The American market accounts for nearly a third of the estimated $100 billion a year the world spends on toys and video games. And while most of the world's largest toy companies are American, 80 percent of the toys they sell are manufactured in China.
Consumer confidence in the safety of Chinese-made toys was shaken this summer as lead-based paint and other dangers were discovered in some products. This has meant a surge in business for American toymakers, whose market share had been declining for years.
When the "RC2" company's Chinese-made trains were pulled from American store shelves and millions of popular Mattel toys were recalled, small American toy manufacturers saw demand for their products soar. "We've been doing well," says Mike Whitworth, owner of the Whittle Shortline Railroad toy company, which makes handcrafted wooden trains in Missouri. In June, when the first RC2 recalls started, his company saw a small jump in sales. "But then when the Mattel recalls started out we saw a 40 percent jump."
Whittle Shortline Railroad is a small firm. Before the recall, they employed 36 people. But Whitworth says, "We are adding people like crazy now because we do want to meet as much demand as we can while we are still on the national stage."
Toys are cheaper to make in China than in the United States, mostly because of lower labor costs. Whitworth adds that American manufacturers must also follow strict U.S. government safety regulations, which add to their costs. "We've always used lead free paint simply because it's the safest paint and because the government said, and the insurance company said, 'you will.'"
Toys imported to the United States are subject to the same regulations as toys made here, but the sheer volume of Chinese imports makes comprehensive inspection of the imports and enforcement of the rules impossible.
"The number of inspectors is so few and you'd have to inspect every single container and you can't physically do it," says Whitworth. "I think it's the importing company that needs to go to China and make sure that what is leaving their territory is indeed safe."
He acknowledges that RC2 and Mattel never wanted the tainted toys to enter America, much less be associated with their company. "But, at the same, they had it in their means to prevent it, and they just didn't do it. And I think the American consumer, at least right now, is very much aware of that."
That has convinced some of Mike Rainville's customers to "buy American" from now on. And it's helped boost sales of Maple Landmark Toys, his company in Middlebury, Vermont.
"We've had a number of people telling us they are literally throwing away all their toys and starting over. People are very, very concerned. When you start endangering their kids, you're talking about some serious issues that don't go away very easily."
Chinese imports aren't going away very easily either, and probably not at all. But toy industry analyst Sean McGowan of Wedbush Morgan Securities notes that the lead-tainted toys of this summer represent only a tiny fraction of imported Chinese goods. He says he is confident that China's overall safety standards remain high.
"I'm not trying to minimize the dangers of poisonous materials or lead or what could happen," McGowan says, "but it's not as if the entire toy industry has found that all Chinese goods are unsafe."
McGowan asserts that the tainted toys represent a case of some people being paid to look the other way while substitutions were made for the purpose of generating profit. "That can happen anywhere in the world, including the United States and the Western countries," he points out.
The answer, according to McGowan, is not to boycott Chinese goods, which he believes are generally sound. "It is to address the holes in the system which could exist anywhere, and patch those holes." He suggests regular testing to make sure that "breaches in the safety net can be detected."
Indeed, many American-made toys once contained large amounts of pure lead, featured sharp parts that could be dangerous, or contained small pieces that could choke a child. But as Stevanne Auerbach, a child development and toy safety specialist also known as "Dr. Toy," notes, over the years the world's toys have become much safer.
"They are more reliable. There is more scrutiny. And, when an accident happens, it's a wakeup call." Now, as in the past, Auerbach says, "it's time for all of us to join together and find a better way to create a better and safer toy box."
The Mattel and RC2 corporations are moving swiftly to get the tainted products off store shelves. They also want to reassure consumers that future toys will be safe. They plan to increase both the number and the rigor of toy factory inspections in China. If their efforts are successful, and Chinese-made toys remain cheap, a rebound seems certain, because, as one American toymaker put it, "memories are short, and price is king."