Hong Kong Toy & Games Fair Keynote Address - Wednesday, January 11, 2012, Liuyang, China

January 11, 2012

Good morning, and Happy New Year to everyone!

 

Thank you for that kind introduction, and Mr. Wong, thank you for your leadership and advocacy for toy safety.

 

Well, the tradition continues. This is the third time I have begun the New Year with a speech in Hong Kong about toy safety.

 

I wish I could have been here a few days ago, as the New Year’s Eve fireworks display over Victoria Harbour looked wonderful.

 

I have travelled here to be at your toy fair for two reasons. First, I want to share with you the progress I see being made in Asia and the United States to make toys safer. And second, I want to share my expectations of the toy industry in the year ahead.

 

I am pleased to report that the state of toy safety is strong—it is strong thanks in large part to the actions of many of you in this room today.

 

2011 represented the third consecutive year that toy recalls declined in the United States. I applaud all of the manufacturers, suppliers, importers, and labs that complied with CPSC’s requirements and did their part to put safer toys in the hands of American children.

 

In fiscal year 2011, there were 34 toy recalls, mostly related to choking and laceration hazards to young children. The 34 recalls last year represented a drop in the number of recalls from 46 in 2010, 50 in 2009, and 172 in 2008—a year we must never repeat.

 

Lead violations that resulted in recalls also remained low. There were only four recalls for lead violations in 2011, as compared to 19 in 2008.

 

Now, that’s the good news.

 

But, here is the reason why the toy industry still has more work to do: CPSC and Homeland Security inspectors at U.S. ports continue to detect and detain shipments that contain violative toys.

 

These violations range from excessive lead and phthalates, to more small parts violations.

 

With new resources and technologies aimed at identifying high risk shipments—as they are in transit from the Port of Hong Kong or the Port of Shanghai—we are getting better and better at sampling and seizing violative products.

 

Overall, the toy industry has made great progress in recent years. Quality assurance and quality controls systems and adherence to U.S. safety standards have improved.

 

But, you cannot let your guard down because the customers in America—your largest trading market—have high expectations that toys coming into the country will be compliant with the CPSC’s toy safety rules.

 

And I have the same expectations.

 

So that we can all make 2012 the single best year in toy safety, I want to focus on three areas during my time with you this morning.

 

First, I will give you an update on all of the latest developments with the Consumer Product Safety Improvement Act.

 

Second, I will discuss the concept of “Safety by Design.”

 

And finally, I will talk about CPSC’s renewed effort to be a regulator that favors prevention and education over reaction and recall.

 

Let’s start with a discussion about the Consumer Product Safety Improvement Act, or CPSIA.

 

I trust that everyone knows by now that this sweeping U.S. child safety law established some of the lowest lead paint and lead content limits in the world for toys.

 

Paint is set at 90 parts per million of lead, and total lead content is set at 100 parts per million. The drop down to 100 parts per million for lead content became effective, prospectively, on August 14, 2011.

 

The law also bans toys from being made or sold with more than 1,000 parts per million of six different phthalates. There is an expert panel of scientists who are still researching three of the six banned phthalates, as well as the safety of chemical alternatives.

 

I also hope you all are aware that the CPSIA turned the longstanding and well-known voluntary toy standard, ASTM F963, into a mandatory, federal safety standard.

 

Except for the drop down to the 100 parts per million lead limit for total content, all of the requirements I just cited have been in place for more than two years.

 

I support these rules because they are paying off. The payoff is seen in increased consumer confidence and increased efforts by your industry to move away from harmful metals and chemicals.

 

Now, here is the big news that everyone must know.

 

On January 1, just 10 days ago, CPSC lifted the two-year-old stays of enforcement for the testing and certification requirements for lead content, phthalates, and ASTM F963.

 

The headline from CPSC is that independent, third-party testing is now required and in effect for these important toy safety rules.

 

I recognize that some of you may be unfazed by this news. That’s because many U.S. manufacturers and retailers have required you to adhere to and test to these rules, even with the stays of enforcement in place.

 

Yet, everyone should understand that with the stays lifted, imported toys may not reach their intended destination if they are not accompanied by a certificate of compliance.

 

This certificate is the golden ticket that CPSC port inspectors, importers, and retailers are looking for to ensure that the toy you make over here can reach the hands of a child in the United States.

