The quality of Chinese goods has come under great scrutiny of late with many markets, more particularly the United States and Europe, deeming many Chinese products substandard and in many cases dangerous to the consumer.
With China looking increasingly to the Caribbean and its balance of trade with the region increasing year-on-year, should the Caribbean be wary of Chinese goods?

China is now the developing world's largest exporter, but is failing to match quantity with quality. In the decades following the Second World War, Japanese goods did not enjoy a very good reputation. "Made in Japan" often spelt shoddy, ephemeral, cheap. At the close of the twentieth century that has all changed. Sony, Honda, Pioneer are by-words in quality consumer products that often perform better than their United States counterparts. It is all very well being an exporter, but the quality of your goods into the world's most demanding markets is the litmus test, a test China has failed to pass. China is yet to generate consumer confidence. Perhaps it will do better on the resit.

In the first half of this year, 19 per cent of Chinese products made for its domestic consumption were found to be substandard. Among products made by small firms, the failure rate was nearly 30 per cent, said China's General Administration of Quality Supervision, Inspection and Quarantine. Of particular concern to the director of the administration's quality control and inspection department, Han Yi, is the growing trust deficit both at home and abroad relating to food safety, excessive amounts of additives and preservatives and the high number of substandard goods that are allowed onto the market.

Earlier this year there was a big scandal with tainted pet food from China responsible for the deaths of domestic cats and dogs. Then there were defective fireworks coming onto the US market followed by toys coated in toxic lead paint.
Outside the United States, Chinese toothpaste with high levels of diethylene glycol was found to be the source of oral hygiene concerns in Latin America. More recently dodgy pharmaceuticals from China flooded the world market and many first-world doctors cite them as a major health scare that can escalate to epic proportions.

According to the European Union Trade Commissioner Peter Mandelson, half the counterfeit goods found in the European Union are made in China.

"I think we have reached a point unfortunately where 'Made in China' is now a warning level in the United States," said Democratic Senator Richard Durbin.

Some see this as a test of wills between the world's biggest producer and the world's biggest consumer, a ruse to stem the tide of cheap Chinese imports. However, many other countries have become circumspect regarding Chinese goods. The Australians have concluded that the Chinese Brilliance BS6 automobile has quality issues and that it failed to pass vigorous crash-testing exercises in Europe.

An Australian commenting on Chinese goods said: "It's going to take a long, long while before the Chinese get their act together in terms of safety and QA. If you treat your employees like 10-cent-an-hour monkeys then you will manufacture products that look like they were made by 10-cent-an-hour monkeys.

"My company has outsourced a lot of IT to the Chinese recently and having worked with them for the past 12 months, I can tell you that they are no better than the Indians, if not worse. Deadlines are made at the sacrifice of quality and design. Corners are often cut and there's not much thinking outside of the box going on."

Japan has called for higher safety standards and the Dominican Republic has recalled million of tubes of Chinese-made toothpaste.

All this is not lost on the Chinese government and it has made a concerted effort to address quality control issues. Perhaps the most draconian step was the execution last month of the head of China's food and drug agency Zheng Xiaoyu for accepting around US$880,000 in bribes from pharmaceutical companies to speed up the approval of new drugs.

China has declared war on unsafe food for its 2.3 million soldiers, with the military having to implement safety measures after a number of health scandals. Some of these measures include weeding out fake or substandard food products and eliminating the practice of several soldiers eating from the same plate.

"To strengthen food safety is to guarantee the army's combat capacity," The China Daily newspaper quoted Zhou Pengjun, a logistics official, as saying.

According to the July 4th edition of BusinessWeek, Beijing has also taken other steps to clean up safety problems. Chinese inspectors recently announced that they had closed 180 food factories in the first half of this year and seized tons of candy, pickles, crackers and seafood tainted with formaldehyde, illegal dyes and industrial wax,
According to the report entitled "20 per cent of China's goods substandard", authorities said most of the offending manufacturers were small, unlicensed food plants with fewer than 10 employees. State media has reported that 75 per cent of the country's estimated 1 million food-processing plants are small and privately owned. The Chinese maintain that more than 93 per cent of products made by large companies met standards, while only about 73 per cent of products made by small companies met standards.

So should the Caribbean be worried?
China has stepped up its trading relationship with the Caribbean as the region continues to look east foregoing its more traditional trading partner, the United States.
The Chinese news agency Xinhua reported in 2004 that Caribbean trade reached US$2 billion that year, representing a 42.5 per cent increase on 2003's numbers.

Latin America and the Caribbean exports to China rose by 72 per cent in 2003, according to ECLAC's Latin America and the Caribbean in the World Economy (2003). China is now the world's fourth biggest exporter and the third biggest importer, and its impact is making itself felt in the region. China's entry in the WTO in 2001 improved the conditions of its market access, in a context of high economic growth, a key factor in the recovery of basic product prices.

China competes with the exports of developing countries on the basis of its low labour costs in labour intensive goods. Measured by production unit, it is more competitive in wages and labour costs than Mexico where wages are 7 times higher than in China, or Bolivia (4 times), or Chile (13 times).

