Earlier this week we briefly summarised a new report by law firm Reynolds Porter Chamberlain, which said that the 2007 rise in product recalls in the UK reflected the fact that it was “the year the Chinese supply chain proved to have sting in its tail.” Below, is the full text of RPC’s official report release.
The number of product recalls in the UK has hit a new high of 190 in
the last year (up from 179 in the previous year) as problems with
products sourced from China mounted. The number of recalls of dangerous
or faulty consumer goods rose 22 per cent, to 89, whilst the number of
food & drink recalls also increased, from 71 to 74.
RPC says that it has been the year in which poorly controlled Chinese
supply chains have proved they have a nasty sting in their tail.
Mattel's Fisher Price brand clocked up blanket media coverage when it
was forced to make a series of recalls covering millions of potentially
dangerous Chinese manufactured toys.
Mark Kendall, Partner of RPC, says: "We have been warning for years of
the risks in uncontrolled out-sourcing to China and other developing
countries. Many companies need the cost savings from outsourcing to
China to drive their earnings but the statistics show that putting in
place proper quality control procedures to protect their customers is
easier said than done. While lessons will have been learned from the
Mattel recall, the problem will not be solved over night. We expect to
see more of the same."
The good news is that companies are now more willing to move early to
launch product recall programmes in order to protect their reputations
but the bad news is that these expensive programmes are often
undertaken without any product recall insurance coverage to offset the
costs.
Explains Mark Kendall: "When you add up the costs of the
transportation, publicising the recall, refunds and other factors it
can be very costly. Standard product liability insurance will not cover
for a recall."
"But, insurance or no insurance, the costs of trying to avoid a
necessary recall in terms of reputational damage, regulatory
intervention and potential lawsuits can be huge."
"Consumer groups are more litigious than ever and regulators in the UK
such as the Food Standards Agency and Medicines and Healthcare Products
Regulatory Agency promise a tough stance against dangerous products."
Merck which has been accused of delaying the recall of its Vioxx
painkiller drug has faced legal fees of USD500m a year to defend
against lawsuits. This month the company offered to pay USD4.85bn to
settle 26,000 lawsuits. Vioxx was found to increase the chances of a
heart attack. The total cost of the Vioxx problem is currently
estimated at USD8bn.
Despite some exceptions, such as insects found in batches of cereal,
there was a smaller rise in UK food recalls and a decrease in
pharmaceutical recalls. RPC says this is due to the fact that food and
drugs sold in the UK are either produced in the UK or in other Western
countries where the existing systems for quality control are more
robust than in China.
News & Interviews 
(0 vote)
