3.Many international trade and development experts argue that China is just now discovering the difference between being a major economic player in global business and its previous peripheral role as a low-cost manufacturing site on the periphery of the world economy. What do you think?14
1. Mattel’s global sourcing in China, like all other toy manufacturers, was based on both low-costs manufacturing, low-cost labor, and a growing critical mass of factories competitively vying for contract manufacturing business. Do you think the product recalls and product quality problems are separate from or part of pursuing a low-cost country strategy?
Mattel was founded in the year 1945 by Ruth Handler, Elliot Handler and Harold Matson (Mattel, 2001). Mattel, a toy company from the United States, has been preserving a business relationship with China since 1959. Despite having a long-term trade relationship with China, Mattel had to face numerous ethical problems regarding its production process. Likewise any other multinational company, Mattel’s functions in the Chinese manufacturing sector was majorly focused on the low-cost production process with the virtues of low-cost labourers. Moreover, with the effect of modernisation and globalisation, the Chinese industry was also flourishing with growing numbers of small factories which were solely focused on operating as third-party manufacturers for global brands and thus earn a large amount of foreign currencies. This further motivated Mattel to shift its production process in the Chinese manufacturing sector with the intention of minimising its responsibilities towards quantity production and thus attaining a larger market share along with increased sales (Dietz & Gillespie, 2012). With its production functions transferred to the low-cost market of China, Mattel was able to earn various advantages in terms of low-cost labourers as well as low-cost raw materials.