[UPDATE 11:15pm] The New York Times has followed up its previous article with this one. There's a nice little quote hidden in there from Dara O’Rourke, associate professor of labor and environmental policy at UC Berkeley.

"Mattel used China as a scapegoat for its own problems and that the toymaker is now paying the price for that."

That quote says a lot about the Chinese exports scare, but forgets to note the racial issues involved. Namely, if Mattel were producing at the same price in any other country, would they have tried to use that country as a scapegoat just as they had with China? A related question would be, why did the country fall for it so easily?

Finding a scapegoat to avoid blame and dodge shareholder fallout is one issue, but there's clearly more to it. Maybe given national sentiments at the time toward Chinese exports for other regulatory violations (toothpaste, pet food) Mattel just thought they could get away with it? Or maybe they just shared the same sentiment?

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Earlier this morning, Mattel issued an apology to China (yes, to the entirety of China - thats a lot of apologies) for its excessive recall of toys from China.

"Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys''

Debrowski, Mattel's executive vice president for worldwide operations, also acknowledged that the ''vast majority of those products that were recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in China's manufacturers.'' A few other notable quotes from the New York Times...

Lead-tainted toys accounted for only a small percentage of all toys recalled, he said, adding that: ''We understand and appreciate deeply the issues that this has caused for the reputation of Chinese manufacturers."

... new research from two business professors shows that recalls due to problems with the U.S. maker's design accounted for the vast majority -- about 76 percent -- of the 550 U.S.toy recalls since 1988...

''if shifting manufacturing to China resulted in poorer quality goods, then the number of toys recalled due to manufacturing should be greater than the number recalled due to design,'' the report said. But that is not the case.

Mattel's apology reflects how the Chinese product scare has been blown out of proportion. Amid the series of recent China recalls, faults endemic to American design became attributed to Chinese manufacturing. Anyone who has paid attention to recent commentary on Chinese exports know that this is not the only consequence of "Yellow Paint Peril". The fact that Mattel issued the apology to China, as opposed to the specific manufacturers or even just Chinese manufacturers, reveals how this issue has not only affected the reputations of the manufacturers involved or even just Chinese industry, but rather China as a whole. I would extend that range to include Chinese outside of the P.R.C. as well.

There are certainly many regulatory problems in China and having worked in China I have seen some of these issues first-hand. Nonetheless, its important to consider why the Chinese product scare exploded the way it did. Why was it so easy for Mattel to overlook the design faults in their toys as they recalled millions of toys on the basis of lead paint added by Chinese manufacturers against Mattel standards? Discuss.