Ethics Lapse Business Ethics Mattel: Five Lessons

Ethics Lapse

Business Ethics

Mattel: Five lessons learned from its ethical lapse

In the 21st century globalized economy, it is not uncommon for companies to use outsourcing to keep costs under control. This is particularly true regarding relatively inexpensive products like children's toys. The Mattel Company, the maker of iconic childhood toys like Barbie and Hot Wheels, has outsourced major aspects of its operations to China as a cost-cutting effort. Mattel sells relatively low-priced toys that are accessible to a wide demographic of U.S. consumers, hence the need to keep prices within the budget of most families.

Mattel's problems began when Early Light Industrial Co., "a subcontractor for Mattel owned by Hong Kong toy tycoon Choi Chee Ming, subcontracted the painting of parts" of the Mattel CARS toys to yet another China-based vendor named Hong Li Da (Mattel responds to ethical challenges, n.d, Daniels Funds Ethics Initiative: 6). In other words, this could be called 'subcontracting run amuck.' No longer under the careful oversight of Mattel, Hong Li Da "decided to source paint from a non-authorized third-party supplier[s]" Dongxin, Zhongxin, and Mingdai and the subsequent products were later found to contain "impermissible levels of lead" (Mattel responds to ethical challenges, n.d, Daniels Funds Ethics Initiative: 6). Ten million toys had to be recalled by Mattel because of dangerously high levels of lead.

The first lesson learned from this ethical lapse is that simply having written ethical policies are not enough to protect a company from falling into ethical maelstroms. According to Mattel's corporate policy, Hong Li Da had violated "Mattel's requirement to use paint supplied directly by Early Light' (Mattel responds to ethical challenges, n.d, Daniels Funds Ethics Initiative: 6). However, merely having the guideline in place did not stop the sub-sub-contracted firm from ignoring this directive. More recalls soon followed because of safety hazards in outsourced Chinese products, including magnets that posed a choking hazard to children. Over 21 million Mattel toys were recalled in all (Mattel responds to ethical challenges, n.d, Daniels Funds Ethics Initiative: 6).

The second lesson learned from the Mattel controversy is the need to understand different cultural attitudes towards regulations. Not all nations take safety requirements as seriously as the United States. In the U.S., particularly with products designed to be used by children, safety is of great concern and the potential of a product to be used in an unsafe manner (even if not explicitly following the manufacturers guidelines for usage) can result in a recall. In China, despite government regulations to the contrary, in the 'wild West' of new Chinese capitalism, such laws are often flouted. "It is said that Lee Der purchased the paint from Mingdai due to an intimate friendship between the two company's owners" (Mattel responds to ethical challenges, n.d, Daniels Funds Ethics Initiative: 6).