export fair today, undaunted by a string of reports about substandard, and even dangerous, made-in-China goods from toys to toothpaste.

Businessmen from as far away as Argentina and Kenya said recalls of products including lead-laced toys by Mattel or the discovery of a harmful chemical in Chinese toothpaste didn't change the game, but just highlighted a few of the well-worn rules of sourcing in China that lower the risks.

''If you pay a good amount, then they give you good quality. But if you pay a cheap price, get a discount, they will give you bad quality,'' said Rupesh Parekh, who was attending the Canton Fair in the southern city of Guangzhou to find new suppliers of hardware for his Mumbai-based business.

Some industry experts have pointed to wafer-thin profit margins in toy manufacturing in China as a major cause of corner-cutting, including the use of cheaper, lower-quality and sometimes unsafe inputs.

Critics say pressure from foreign purchasers for ever lower prices can make matters worse.

''It all depends on how much the customer is paying,'' said Wendy Wang, a manager in the hand tools department of the Hebei Machinery Import And Export Corp. ''That determines what materials go into the product.'' In Mattel's case, some of the recalls have had nothing to do with the quality of Chinese manufacturing, but were design flaws.

Still, with exports an important driver of economic growth, the Chinese leadership has taken the quality issue seriously.

At the start of the Communist Party's five-yearly Congress yesterday, President Hu Jintao vowed to assure the quality and safety of Chinese goods.

Exports have remained robust, up 27 per cent to 8 billion in the first nine months of 2007, the government reported last week.

Rule number two for buyers, perhaps, may be a corollary to the right-price rule: if the carrot doesn't work, the stick is always an option.

''I tell them, if there is any reject or problem in quality, then that is our last business with you. It's all about trust,'' said Parekh, who switched to Chinese imports from Indian-made tools three years ago.

Walter Gonzalez, a Shanghai-based business broker from Argentina, agreed that you need to know your suppliers in China.

''If you are overseas and you want to find a producer and you go on the Internet and order something ... it is 90 per cent probable that the producer will send you garbage,'' he said. ''You have to be very careful and have very good relations.'' Another important thing to keep in mind: check your products before they ship.

Johnson Ndegwa, from the Kenyan capital, Nairobi, came to China to buy mobile phone parts he used to get through a distributor in Dubai.

''Even with these electronic products, some are very low quality and can be dangerous, so we come with samples and we check it first,'' he said.

''When you order something you must wait here. Maybe it will take a month, but I cannot trust them to ship it for me.'' Vladimir Vasyliev, from Moscow, was looking for sources of spare parts for construction cranes. It was his first visit to China, but he was already aware of the dangers of blind sourcing.

''I will organise delivery from China only through my friends,'' he said.

Paying a fair price, developing relations with your supplier, and checking your inventory are all essential, but getting too cozy with one one source in China may be just plain crazy.

''You need multiple suppliers,'' Gonzalez said. ''They will try to cheat you sooner or later, so you have to be able to change very fast.'' REUTERS GL BD1439