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Mattel: the U.S. company scandal story

On August 2, 2007, the Mattel Corporation recalled hundreds of thousands of toys which were made in China under the Fisher-Price label. These recalled Fisher-Price toys, which were manufactured by Lee Der Industrial. Some of these toys were found to have been coated in paint containing excessive levels of lead, particularly from lead paint, has been cause to health problems in children, brain damage, and even death in children. 1.5 million toys were recalled from American stores such as Toys R Us and Walmart.

The Mattel Company sent investigators to China. Mattel identified Lee Der Industrial company as the main supplier of the lead paint tainted toys. China immediately suspended the company's export license which had a devastating effect on the company's business. According to press reports, Lee Der Industrial stood to lose as much as $30 million dollars due to the Fisher-Price toy recall scandal.

Mattel tracked down three paint suppliers who worked for the Lee Der company - Dongxin, Zhongxin and Mingdai. Each of these three companies had supplied paint to factories which were contracted to make Mattel products, including Fisher-Price

Mattel believes that specifically, the Mingdai company sold yellow paint pigment containing lead to Dongxin and Zhongxin, which produced the paint. The paint was then used by Lee Der, operated by Zhang Shuhong, to produce Mattel's line of Fisher price products.

It is believed that a personal friend of Zhang's ran the company who supplied the lead paint, which ultimately led to the Mattel recall and the financial ruin of Lee Der Industrial. It has been speculated that Zhang Shuhong felt demoralized by the scandal and possibly betrayed by a close friend. Whether or not Zhang knew of the lead paint before the recall is unknown.

Zhang committed suicide. He was found dead in his factory workshop the week after the recall.

Mattel’s Company History:

The world's largest toy company, Mattel, Inc. designs, manufactures, markets, and distributes a wide variety of toy products. The company's products include a number of core toy lines, including Barbie dolls, Hot Wheels toy, including Harry Potter, Batman, Superman, and Looney Tunes products; the American Girls Collection of books, dolls, clothing, and accessories; Fisher-Price infant and preschool toys, including Little People figures and play sets and toys based on various licensed characters from sources such as Disney and Sesame Street; and games such as Scrabble and UNO. With worldwide headquarters in El Segundo, CA, Mattel employs over 30,000 people in 43 countries and sells products in more than 150 nations throughout the world. Approximately 36 percent of 2002 revenues were generated outside the United States. During 2002, about half of Mattel's revenues was derived through three main retail customers: Wal-Mart Stores, Inc., Toys 'R' Us, Inc., and Target Corporation. Mattel was named one of the Best Companies to Work For by Fortune magazine for 2008.

In 1959, Mattel made toy industry history with the introduction of the Barbie doll, the best-selling toy of all time. Inspired by her daughter's fascination with cutout paper dolls, in 1959 Ruth Handler suggests making a three-dimensional doll through which little girls could play out their dreams. She names the doll "Barbie," after her own daughter Barbara's nickname. The result was a smash hit, propelling Mattel into the national spotlight. More than 350,000 Barbie dolls were sold in the first year and over one billion to date (including other versions). In 1961 the company provided her with a boyfriend, the Ken doll which would be Barbie's boyfriend. The doll is named Ken after the Handler's son. In 1968, another spectacular hit, Hot Wheels miniature model cars, which proved to be a pivotal year for Mattel.

The Mattel Company went public in 1960. The bigger move had set when Mattel would merge with Fisher-Price in 1993, the world's number one brand in infant and preschool toys. Based in East Aurora, NY, Fisher-Price was founded in1930 and is recognized for designing and manufacturing high-quality, imaginative toys for children from infancy to age five, as well as innovative products that help parents care for children, such as highchairs, strollers, bouncer seats, and nursery monitors. Mattel would earn rights to distribute the line of Cabbage Patch dolls in 1995 and introduced the popular Tickle Me Elmo doll in 1996.

Mattel would merge with Tyco Toys in 1997, then the third-largest toy maker in the country. In 1998, Mattel would acquire Pleasant Company, which owned the American Girl brand.

Mattel's vision: to be the world's premier toy brands -- today and tomorrow.

Principal Subsidiaries: Fisher-Price Inc.; Mattel Factoring, Inc.; Mattel International Holdings B.V. (Netherlands); Mattel Investment, Inc.; Mattel Overseas, Inc.; Mattel Sales Corporation; Pleasant Company.

Principal Operating Units: Mattel Brands; Fisher-Price Brands; American Girl Brands.

Principal Competitors: Hasbro, Inc.; JAKKS Pacific, Inc.; LEGO Company; LeapFrog Enterprises, Inc.; Bandai Co., Ltd.; MGA Entertainment; TOMY Company, Ltd.

Mattel? What going on?

On August 2, 2007, Mattel's Fisher-Price subsidiary recalled almost a million Chinese-made toys, including Dora the Explorer and Sesame Street toys because of potential hazards from parts of the toys which were colored using lead-based paint.

In worst cases, Mattel toys' lead in paint was found to be 180 times the limit. The paint on the toys was up to 11% lead, or 110,000 parts per million. U.S. Federal law allows just 0.06% lead, or 600 parts per million. Children who suck on or ingest toys or jewelry with high lead content may be poisoned, which can lead to learning and behavior problems, even death in some cases.

On August 14, 2007, Mattel recalled over 18 million products because it was possible that they could pose a danger to children due to the use of strong magnets that may detach. Strong small magnets could be dangerous to the children if two or more were ingested, attracting each other in the intestines and causing damage. Some instances were reported. A child swallowed a Polly Pocket toy magnet and had to undergo a surgery. The products were manufactured in China. At the time of the recall, none of the US or European safety legislation and standards addressed the specific hazard of strong magnets. Some of the products had been available in US stores since 2003, during which time Mattel did not flag them up as being



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