 

I applaud those of you at this fair that do first-party conformance testing; but, the law in the United States calls for a representative sample of toys to be third-party tested.

 

If you need to know which laboratories in this region are accredited to test to these requirements, log on to www.CPSC.gov where we have an easy-to-use, searchable list of laboratories.

 

The other new development that I’m pleased to share with all of you is that the ASTM F963 subcommittee recently approved and published a 2011 version of their standard.

 

Under the CPSIA, my fellow Commissioners and I can accept this new version of the voluntary standard and turn it into the updated mandatory standard.

 

This revised standard is a net positive for the industry and for the safety of children. It should not be a cause for confusion within the industry.

 

Once CPSC accepts the new version of the standard, we will issue new notices of requirements, which will provide all of you with guidance on how to test to the new or upgraded requirements.

 

I will let DeWane Ray, CPSC’s outstanding Director of Hazard Identification and Reduction, talk to you about many of the specifics of the new standard during his presentation.

 

Though, one of the new upgrades that is especially noteworthy are the limits on cadmium and other toxic metals in both surface coatings as well as substrates.

 

For the past two years, I have been warning manufacturers in this region about substituting cadmium or other toxic metals in place of lead.

 

We now have standards for both toys and children’s metal jewelry, reinforcing my warning to manufacturers about the hazards of cadmium and other toxic metals.

 

To me, that is forward progress.

 

Knowing the specific standards and testing requirements to deal with various hazards is very important because standards and testing are the foundations of the CPSIA.

 

What my Commission colleagues and I did last October was to fortify that foundation—and we fortified it for years and years to come.

 

In October, we approved a rule requiring continuous, third-party testing for all toys and children’s products. It was a monumental vote and one that parents and grandparents in the United States have waited for years to happen.

 

The third party testing requirement is the crowning achievement of CPSC’s work on the CPSIA. The rule furthers CPSC’s efforts to create a stronger safety framework—a framework designed to ensure the safety of toys and children’s products before they get into the hands of children, no matter where they are made.

 

Let’s say after you begin making a new toy, there is a material change introduced during the manufacturing process.

 

Maybe you change your paint supplier or plastics supplier.

 

Should the child who ends up playing with the toy manufactured after the material change have to serve as an unwitting tester of whether it potentially made that toy unsafe?

 

I say absolutely not, and I trust all of would say exactly the same.

 

Well, our continuous testing rule is intended to ensure that there is a high level of assurance that a particular toy complies with all of the pertinent safety requirements.

 

And that compliance is maintained during the entire production life of that toy and that any safety issues are discovered before the product goes out the factory door—not after it ends up in a child's hands.

 

This rule goes into effect early next year, but I am confident that all of you are committed to providing children with the highest level of safety in their toys this year.

 

I would be remiss if I did not also mention that on the same day CPSC approved the continuous testing rule, we also approved the final component part testing rule.

 

I recognize fully that component part testing may not work in every situation, but I hope it will prove beneficial to many.

 

For the past few years, my fellow Commissioners and I have been advocating that U.S. toy and children’s product companies push the responsibility for testing upstream.

 

Well, upstream means Hong Kong.

 

Upstream means Guangzhou.

 

I urge all of you to do everything you can to encourage suppliers of paints, parts, and accessories to do the right thing and certify that their components meet U.S. safety requirements.

 

The benefits downstream—in the form of reduced costs—will be significant; however, safety will not be sacrificed.

 

In case you didn’t know, in August 2011, the U.S. Congress approved, and the President signed into law amendments to certain parts of the CPSIA.

 

Congress did not overhaul the independent testing requirements, nor did it back away from the stringent lead limits in children’s products.

 

What they did do is establish a pathway for small batch manufacturers to gain some relief from some of the third-party testing requirements.

 

Congress also made sure that the 100 parts per million total content lead limit was applied prospectively only—not retroactively—for retailers and resellers. I fully supported this change in the law.

 

Now, I know that the CPSIA has presented certain challenges to the toy industry. Nevertheless, I believe that your motivation to comply with the law should continue to be the same as CPSC’s motivation to implement the law—a desire to keep children safe while at play.

 

Many of the toys on display at this fair are ingenious, and eventually, they will appear in retail stores in America. Take the necessary steps now to ensure that those toys comply with the CPSIA so that children are safe and happy when those toys reach their hands.

 

It’s not just the law; it’s the right thing to do.

