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Assignment Regulation:

· All students are encouraged to use their own word.
· Assignment -1 should be submitted on or before the end of Week-07 in Black Board only.
· Citing of references is also necessary.

Assignment Structure:

A.No

Type

Marks

Assignment-1

Case Study

5

Total

5

Learning Outcomes:

· Explain the forces driving and evaluate the impact of globalization (Lo 1.3)
· Discuss the reasons for and methods of governments’ intervention in trade (Lo 1.7)
· Identify the major components of international business management (Lo 1.2)

Case study

Please read Case 5: “Lead in Toys and Drinking Water” available in your e-book (page no.615), and answer the following questions:

Assignment Questions:

1. Should there be a global standard for toy manufacturing? What are some of the benefits and what are some of the drawbacks of a potential global quality and manufacturing standard? (marks: 2, minimum words: 150 words)

2. With some 80 percent of the toys sold in the United States being manufactured in China, should the United States place greater emphasis on its toy-trading relationship with China? Could the United States control China’s manufacturing more than it does today? How? (marks: 2, word limit: minimum 200)

3. The Flint, Michigan, water crisis highlighted a major issue in the United States regarding old lead-based pipes used to transport water to the community. This came to light in Flint due to the failure of applying corrosion inhibitors to the water when the city leadership decided to switch water sources. What global fail-safe mechanisms should be enforced on water consumption, and other consumable products, to safeguard from potential lead poisoning? (mark: 1, word limit: minimum 150 words)
Ans:1

Ans:2

Ans:3

614 Part 7 Cases

specifically (built-in instant messaging) shaped a lot of the
problems that eBay ran into in China. Some 200 million
shoppers are using Alibaba’s Tmall and Taobao platforms
to buy products, and the company accounts for almost
80 percent of online transaction value in China.

Uniquely, Taobao’s built-in instant messaging system
has been cited as a main reason for its edge over eBay in
China. Basically, customers wanted to be able to identify
a seller’s online status and communicate with them di-
rectly and easily—a function not seamlessly incorporated
into eBay’s China system. Clearly, built-in instant text
messaging is a solvable obstacle in doing business in
China. It sounds easy now that we know about it, but it
may not always be the case when we take into account all
the little things that are important in a market. How can
a foreign company entering China ensure that it tackles
the most important “little” things that end up being huge
barriers to success?

Sources
Frank Lavin, “China Marketing: Five Keys for a Crowded Mar-
ket,” Forbes, March 25, 2017. B. Carlson, “Why Big American
Businesses Fail in China,” GlobalPost, September 22, 2013;
Y. Atsmon, M Magni, L. Li, and W. Liao, “Meet the 2020
Chinese Consumer,” McKinsey Consumer & Shopper Insights,
March 2012; “Exports to China by State 2000–2011,” The
US–China Business Council, 2012; A. Groth, “Best Buy’s
Overseas Strategy Is Failing in Europe and China,” Business
Insider, November 4, 2011.

Case Discussion Questions

1. Will China maintain its strong economic growth in
the years to come? Some suggest it will until 2050.
What do you think?

2. If China will go from 17 million to 200 million
middle- and upper-income people by the early 2020s,
would the scenario presented by Best Buy not be
applicable anymore? Would newly rich Chinese
customers engage in this purchasing in the 2020s?

3. With Alibaba’s ownership of the very popular Tmall
and Taobao online shopping systems (similar to
eBay and Amazon) and its spread across the world,
will a Western-based online shopping culture
ultimately infiltrate China?

albeit not at the historic levels seen between 2000 and
2010, when it grew about 10.4 percent annually. The
growth in the 2020s is expected to be about 5.5 percent
per year (until 2030), which is still far above the expected
growth for the United States (2.8 percent annually), Japan
(1.2 percent annually), and Germany (1.7 percent annu-
ally). And the key is that consumption will now be the
driving force behind the growth in China instead of for-
eign investment. The consumption forecast opens up op-
portunities for foreign companies to engage with Chinese
consumers who are expected to have more purchasing
power and discretionary spending.

But culturally translating market success from one coun-
try or even a large number of countries to the Chinese mar-
ketplace is not necessarily as straightforward as it may
seem. Often, a combination of naiveté, arrogance, and cul-
tural misunderstanding have led many well-known compa-
nies to fail in China. Lack of an understanding of issues
such as local demands, buying habits, consumption values,
and Chinese customers’ personal beliefs led to struggles for
companies that had been very successful elsewhere in the
world. And as global as China is becoming, cultural differ-
ences still get magnified in the Chinese marketplace. Let’s
take a look at Best Buy and eBay as two examples.

Best Buy, the mega-store mainly focused on consumer
electronics, was founded in 1966 as an audio specialty store.
Best Buy entered China in 2006 by acquiring a majority in-
terest in China’s fourth-largest appliance retailer, Jiangsu
Five Star Appliance, for $180 million. But culture shock hit
Best Buy, best described by Shaun Rein, the founder of
China Market Research Group. First, the Chinese will not
pay for Best Buy’s overly expensive products unless they are
a brand like Apple. Second, there is too much piracy in the
Chinese market, and this reduces demand for electronics
products at competitive market prices. Third, like many
Europeans, the Chinese do not want to shop at huge mega-
stores. So, these three seemingly easy-to-understand cultural
issues created difficulties for Best Buy.

eBay, the popular e-business site focused on consumer-to-
consumer purchases, was founded in 1995. The company
was one of the true success stories that lived through the
dot-com bubble in the 1990s. It is now a multibillion-dollar
business with operations in more than 30 countries. But
China’s unique culture created problems for eBay. Contrary
to the widespread cultural issues that faced Best Buy, one
company in particular (Alibaba) and one feature more

