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Mandatory Recall Paves Way for Real Recall
The public has grown weary of expecting a domestic product recall system that has time and again turned out to be a failure, as the hotly debated car recall issue has shown. However, the mandatory recall recently of several unqualified products ordered by state departments, raises again consumer expectation for a recall system.

Business insiders maintain that mandatory recall will pave the way for establishing an effective recall system in China.

Government Orders Mandatory Recall for Unqualified Products

Guangdong Provincial Bureau of Quality and Technical Supervision ordered the mandatory recall of eleven unqualified products from eleven enterprises on August 7, 2002. This is the first time China has carried out a mandatory recall system on such a large scale.

In the second quarter regular quality supervision inspection, the bureau detected eleven severely defective products including air conditioners, lamps, and rechargers for mobile phone batteries and feeding stuffs. These products all failed to meet state requirements in respective of the durability, heat resistance or heavy metal content and sanitary index. For example, chrome and cadmium found in a kind of chicken feeding stuff exceeded the national limit value by more than fifty times and fifteen times, respectively, and is likely to do harm to humans indirectly. The inspection team sealed up a total of 2 million yuan (US$242,000) worth of products including 11,000 lamps, 300 plus air conditioners, 35 tons of feeding stuffs and 45 rechargers for mobile phone batteries.

When defective products are found, the quality supervision authorities issue an internal notice, then carry out further investigation to punish and reform. This time however, the Guangdong Provincial Bureau of Quality and Technical Supervision issued a public notice to identify the products and their manufacturers, and ordered a large-scale mandatory recall within a limited time, in addition to the usual cleaning-up of stock and semi-finished products. In such cases, enterprises are ordered to call back unqualified products that have entered distribution channels. Retail outlets are therefore required to withdraw them from their counters. Customers are warned not to buy these products and those who buy can claim their money back.

Luo Shaohua, chief engineer of the bureau, said that the mandatory recall system presents more of a warning to other enterprises than the recall of simply eleven products.

Prior to this, the General Administration of Quality Supervision, Inspection and Quarantine had ordered the mandatory recall of plugs and sockets that were found to have severe quality problems in the national second quarter quality spot-check. Customers who bought these products could return to their retail outlets or manufacturers for a refund. This was the first landmark mandatory recall in the name of the state. It showed that quality watchdogs were tightening up the supervision of products that concern personal and property safety, particularly defective ones.

How Far is Recall From Chinese Consumers?

As a point of fact, mandatory recall and recall are two similar systems, where the former follows state supervision departments’ mandatory enforcement, and the latter presents the manufacturers’ attitude of responsibility towards its customers.

As an international practice, recall systems have been written into law in many countries. When products are found to have severe bugs or invisible defects, even if operating properly, manufacturers and distributors are held responsible to replace or repair the product. Many countries have developed detailed recall systems that give specific definition to a recall procedure of supervision and compensation.

China, however, falls short of a formal defective product recall system. The state has no authoritative definition of a defective product. Therefore, some foreign car companies exclude the Chinese market in their recall plan due to the lack of relevant laws and regulations. Chinese customers are quite indignant, as the product they buy does not benefit from recall as part of an after-sales service as to foreign buyers. On February 15, 2001, Japan-based Mitsubishi, announced a recall of over 400,000 cars worldwide but excluded around 72,000 Pajero V31 and V33 cross-country vehicles in China. (Later Mitsubishi was pressured to replace defective brake pipelines however.) Another Japan-based company, Honda Corporation, announced a recall of about 2 million cars worldwide. While it wanted to extend the recall to China, it found, “no laws or regulations to follow, no authoritative departments or officials to consult.” Finally, it had to make an announcement on China’s Central Television Station.

While foreign companies exclude Chinese customers with an excuse of no recall laws to follow, Chinese domestic enterprises are slow to respond to mandatory recalls. For example, The State Drug Administration issued on March 22, 2002 a notice on forbidding imports and marketing of medical equipments from BSE-discovered countries or regions containing cattle or sheep tissue cells. According to the notice, relevant enterprises should have withdrawn all these products and reported to the State Drug Administration by May 1, 2002. However, enterprises were slow to react and many retail outlets were still selling these products after the deadline.

Industry insiders maintain that a universal non-standard operation of production and sales show a lack of customer registration systems and insufficient economic strength in Chinese enterprises that results in making recall in China physically impossible. Thus, the lack of relevant policies and laws presents the biggest bottleneck for establishing an effective recall system.

Enterprises Step out Towards Recall

Chinese enterprises will come to realize that the recall system will finally turn out to be in their long-term interest. Only by giving first priority to consumer interest can one win customer confidence. Before the government hammers out tough sector regulations, some enterprises hoping to develop or maintain brand awareness among consumers have spearheaded the recall system.

The Legend Corporation, China’s biggest computer company, promptly recalled its Zhaoyang V60, V66 and V68 notebook computers in March 2002, because of a high display malfunction rate. Legend promised “free check, repair or replace” for the computer users. However, Legend insisted that this did not belong to a product recall similar to that of defective cars.

In May 2002, the Guangzhou Honda Corporation officially confirmed a durability fault in the ignition of the Guangzhou Accord, made before August 1999. They issued a notice to 3,560 car owners to, “check in special repair shop” as part of its global recall of about two million cars. The Guangzhou Honda Corporation insisted that the check was not a recall because, “We informed consumers to check cars and there is no recall in China.”

Despite what they say, these enterprises have demonstrated a promotion of responsibility awareness. Enterprises show their respect to customers when they announce, retrieve and solve defective products on their own initiative, once they have found out.

A senior official of the Product Division under the General Administration of Quality Supervision, Inspection and Quarantine, said that the mandatory recall system will be held regularly to guard customers against inferior products. Enterprises that refuse to withdraw, or fail to withdraw, will be severely punished.

Industry insiders point out that recall has been an important means to snap market share with foreign competition as China has now joined the World Trade Organization. The establishment of a recall system is not only in the interest of customers, but also useful to push enterprises to promote product quality and helpful to the government’s supervision of the market. It is time now to enhance research towards a defective product management system of developed countries so as to establish Chinese own defective product recall system based on international standards and national conditions.

(china.org.cn by Alex Xu, September 7, 2002)

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