UK product recalls of Chinese goods in downward trend

The percentage of product recalls of Chinese-made goods has fallen sharply from 78% of all UK recalls of consumer products in 2011-12 to just 59% of all recalls last year (2013-14), according to City law firm, RPC.

The overall number of recalls of potentially dangerous Chinese goods in the UK fell to 66 this year down from 72 last year.

RPC says that the tightening of quality control checks in China, especially for goods destined for export markets, may be bearing fruit.

Product recalls are issued after a health and safety risk or a major design or production flaw has been discovered in a product. The product can be withdrawn from sale, safety notices issued and customers urged to return the item.

RPC says that Chinese manufacturers, in particular within the consumer electronics market, are investing heavily in quality assurance processes as part of their drive to become global brands.

Gavin Reese, partner at RPC, comments: “Just how safe or unsafe China’s manufactured goods are has been a highly contentious topic over the last decade as China took on the role as the world’s workshop.”

“On the face of it does look like fewer and fewer Chinese products are being recalled in the UK. That is partly because the Chinese government has pushed for improved quality standards across the food and drinks sector and for consumer goods but also because Chinese manufacturers are steadily moving up the value chain where production standards are more closely watched. For example, the world’s third and fourth largest mobile phone manufacturers are Chinese.”

“The shift from Chinese companies making products or components for other companies, to making goods under their own name has helped put more emphasis on achieving zero defects.”

“A growing range of Chinese manufacturers realise that as they improve their reputation for quality they will move closer to the point where they can charge a premium for their products.”

Overall, potentially dangerous food and drinks products made up the biggest category of product recalls in the UK (56 recalls) in the last year followed by potentially dangerous electrical appliances (46 recalls).

The total number of UK product recalls dipped slightly from 272 in 2012/13 to 245 in 2013/14 but is still far higher than it was five years ago (229 in 2009/10). There were 30 motor vehicle related recalls and 18 recalls of pharmaceutical/healthcare products in the UK in the last year.

RPC explains that the major amendments to China’s Consumer Rights and Interest Law came into force in March 2014, should further enhance consumer protection. New provisions included tougher rules on compensation to be paid out by manufacturers for the most serious product defects. This may have helped improve production standards in the export sector.

Chinese made goods have been at the centre of a number of product recall scandals in 2014, including Aston Martin's global recall of cars due to the supply of faulty accelerator pedal components manufactured in China; Walmart's recall of donkey meat from its Chinese supplier following discovery it contained fox meat; and Hewlett Packard's recall of about six million Chinese made computer power cords over concerns that they were a fire hazard.

Costs for companies involved in a product recall can be high
Alex Hamer, partner at RPC, comments: “The costs for a company involved in a recall can be colossal- compensation, regulator fines and costs linked to reputation management quickly build up.”

RPC points out that one of the most high profile and costly recalls of 2014 was carried out by car manufacturer, General Motors (GM). A fault was discovered with the ignition switch in certain models, whereby power supply to the vehicle could be suddenly cut off. According to a report by the claims administrator, at least 42 are believed to have died and 58 suspected injured in connection with the defect.

GM has had to set aside approximately US$400m to pay claimants. It has also been fined US$35m by the National Highway Traffic Safety Administration for delays in issuing the recall.

Hamer adds: “Many companies are now rightly taking out product recall insurance to protect themselves in the case of a design flaw or defect.”

“Product recall insurance can help cover the costs for the business of taking immediate steps, before any consumer suffers any harm.”

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