Mattel's (NYSE: MAT) Fisher division is recalling about a million toys. The products contain (subscription required) high levels of lead.

Oh, and the products were made in China. Mattel says it did not catch the problem earlier because they were made by a "trusted" manufacturer.

Most of the toys have not been shipped from warehouses.

Mattel's problems raise the issue of whether US companies are going to have to spend increasing sums of money to audit Chinese manufacturing processes and inspect products from that country as they come to the US market. The current recall is part of an emerging epidemic of serious concerns about items manufactured in the world's most populated country.

That brings up the P&L question of whether out-sourcing manufacturing to Chinese companies is really less expensive over time. If Chinese work quality is too low for most US companies. the cost of monitoring and inspecting these products could sky-rocket. And, this could off-set the advantage of China's cheap labor force.

Made in China may come to mean too much cost and too much risk for many US firms.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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