China vs. Jersey

So now we're hearing from the Chinese tire manufacturer that has been accused by the New Jersey tire importer of not including something called a gum strip that prevents tread from separating. Hangzhou Zhongce Rubber Co., the second-largest manufacturer of tires in China, said in a statement Tuesday that it followed "very strict quality control and testing procedures" and had not "found any of the defects claimed by" the distributor, Foreign Tire Sales Inc. Talk about a finger-pointing exercise: Foreign Tire is blaming Hangzhou Zhongce (it filed suit against the Chinese company last month), the National Highway Traffic Safety Administration is not happy about Foreign Tire holding back on the potential dangers, and Hangzhou Zhongce says its tires are just fine. Tread separation is no small matter - it's the same thing that led to the recall of millions of Firestone tires in 2000. From the NYT:

Lawrence N. Lavigne, a lawyer for Foreign Tire Sales, said the company did not alert the National Highway Traffic Safety Administration about the problems until June 11 because officials had no definitive proof of a manufacturing flaw until it was revealed by further testing in May. He said it made no sense to initiate a recall based on suspicions. Jeffrey B. Killino, a personal-injury lawyer from Philadelphia, said the company came forward only after it was named as a defendant in a lawsuit, filed in May, involving an accident in which two construction workers were killed and a third was severely injured when a van rolled over. The lawsuit contended that the accident was caused by tread separation in a Hangzhou Zhongce tire.

Now we're left to figure out who to believe - and frankly, neither player seems like a great bet. For now, I'll stick with the Jersey boys because Chinese credibility these days is running neck and neck with Paris Hilton's parents and the news department at NBC. Just have a look at David Barboza's Sunday piece in the NYT, in which he describes being held for nine hours at a Chinese toy factory. Specifically it was the company that makes Thomas & Friends toy rail sets that have been recalled in the U.S. because they contained lead paint. Can we assume that nothing coming out of China is inspected or regulated? Well, yeah.

Factory bosses, I would discover, can overrule the police, and Chinese government officials are not as powerful as you might suspect in a country addicted to foreign investment. I shouldn’t have been surprised by the reception. The last time I arrived at a factory under suspicion for selling contaminated goods (toothpaste), they quickly locked the gate and ran. A month earlier, I walked into the headquarters of a company that sold tainted pet food to the United States, and the receptionist insisted the owner was not in. When my translator called the owner, we heard his cellphone ring in the adjoining room. I peeked in and saw the boss scamper out the backdoor.

[CUT]

Many experts have told me that one of the most serious problems in China is that the government lacks the power to control the nation’s Wild West entrepreneurs, deal makers and connected factory owners. Bribery is rampant, and government corruption widespread. Just a few weeks ago, the top food and drug regulator was sentenced to death for taking huge bribes from pharmaceutical companies. But it’s not clear that strong messages like that will stop the anarchy. “China effectively has no oversight over anything,” said Oded Shenkar, a business professor at Ohio State University and author of “The Chinese Century: The Rising Chinese Economy and Its Impact on the Global Economy, the Balance of Power and Your Job.” “People have this idea they are Big Brother and everyone is under watch,” Mr. Shenkar said. “But this is not China. In China, local authorities often turn a blind eye to problems because maybe they’re invested in it.”