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Brand Health Check... A human cost to a consumer and brand crisis

What initially emerged as a straightforward consumer PR crisis for Mattel has ended in tragedy.

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Days after issuing a global recall of more than 1.5 million toys spanning 83 different product lines over excessive levels of lead allegedly used during the manufacturing process in China, Mattel, under a great deal of external pressure from local and international media, named the China factory involved as Lee Der Industrial.

Shortly after, the China head of the facility, Zhang Shuhong, reportedly took his own life.

It was a disturbing footnote to a difficult issue for the company, which has subsequently issued a further recall for toys containing magnets, with some estimates placing the affected number of toys at around 18 million, making this the company’s largest ever recall.

Mattel, the parent company of Fisher-Price, had communicated the potential problem to retailers in late July. The story was picked up by the press just days later, with Mattel issuing a global recall in early August, along with an apology to parents from Mattel chairman and CEO Robert Eckert.

In fact, as Media went to press, Mattel launched a product assurance campaign in the US, in which Eckert said: “Our long record of safety at Mattel is why we’re one of the most trusted names with parents, and I am confident that the actions we’re taking now will maintain that trust.”

For Mattel, which has positioned itself as a ‘best-in-class’ company when it comes to quality control in China, the fallout is expected to be significant. The manufacturer has promised to take action if a high-level investigation finds that safety procedures were knowingly ignored, and it has been quick to establish a website where consumers and retailers can access news, information on toys affected, how to identify them, and technical information on the recall. Mattel has offered exchanges for affected products, and a hotline was also set up.

The recall is expected to cost Mattel in the vicinity of US$30 million - its Q2 results will be adjusted accordingly — but the cost in terms of damage to the brand could run significantly higher.

Fact Box

July 26: Mattel informs retailers of the affected products, which span more than 1.5 million toys across 83 product lines.

August 1: Mattel issues a public recall of the affected products.

August 7: Mattel publicly identifies the factory involved in the scandal as Lee Der Industrial.

August 13: Media reports indicate Lee Der Industrial head Zhang Shuhong had committed suicide.


This article was first published on Media Asia

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