Chapter 3 – Recent Examples of Huge Claims with Chinese Factories in the USA

Each of the recent high-profile safety problems with Chinese imports to the United States were characterized by deceptive or dishonest business practices in an effort to cut costs and boost profits.

Melamine, which is toxic to animals, was blended into pet food to give artificially high protein readings.

Diethylene glycol, potentially lethal to humans, was substituted for its higher-cost cousin, glycerin, in the manufacture of toothpaste.

Tires were surreptitiously manufactured with either a minimal or missing gum layer needed to prevent catastrophic tread separation.

Toxic lead paint was substituted for the paint that was originally approved for popular childrens’ toys, presumably to save money.

These are all cases where unscrupulous business practices have jeopardized the health and safety of the consumer.

The Importer has a Responsibility

You, as the importer, are responsible to take all necessary precautions to stop such dangerous goods from entering your home country.

You must minimize the likelihood of your products harming people and at the same time minimize your liability by doing everything you reasonably can to prevent problems with your imports. It is essential when you purchase products from China that you take action to ensure the safety and quality of your products; you cannot rely on the Chinese to always take appropriate action. Even if the Chinese do not intentionally manufacture substandard products, they may simply be unaware of your country’s regulations.

More Scrutiny of Imports

The only way to do this is to get more actively involved with a successful quality control program.

Dangerous Chinese products were entering the United States and Europe long before the Melamine pet food tainting incident hit the news. But that incident and those that quickly followed it (bad toothpaste being the most prominent) mean everyone is now on notice that these issues are real.

From now on, it will be impossible for any Western company to plead ignorance. Western companies that refuse to take proper action will increasingly be subject to severe penalties including punitive damages where they are legally available.

In other words, any Western company that does nothing to assure the safety of its Chinese imports and then steps into court claiming they had every reason to trust their Chinese supplier (based on faith alone), is likely to face real anger and major damages. Plaintiff’s class action attorneys in the United States and Europe should be and are salivating.

Liability for damages caused by defective Chinese products is going to be huge and it is going to be vast and it is going to fall disproportionately on American and European companies.

The reason for this is twofold. First, it is viewed as difficult and expensive to sue Chinese manufacturers. Second, and more importantly, Chinese courts do not give out large damage awards, so the result of a tort suit in China is not likely to be attractive to U.S. and European plaintiffs. Therefore, there will be overwhelming pressure to file such suits in the United States or in Europe, with the importer and retailer as defendants.

Such suits will likely be heard by U.S. and European courts and damages will be awarded. As I write this book, the tainted pet food cases are progressing through the US courts where more than 300 people are suing 30 different companies involved with importing the tainted pet food from China. More than US$8 million has already been paid out and the companies have agreed to pay another US$24 million. Each pet owner with documented veterinarian bills and burial costs is expected to receive up to $900. Any funds left over will be donated to animal welfare groups.

Definition of Tort

A tort is an injury to one person for which the person who caused the injury is legally responsible. A tort can be intentional – for example, an angry punch in the nose – but is far more likely to result from carelessness (called “negligence”), such as riding your bicycle on the sidewalk and colliding with a pedestrian.

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