In the winter of 1902 Theodore Roosevelt’s immortality was secured. Out hunting with his friends, the American president refused to shoot a bear they had tied to a tree. A famous cartoon captured the moment, and inspired a new industry: the making of stuffed bears. Forever more these children’s playthings would be called ‘Teddy Bears’ – in commemoration of Roosevelt’s nickname.
Across the Atlantic, Richard Steiff designed a cute bear with a patented metal button in its ear. His aunt’s German toy firm, Steiff, would become the world’s leading maker of Teddy bears, making its first in the same year as Roosevelt’s famous hunt. Its bears would become famed for an unrivalled quality and would rapidly become collectors’ items.
Nearly a hundred years after its first bear was sewn together, Steiff was facing stiff competition from other manufacturers – in a cuddly toy industry now much more cut-throat. Hence the response: a decision in 2004 to move some of its manufacturing to China.
However, China Business News reports that the company has now reversed that move. It withdrew its main Chinese production lines late last year and will shutter its entire facility in the coming months. “China is not suitable for us,” the firm’s CEO, Martin Frechen told CBN.
For cheerleaders of the ‘Made in China’ story this is quite a reversal (for more on this topic, see Focus Issue 1).
So what has caused the German toymaker’s volte face?
First off, quality issues. After Mattel recalled some of its China-made toys, Frechen says that his firm started to have to spend more time persuading parents that its own China-made bears were safe to purchase.
The quality issue went beyond safety concerns. Every Steiff Teddy Bear is divided into 35 parts, with 80% of the work completed by hand. Frechen sent 300 training personnel to China to ensure workers could match the high standards the German firm was known for.
But to reach the level of craftsmanship the firm requires needed 18 months of experience. Many of the Chinese staff left after a year, and the high employee turnover meant that products weren’t passing the German HQ’s quality control standards.
“If the location of the bear’s glass eye is 1mm lower, a pleasing expression becomes lifeless and no one wants this,” says Frechen with a typically German fondness for absolute precision.
Lack of staff loyalty wasn’t the only issue. Rising transport costs and logistical delays also hurt the company. When Steiff weighed it all up, it concluded that, although Chinese labour costs were a third of those it faced in Europe, the other issues offset this advantage.
So now when children hug a Steiff bear it will be made in Tunisia, not China.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.