Toys for children are made in numerous countries and
then exported to buyers throughout the world. In some
countries, such as the United States, certain protection
exists to make sure that toys are safe for children. The
U.S. Consumer Product Safety Commission (CPSC) reg-

ularly issues recalls of toys that have the potential to ex-
pose children to danger such as lead or other heavy
metals. Lead may be found in the paint and in the plastic
used to make the toys. If ingested (e.g., children chewing
on toys), lead is poisonous and can damage the nervous

Lead in Toys and Drinking Water 

Cases 615

human body. Another unfortunate part about lead is
that it is invisible to the naked eye and has no detect-
able smell. This means that children may be exposed to
lead from toys (and other consumer products) through
normal playing activity (e.g., hand-to-mouth activity).
As everyone with children knows, children often put
toys, fingers, and other objects in their mouth, exposing
themselves to lead paint or dust.

The Flint, Michigan, water crisis that spanned 2014
to 2017 is one significant news story that highlighted
the unfortunate part about lead being invisible and with
no detectable smell. The Flint water crisis started in
April 2014 when Flint city management changed its wa-
ter source from the treated Detroit Water and Sewerage
Department water (which is sourced from Lake Huron
and the Detroit River) to the Flint River. A critical
mistake in making this switch of water source was that
Flint officials failed to apply corrosion inhibitors to the
water. The result was that upward of 12,000 children
were exposed to drinking water with high levels of lead.
Contaminated drinking water—with lead or other con-
taminants—is a problem that affects some 1.8 billion
people in the world according to the World Health
Organization.

Children are also more vulnerable to lead than
adults; there is no safe level of lead for children. The
worldwide toy industry has published a voluntary stan-
dard of 90 ppm (parts per million) for lead in toys,
which, of course, is greater than a ban on lead in paint
used for toys and in the materials used to make the toys
(such as plastics). But since 2007, the world has at least
seen stricter standards—either voluntary or regulated
standards—that make it safer for children to play with
newly purchased toys. The CPSC in the United States,
the European Union, and China’s AQSIQ are actively
monitoring and enforcing stricter standards. But, ac-
cording to Scott Wolfson of the CPSC, many toy manu-
facturers have been violating safety regulations for
almost 30 years. So, are toys safer now and are they re-
ally safe to play with throughout the world? What do we
do with the old toys, old water pipes, and untested
products?

Sources
Liam Stack, “Lead Levels in Flint Water Drop, but Residents
Still Can’t Drink It,” The New York Times, January 24, 2017;
Andy Robertson, “Toy Fair Trends Reveal Movies, Collectibles
and Tech Drive $26 Billion Toy Industry,” Forbes, February 28,
2017; M. Moore, “One-Third of Chinese Toys Contain Heavy
Metals,” The Telegraph, December 8, 2011; P. Kavilanz, “China
to Eliminate Lead Paint in Toy Exports,” CNN Money, Septem-
ber 11, 2007; U.S. Centers for Disease Control and Prevention,
www.cdc.gov/nceh/lead/tips/toys.htm, accessed March 8, 2014;
“U.S. Prosecutes Importers of Toys Containing Lead, Phthalates,”
AmeriScan, February 26, 2014.

system and cause brain disorders. Lead is also a neuro-
toxin that can accumulate in both soft tissue and bones in
the body.

For these reasons, lead was banned in house paint, on
toys marketed to children, and in dishes or cookware in
the United States in 1978. In addition, in an agreement
between China’s General Administration of Quality Su-
pervision, Inspection and Quarantine (AQSIQ) and
CPSC, the Chinese agreed to take action to eliminate the
use of lead paint for Chinese-manufactured toys that are
exported to the United States. With China’s prominence
as a toy manufacturing country, this agreement was a step
toward making safe products for children.

Still, lead continues to be a hazard in a quarter of all
U.S. homes with children under age 6. A wide range of
toys and children’s products, including many market-
leading and reputable brands, often contain either lead
or other heavy metals (e.g., arsenic, cadmium, mercury,
antimony, or chromium). Estimates exist that suggest
that one-third of Chinese toys still contain heavy metals.
These estimates are supported by researchers from
Greenpeace and IPEN, who conducted a study by using
500 toys and children’s products they bought in five
Chinese cities. They tested the products with handheld
X-ray scanners and found that 163 of the toys were
tainted with heavy metals above the norm (32.6 per-
cent). “These contaminated toys not only poison chil-
dren when chewed or touched, but can enter the body
through the air they breathe,” said Ada Kong Cheuk-san
at Greenpeace. This testing result is a major problem
given that China manufactures 80 percent of the toys
sold in the United States.

While lead in the paint on toys has not been elimi-
nated, the focus on cleaning up lead in the paint has
been given front-page coverage in the news for the last
decade. Lead in toys is certainly not gone, but at least
more and more people are paying attention. Several
organizations—both governmental and private—are exam-
ining lead-based paint in toys on a continual basis. For
example, The New York Times and Consumer Reports re-
cently found that dangerous products for children are
still widely available. The Ecology Center, which is
headquartered in Ann Arbor, Michigan, has created a
website called HealthyStuff.org that contains a database
of toys and other products that have been tested for dan-
gerous chemicals.

While lead in paint seems to be in focus, the use of
lead in plastics has not been banned! Lead is used to
soften the plastic and make it more f lexible to allow it
to go back to its original shape after children play with
the toys. Plus, lead may also be used in plastic toys to
stabilize molecules from heat. Unfortunately, when the
plastic is exposed to sunlight, air, and detergents, for
example, the chemical bond between the lead and plas-
tics breaks down and forms dust that can enter the

part seven Integrative Cases
Lead in Toys and Drinking Water

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