Jamaica has now become China's largest trading partner in the English-speaking Caribbean region. The Chinese Ambassador to Jamaica, Zhao Zhenyu, said last year that trade volumes between the two countries reached US$305.07 million in 2005. China is looking to rehabilitate Jamaica's railway system at a cost of US$310 million and to complete the project by 2009.

China regards the Caribbean as a prized market and some argue that the region is being blindsided by China's " dollar diplomacy" as it steps up its efforts to cut off Taiwan's sphere of influence. Most of CARICOM maintains good diplomatic and trading relations with the People's Republic of China.
But St. Vincent, St. Kitts, Haiti and more recently St. Lucia have turned to Taiwan thereby preventing a joint trade and investment strategy for the world's fourth largest exporter. The battle for influence in the Caribbean is clearly illustrated by both Taiwan and China's attempts to court Dominica and woo it with cash. Two weeks before Dominica switched allegiance from Taiwan to China, Taiwan gave it US$9 million. China promised Dominica US$112 million over the next six years.

China is less likely to encounter the more exacting and stringent safety and quality standard requirements in the Caribbean, and regional governments and businesses welcome paying less for labour produced products and more so having to depend somewhat less on the United States.

"China is ready to become a global power and is ready to be of service to those countries that are becoming a little disgruntled with the United States. The United States' level of investment in the region has undoubtedly fallen off and China is prepared to take up the slack. Caribbean governments are grateful for the level of infrastructure and development projects both financed and built by the Chinese. Many of the stadiums erected for Cricket World Cup were built by the Chinese.

"However, Caribbean people have an aversion to cheap and nasty garments and other goods that they see as substandard. Premier products have always done well in the Caribbean and people will not settle for less. The Chinese have no concept of "Bling" and therein lies the problem. You are dealing with a mentality that the Chinese do not understand. Now if China can produce quality goods at affordable prices it would have cracked the Caribbean.
Substandard cheap goods will never take a hold in this part of the world because Caribbean people are too discerning. Gone are the days when foreign haberdashers could prosper by selling cheap goods from China to unwitting Caribbean people," said Qui-Gonn Jinn of Surbiton Securities.

Tony Minvielle of Barclays Capital observed: " The Caribbean imports over US$3 billion worth of food every year, which is disturbing. Chinese canned and preserved fruit and dried fish have proven problematic, largely because of excessive bacteria and additives. But the Caribbean produces enough fresh food and other produce so as not to place a high dependence on Chinese food imports.

"Where the real problem lies is with pharmaceutical products, more particularly generics. If cheap, substandard or worse yet --- fake drugs are allowed to flood the Caribbean, it could be hazardous to its citizens' health. I think the Caribbean should err on the side of caution and impose US/European standards as far as imported Chinese drugs are concerned because their track record of disasters is frightening. China must understand and adhere to the capitalist maxim " a good, reliable product at an attractive price", if it truly wants to conquer the world of trade like Britain, the United States and Japan have done."

The Chinese economy grew by 10.2 per cent in 2005 due to strong domestic investment and buoyant exports. In the first half of 2006, China recorded growth of 10 per cent compared with the same period in 2005. Initial forecasts put growth at between 8.8 and 9 per cent, according to both the IMF and ADB. China now has hard currency reserves of US$1trillion and therein lies the power of this exporting juggernaught.
Safety and quality issues aside, China has been a good friend to the Caribbean. Not only has it invested handsomely in the region, pumping over US$6 billion into the Caribbean alone, it has also encouraged Caribbean exports into its home markets.

Latin American and Caribbean exports to China have exploded since the late 90s increasing seven-fold in five years while its exports to the region have more than tripled.
This growth has been a response to Chinese demand for raw materials as it runs into domestic supply constraints. The region's exports are mainly of primary commodities. Hence Trinidad is seeking to export natural gas to feed China's growing industrialisation, and Jamaica's bauxite deposits are much coveted. Trinidad has also struck deals to supply asphalt for Chinese highways and for its stadiums in preparation for the upcoming Olympic games.

Latin American and Caribbean exports to China exceeded US$19 billion in 2005 or close to 3.5 per cent of the region's total exports.

According to a paper entitled "The impact of China on Latin America and the Caribbean" by Rys Jenkins of the University of East Anglia and Enrique Dussel Peters of Universidad Autonoma de Mexico, " In contrast to exports, imports are almost entirely of manufactured goods, almost half of which are low-techlabour intensive products. It is unclear how far imports from China have been at the expense of other exporters and how far they have displaced local producers.

The Caribbean's sugar and banana industries are in trauma as a result of the European Union's decision to end preferential treatment for ACP countries. Compounding matters is the EU's decision to cut the price it pays for sugar from Caribbean countries by 39 per cent.

Back in 2005, China's minister of commerce, Bo Xilai said that China was considering importing more volumes of sugar and bananas from the Caribbean.

"China is a huge market and everybody has high expectations of China. So I will encourage the importation of more sugar and bananas from the region to help the industries," said Bo Xilai.

Back in 2004, China's President Hu Jintao on a visit to Latin America committed to invest some US$100 billion in the region over the next decade. Data from the Chinese Ministry of Commerce shows that the following year Latin America and the Caribbean was the second-largest recipient of Chinese FDI, receiving US$659 million (16.3 per cent of its total).

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