CPSC RICH O'BRIEN VISITS FACTORY THAT PRODUCED TOXIC AQUA

UNCLAS SECTION 01 OF 02 GUANGZHOU 001249 SIPDIS SENSITIVE SIPDIS STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH O'BRIEN/INTL PROGRAMS STATE PASS USTR CHINA OFFICE STATE PASS HOMELAND SECURITY COUNCIL STATE PASS IMPORT SAFETY WORKING GROUP E.O. 12958: N/A TAGS: ETRD EIND TBIO ECON PGOV CH SUBJECT: CPSC RICH O'BRIEN VISITS FACTORY THAT PRODUCED TOXIC AQUA DOTS TOY ON SOUTH CHINA TOUR (U) This document is sensitive but unclassified. Please protect accordingly. Not for release outside U.S. government channels. Not for internet publication. ¶1. (SBU) Summary: How does a potential toy nightmare and company branding problem get underway? In the case of Aqua Dots, it was partially caused by having just one manufacturing option. The toxic adhesive formula used in the Aqua Dots was developed locally by the Chinese manufacturer after the Australian distributor asked it to increase adhesion in the final product. A Wangqi Product Factory (Shenzhen) employee and local Chinese officials told Consumer Product Safety Commission (CPSC) and Consulate officials about their investigation during a November 15 site visit, only one week after the Aqua Dots were pulled off shelves and production stopped. Tours of local CIQ offices and labs, as well as a high-end toy factory, all revealed how seriously China is working to reverse the effects of negative publicity after a string of toy recalls since mid-summer. Public outreach at a toy safety seminar and meetings with the local toy industry association alerted many companies that new product safety standards are being debated in the U.S. Congress and toy designers should consider the possible changes when planning future production. End summary. Visiting the Factory that Produced Toxic Aqua Dots -------------- -------------- ¶2. (SBU) The toxic adhesive formula used in the Aqua Dots toy was developed locally by the Chinese manufacturer after the Australian distributor asked the firm to increase its adhesion, according to an engineer involved in the toy's production. During a November 15 tour of Wangqi Product Factory arranged by Chinese inspection officials, the engineer described to CPSC International Programs Director Richard O'Brien and Congenoff how the first Aqua Dots product sample was provided by Australian toy distributor Moose Enterprise via a Hong Kong intermediary in 2005. The sample toy's adhesive properties required further extensive development before the Australian firm accepted the final design of the recalled toy. Moose Enterprise ordered commercial production in 2006, after a year of local R&D efforts succeeded in meeting the distributor's requirements to increase the adhesion of the beads when sprayed with water. The Aqua Dots toy was recalled world-wide on November 7 after Australian and American children who swallowed the small beads lapsed into a coma. As has been well reported, a chemical in the beads metabolized in the children's stomachs as GBH, also known as the "date rape drug." The factory engineer told us that Wangqi was the only factory producing Aqua Dots, a conclusion supported by the investigation of Shenzhen China Inspection and Quarantine (CIQ) officials. ¶3. (SBU) This factory visit, just one week after the recalls were announced, showed U.S. officials first-hand how China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and local Shenzhen CIQ officers responded to the international product safety investigation by seizing and locking up production materials and finished toy sets, as well as the molds used to produce the Aqua Dots toy. An AQSIQ representative from Beijing described his agency's ongoing investigation; Shenzhen CIQ officials said they had revoked the factory's export license and seized the relevant evidence within a day of learning about world-wide product recalls. Wangqi Product Factory is relatively small, producing 100 different toy products and employing 300 people, who are now out of work while Chinese authorities conduct their investigation. More than 100 of the unemployed workers are still housed at the dormitory on the factory premises. Guangdong CIQ Shows Toy Testing Lab -------------- ¶4. (SBU) During a visit to Guangdong's Provincial CIQ Technology Center, officials explained that the center's Toy Testing Lab performed 10,000 quality tests in 2006. In addition, Liu Zhongyong, Director of the center, also noted that the CIQ facility includes 8 other labs, employs more than 430 workers and has equipment worth RMB 120 million. Separately, Guangdong CIQ Deputy Director General Li Qingxiang explained that 80 per cent of Guangdong's toy exports are produced by only 200 large factories, and CIQ inspects each producer and its toys regularly to ensure quality. Comment: This GUANGZHOU 00001249 002 OF 002 lab tested Aqua Dots for compliance with U.S. safety standards and as a result, Guangdong CIQ granted the company a permit to export the product. The subsequent fiasco demonstrates that even an army of government inspectors cannot ensure compliance with all existing laws and regulations absent industry commitment to an end-to-end compliance assurance program. End Comment. Silverlit Toys Literally Flying Off Shelves -------------- ¶5. (SBU) One of Hong Kong's most successful mainland-based toy companies opened its doors to International Director O'Brien and showed off the factory's safety and quality testing facilities. General Manager Kevin Choi described Silverlit's design process as centered on product safety, reinforced by extensive onsite testing of each component. The company employs 4,000 workers at its Dongguan factory, and the tour offered a glimpse at each major production department, including tools, plastic molds and injection, electronics, painting, assembly, testing and packaging. Silverlit's toys are exported to the U.S. and many other developed-country markets in addition to being one of the top three toy brands in China's department stores. South China's Toy Industry Welcomes CPSC -------------- ¶6. (SBU) Speaking at a conference sponsored by the Toy Industry Association of America, International Director O'Brien described the U.S. product safety system and previewed draft product safety legislation currently being considered by the U.S. Congress. He noted that draft bills in both houses of Congress include lower testing thresholds for lead, increased third-party testing requirements for children's products and increased emphasis on traceability of production materials from initial procurement to the final sales in U.S. stores. O'Brien contrasted differences between China's reliance on government pre-market inspections with the U.S. model, which stresses industry's responsibility to comply with standards and to report problems when they are discovered. ¶7. (SBU) In a separate meeting with the Guangdong Toy Industry Association (GDTA),International Director O'Brien urged producers to demand the most accurate and up-to-date standards information and production requirements from U.S. importers to help prevent toy safety problems. Association Vice Chairman Li Zhuoming described his organization's efforts to improve toy safety and increase awareness among the 5000 toy producers in Guangdong Province, which make 80 percent of all toys in China. Frequent training and technical support seminars, an extensive website and an industry magazine distributing 10,000 copies monthly are just some of the ways GDTA works to educate toy factories and designers. ¶8. (SBU) This cable was cleared by CPSC Rich O'Brien. GOLDBERG