Johnson & Johnson (NYSE: JNJ) handles China import problems the right way.
Unlike Mattel (NYSE: MAT), the drug and consumer products company was proactive. When it got wind of the fact last year that there were fake copies of its OneTouch Test Strip which is used to check glucose levels in the blood and is marketed to diabetics, it hired investigators. If the readings on the strips are wrong, a patient can take the incorrect dose of insulin.
According to Bloomberg, "Tipped off by J&J, the U.S. Food and Drug Administration issued a nationwide consumer alert in October without disclosing the link to China." The news service adds: "As diabetics without insurance may spend $100 to $200 a month for the strips, pharmacies with low-income customers are tempted to buy discounted tests from gray market distributors."
The products came from China through Canada.
The new revelation obviously adds to a long list of good from China that have dangerous health risks. These range from dog food to toothpaste to toys. While Mattel appears to have addressed most of its toy quality issues after the fact, JNJ took information to the FDA early.
The larger question now is whether US companies will continue to source product from China at the same level as they have the last few years. And, will China retaliate if it sees its manufacturing business moving elsewhere.
Ugliness on parade.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
8-16-2007 @ 2:31PM
Joseph Leslie said...
The Chinese manufacturers must be using the business model of the Tobacco companies! Killing your customers really prevents repeat business and makes customer loyalty impossible.
The supposed execution of the Chinese Government Bureaucrat who was responsible for overseeing quality control in goods exported, could have been the execution of some political prisoner from one of China's many jails! Just a show to make us think that the Chinese Government is serious about cleaning up the export mess.
They don't have a clue! China has always had a history of corruption. Life is cheap there. They have no incentive to change, unless we stop buying this CRAP they are sending us! Let them read the story about "Killing The Goose That Lays The Golden EGG"!
8-22-2007 @ 1:57PM
David Kaplan said...
Remember when the great communist enemy couldn't be sold one computer chip without the the red tape of government licensing. So now IBM sells them the entire division of PC's, without the government blinking an eye. Who knows what tracking devices may be implanted in those machines.
We only have ourselves to blame giving away the store. They own the stock market next is the land we live on. Other countries allow the leasing of land to foreigners, we sell it.
Democracy and capitalism were never joined at the hip. It only took southeast asia a whole bunch of years to figure it out. Certainly beats war!