Mattel’s China Experience: A Crisis in Toyland
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Publication Date:
February 02, 2009
Source:
Thunderbird School of Global Management
Mattel, an industry leader with a sterling reputation in corporate responsibility, was being pulled into a recall vortex that had seen affected a variety of products produced in and exported from China in 2007, including dog food, toothpaste, tires, and seafood. Mattel CEO Robert Eckert was faced with a crisis. By the time the dust settled, Mattel had recalled 19 million toys made in China. Mattel’s stock price declined as they took a $40 million charge for recalls, and their costs increased because of added regulation in China and the United States. Customers threatened to boycott Mattel and all toys made in China. Bob Eckert had been called to testify before both U.S. House and Senate hearings on toy safety. Chinese government officials saw Mattel’s recall public relations approach as blaming China’s manufacturers for what was primarily a Mattel design problem. This unfavorable publicity drew attention from Chinese regulators, and resulted in Mattel making a highly publicized public apology to China and China’s quality watchdog chief, Li Changjiang. When it looked like nothing could get worse for Mattel, Congress sent a letter to Mattel stating that Robert Eckert was not honoring the public commitment he had made to consumers during the initial recall incident. This tsunami of negative events left Mattel executives perplexed and reeling: How could a company so highly regarded as a toy industry model of corporate citizenship find itself mired in such a controversy? What next steps should they take to recover from the crisis? How should they protect their brand? What should they do to restore their reputation? Was this crisis a roadblock to achieving their vision of being the world’s premier toy brand “tomorrow”?
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Mattel’s China Experience: A Crisis in Toyland
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