EMERGING MARKETS: Product Recalls Open Gap in Market for Quality Control Champions; Jeremy Butler, Head of KPMG's New and Emerging Markets Group in the Midlands, Asks Whether There Is a Crisis of Confidence over the Made in China Brand or Whether There Is Still an Opportunity to Be Seized?

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Byline: Jeremy Butler

Once synonymous with low cost, high volume and speed to market, the phrase Made in China has taken on a rather different meaning in recent months.

Barely a week seems to have gone by without lurid headlines about the recall or banning of Chinese-made exports because of safety concerns.

From toys manufactured with lead paint to poisonous pet food, and from toothpaste containing a potentially dangerous chemical to tyres lacking critical safety features, production methods and safety standards in the country have been firmly in the spotlight.

To its credit, the Chinese government has been relatively quick to react to the scandals, saying it takes the issue of product safety seriously, and that it intends to work closely with others to improve inspection measures.

Indeed, only in the last few days, the authorities have announced that they have arrested in excess of 700 people as part of their clampdown on the production of fake drugs and sub-standard food.

However, in spite of the Government's charm offensive to restore confidence in its exports, has the Made in China label suffered irreparable damage Certainly there is a very real threat that if foreign consumers - or indeed their governments - believe that Chinese products are not fit for purpose, or that the Chinese government is not taking effective measures to combat such scandals, they will reduce their Chinese imports significantly.

In turn, those firms with manufacturing operations in China may respond to market pressure and potential threats to their reputation by moving their investments to countries with perceived greater safety and quality controls.

However, it strikes me that an important point has been lost in the rush to lambaste greedy Western executives and so-called shameless Chinese factory owners.

Ultimately, it is Western firms who are failing to monitor their production sources, whether wholly-owned, joint ventures or subcontracted.

The onus, therefore, should be on these companies to educate and then validate the quality systems of their Chinese suppliers.

Furthermore, while brand confidence has clearly been dented in the wake of these safety concerns, there is obviously an enormous opportunity in the market for those firms that take the time and effort to reassure customers that both their operations and sources are safe, transparent and ethically sound.

For example, let's take a second to look at how safety-conscious, robust products came to be produced in the West.

Brands originally came to be because they represented a promise of a certain level of quality and consistency to the consumer.

In manufacturing terms, this has led Western firms to install and monitor quality systems as a condition of supplying other, larger, manufacturers. …