Chinese Toy Executive Found Hanged After Export Ban

By Edward Cody
Washington Post Foreign Service
Tuesday, August 14, 2007

BEIJING, Aug. 13 -- When Mattel recalled nearly a million toys manufactured by Zhang Shuhong's company, he fought hard to find a way to resume sales to the United States. They were the lifeblood of his firm, Lee Der Industrial, and its lucrative share of the export boom driving China's economic growth.

But as Zhang's factories in the city of Foshan lay idle, workers started drifting off, fearing the plants would not start up again. Then Chinese authorities announced Thursday that he was prohibited from exporting toys until further notice because of the defects denounced by Mattel.

Zhang was found dead in a company warehouse two days later, colleagues said Monday, apparently having hanged himself. His death dramatized the high stakes in an international scare over unsafe Chinese products and an increasingly vigorous government crackdown designed to restore confidence in the export industry.

"I think the company is about to go bankrupt," said an executive of a Lee Der subsidiary who would not give his full name because of the sensitive nature of the subject matter. "Otherwise, he wouldn't have committed suicide."

Factories churning out U.S.-bound products, which sprawl across Foshan and most of the rest of China's southern Guangdong province, have provided employment for millions of farm youths. The Communist Party government has come to rely on them to maintain not only employment but also the swift economic expansion that has transformed the lives of China's 1.3 billion inhabitants.

As a result, officials have reacted strongly to the reports of dangerous food and other products exported under the "Made in China" label. After initially seeking to play down the problem, they have repeatedly announced moves to strengthen supervision and increase cooperation with U.S. safety authorities. One recent sequence on the official China Central Television news showed smartly uniformed food-safety inspectors running out of their offices like firemen responding to an alarm.

Zhang was not the only one to feel the pressure. A Chinese court handed down a one-year jail sentence Sunday to a Chinese reporter convicted of faking a story about steamed dumplings whose stuffing included cardboard along with ground pork. Zi Beijia, 28, pleaded guilty to damaging the dumpling industry's reputation, the official New China News Agency said.

Coming at the height of the scare over unsafe food, Zi's video report last month attracted attention in China and abroad, adding to a sense that Chinese products were not to be trusted. After an investigation, authorities in Beijing announced that the report was concocted and arrested Zi. Several television executives were forced to resign, and China's Propaganda Department issued a stern warning about reporters' duty to abide by the tenets of Marxist journalism.

While Chinese authorities took action against Zhang's firm, they also imposed an export ban on a Hansheng Wood Products factory that manufactured wooden trains for export to RC2 Corp. and marketing in the United States as Thomas & Friends Wooden Railways. RC2 recalled 1.5 million trains and other parts after finding high lead levels in the paint.

Mattel said it decided on the recall of toys made by Lee Der on Aug. 8 for the same reason: High levels of lead were found in paint on plastic cartoon figures, such as Big Bird and Elmo, designed for preschool children and sold under the Fisher-Price brand.

[Mattel issued a statement Monday expressing sorrow over Zhang's death, the Associated Press reported.

"We were troubled to hear about this tragic news," the statement said. "This is a personal misfortune not a corporate event. Any loss of life is a tragedy and we feel for the family during this difficult time."]

The paint was sold to Lee Der by Dongxing New Energy, which is headed by Liang Jiacheng, one of Zhang's best friends, colleagues said. It was not known whether Dongxing also was the supplier for Hansheng.

Mattel said the toys were made by Lee Der over the past three months and that some had made it to U.S. stores before the problem was detected. The recall could cost about $30 million in pretax income, Mattel spokesmen said.

Zhang, a Hong Kong resident, also owned two subsidiaries, Hengjing and Shuaimeng, his colleagues said. Some executives pledged to try to keep the businesses going. But Wang said that most of the workers have left and that only longtime executives are still reporting for work.

Researcher Zhang Jie contributed to this report.

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