“Eating New Crow on Old China”

Implications: 4th quarter implications Future of Global Sourcing Effects of costs and margin when and if quality control and higher standards are imposed  

Analysis:

I found the article by Alex Veiga AP Business Writer to be most insightful. Let’s cut to the chase here. “China makes more than 80% of the toys sold domestically and as he states “if you're trying to avoid Chinese toys this Christmas, there's not going to be much under the tree”. We can add” or the top line of your company if that is your industry”.  So, let’s start the healing process or should I say damage control and get this off the presses as quickly as we can. Well, those goods that have been produced for this Christmas season aren’t just being made in the North Pole as we speak, they are here and many are coming off the shelf I would venture to say. The impact on Mattel revenue of 5 billion plus which is driven by the fourth quarter can be astronomical and they are just one player in this arena. You can tickle Elmo all you want this Christmas and I doubt you will even get a grin. Those retailers who have taken toys out of their assortment for low margin, returns and seasonality are now breathing a sigh of relief. The impact on so much of the retail sector that depend upon footsteps which are created by shoppers who go into a store to buy a toy and come out with several plus other merchandise will be significant. The implications on fourth quarter sales are huge. I guess all the toy retailers will be trying to buy a non made in China” magic eight ball” very soon to see what their future looks like for the balance of 2007. Long term we really need to consider the consequences of our actions if it’s food, boots or toys as we become so dependant upon global sourcing. The implications can be lethal in many ways and I’m not being xenophobic. The fact that we fix things and put check and balance in place after the fact in so many instances is  reactionary at best and demonstrates a prior willingness to “look the other way “ and hope not to get caught for the sake of margin and profits.