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Toy recalls © Bananastock/agefotostock

Extra8/15/2007 1:01 PM ET

What went wrong at Mattel

As the toy maker moves to make its Chinese suppliers behave ethically, rivals promote their toys' U.S. pedigrees. That could pose a problem for Mattel come holiday season.

By BusinessWeek

Elmo, Barbie, Big Bird and Dora. They are some of the most familiar and best-loved children's characters. Now they're caught up in the global debate about the safety of Chinese-made products.

Mattel (MAT, news, msgs), the world's largest toy maker, announced Tuesday an expanded product recall, involving vehicles based on the hit movie "Cars" that had lead paint on them, as well as Barbie, Polly Pocket and Batman toys that had small, powerful magnets that could harm children if swallowed.

The move follows Mattel's Aug. 2 announcement of a similar recall of toys with lead paint from its Fisher-Price division.

Chinese-made products have come under increasing fire in recent months, as recalls have been announced in everything from dog food to tires. In July, the former head of China's food and drug administration was executed for taking bribes from an antibiotics manufacturer that led to the deaths of consumers. On Monday news reports surfaced that the head of the company that made the lead-contaminated Fisher-Price toys had committed suicide at his plant over the weekend.

But Mattel is not just another company suffering because it uses low-cost Chinese suppliers. The company goes to great lengths to try to ensure that the companies it does business with operate properly and ethically, even subjecting them to outside audits.

Damage control

Mattel's recalls illustrate how difficult it is for a multinational company, despite its best efforts, to keep tabs on all sorts of suppliers around the globe. The company has had at least 15 product recalls in the past five years, from American Girl doll jewelry that contained lead to a Batmobile with dangerously pointy tail wings.

For the latest recall, Mattel took out ads in national newspapers such as The New York Times to reassure parents that it was doing everything it could to keep children safe.

Video on MSN Money

Toy safety concerns © Corbis
Recalls raise toy safety fears
Bob Eckert, Mattel's chief executive, offers assurances that the toy maker will step up testing of toys coming from China.
A new Web site features a video of Chief Executive Bob Eckert in what looks like a tiny Etch A Sketch screen explaining the recall.

"As a parent of four children myself I know that nothing is more important than the safety of our children," Eckert says in the video. "I want to ensure that every parent hears about these issues and returns these products to us. I can't change what's happened in the past, but I can change how we work in the future."

Continued: A subcontractor's choice

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