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»Issue 7, Volume 07 www.scarbrough-intl.com » July 2007 |
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BUSINESS MONITOR Chinas Exports and their Quality China has slowly emerged as major player in world trade, making their presence in the early 1980’s. Their imports and exports began to increase drastically in the mid 1990’s. However, in the last five years their exports have roughly doubled, with the United States accounting for one-quarter of all their exports. As Chinas exports to nations increase one can see a growing number of product-defect claims regarding Chinese products. These claims range from tainted pet food to lead-coated toys, and most recently 450,000 automotive tires. On August 12, 2006, Rafael B. Melo, Claudeir Jose Figueiredo and Carlos Souza, were involved in a fatal accident. Their van was suited with Compass Telluride steel belted radial tires that were made in China in 2004. Officials concluded that the tread separated from the tire causing the van to roll over. Melo and Figueiredo died in the accident and Souza suffered a permanent brain injury. On May 4, 2007 the families of the three individuals sued Foreign Tire Sales, the importer of the tires. Foreign Tire Sales (FTS) is a small import company located in Union, New Jersey consisting of seven employees. The company has been under fire during the last few months for not meeting US Safety and Import standards. FTS has told the National Highway Traffic Safety Administration (NHTSA) that one of their clients, Hangzhou Zhongce, has produced tires that lack “Gum Strips” which act as an adhesive that bonds the tread of the tire to the tire itself. Without these strips it is possible that the tread can become detached from the tire while moving, thus becoming a hazard to the operator of the vehicle as well as those around it. It is believed that the Hangzhou tires in question were sold under at least four brand names, Westlake, Compass, Telluride and YKS, in these sizes: LT235/75R-15; LT225/75R-16; LT235/85R-16; LT245/75R-16; LT265/75R-16; and LT3X10.5-15. On May 31, 2007, FTS sued Hangzhou Zhongce in the U.S. District Court. FTS stated that tests had shown that the tires at stake may fail earlier than those originally provided by Hangzhou and that the recall on an estimated 450,000 tires would bankrupt the company. With this in mind, FTS is asking for an unspecified monetary sum as well as permanent banning on all imported goods from Hangzhou Zhongce Company. The NHTSA has issued a letter to FTS demanding more information on the tires at hand and threatening fines as well as criminal penalties for any violations of US standards. In response to this letter, FTS asked the US government as well as the NHTSA for financial assistance in the situation. The NHTSA responded to the plea by simply stating “If you choose to do business with a foreign company, you are responsible for making sure that the equipment meets our standards.” This basically implies that FTS is on its own to perform the much needed recall. The NHTSA has released a statement to the public stating that individuals with the tires in question should replace them on their own and keep the questioned tires as well as the receipt. With the growing number of product-defects, many wonder what can be done to prevent product-defected items from crossing into the U.S. Perhaps stricter import regulations are needed. Although Scarbrough International is not liable for the quality of the products they ship, it does recommend inspections agencies such as ASG Inspection and other third party agencies for its clients to prevent such events from happening. -- Seth Arnold, Rates Department Intern (William Jewell College) |
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