 

I would now like to transition from talking about what the rules and requirements are, to talking about ways that toy companies can ensure that they meet our rules and requirements by ensuring that all products are designed safely.

 

In 2008, two researchers from western Canada published a paper analyzing about 600 toys recalls announced in the United States over a 20-year period.

 

Hari Bapuji and Paul Beamish found that “the number of defects attributable to design issues was much higher than those attributable to manufacturing problems.”

 

In fact, 71 percent of the toy recalls that they analyzed were related to a design problem.

 

Bapuji and Beamish stated that “a design problem is reflected in sharp edges of a toy, which pose a laceration hazard. Another common design problem is small detachable parts, such as balls and beads, which pose a swallowing and choking hazard. Other examples of design flaws include open tubes and spaces, which can entrap children’s body parts, long strings that pose a strangulation hazard, and sewn buttons and glued eyes on stuffed toys (as opposed to button-less clothing for toys and embroidered eyes).”

 

The researchers added: “A design problem would result in an unsafe toy irrespective of where it was manufactured. On the other hand, a manufacturing defect arises because of manufacturer errors or negligence…If a toy’s design is good, it does not necessarily mean that the toys produced will be good. By contrast, if the design is poor, the toys manufactured will definitely be faulty.”

 

The researchers made two suggestions: first, ensure the accountability of toy companies to improve their product designs; and second, encourage the development of global standards to enhance product safety.

 

We already know that the standards have been enhanced. So, the focus needs to be on building safety into the design of your toys.

 

This is especially important for your industry because the offerings of new designs to your distributors and customers change so frequently.

 

And with nearly 90 percent of all toys imported into the United States coming from China, it is here in Hong Kong, and also in mainland China, that the final design has to be right, every time.

 

Before manufacturing and assembly starts, it is vital that toy companies design out potential health and safety risks in each and every model.

 

Here are some examples of what I mean.

 

If you are making electronic toys that use button batteries, your design must ensure that children cannot access those batteries.

 

Button batteries in toys and in certain adult products re-emerged last year as a public health issue in the United States, due to a rise in incidents of children swallowing these toxic batteries.

 

There is actually international cooperation aimed at addressing this hazard. The World Health Organization is sponsoring a global health and safety conference later this year, and they are looking for research papers from engineers with ideas to reduce child exposure to button batteries.

 

Hopefully the ideas generated by the W.H.O. conference can help your industry develop even better designs for electronic toys.

 

Another important design factor is the metals and chemicals used in your plastics, surface coatings, and substrates.

 

“Safety by design” means ensuring that your specs are very clear about not including lead, cadmium, antimony, chromium, and other toxic metals.

 

And there cannot be more than 1,000 parts per million of six types of phthalates in your plastics because anything above that level is banned in the United States.

 

Adhering to ASTM F963 and the CPSIA in your designs is good for business and good for the health and safety of children.

 

Another key to a safe design is proper age grading of your toys.

 

Parents and grandparents certainly have an obligation to provide age appropriate toys to young children. But when consumers look at the age grading on the package, it should reflect who the toy was designed for, as well as the best science in age determinations.

 

As I stated earlier, we continue to find small parts violations and choking hazards in toys seized at import or that are recalled after they make it into the marketplace.

 

Small balls, small parts, or protruding parts are acute hazards in toys, and these hazards not only lead to recalls, but they also can be the cause of deaths and hospitalizations. As a result, every precaution should be taken to design out these risks.

 

I believe that “safety by design,” can be a winning approach for the toy industry to incorporate.

 

If toy companies around the world can aim for the highest level of safety in their design specifications, while CPSC and AQSIQ keep working to promote best manufacturing practices here in China, we can achieve something great.

 

The entire toy industry can reach a level of superior quality, conformance, and customer satisfaction if it embraces “Safety by Design.”

 

Now the third topic I want to discuss this morning is education. With each new year, come new parents who need to be educated on making safe purchases and become aware of risks with toys.

 

Informing parents and consumers about buying the right toy for the right aged child has been a constant part of CPSC’s work for more than two decades.

 

I want to stress, however, that we still have work to do in educating everyone in your industry.

 

Just a few days ago, I was reading a newspaper story in the United States that shows we still have work to do.

 

A writer, who was visiting Toy Town in Los Angeles, spoke with importers and distributors.

 

The writer approached the owner of a small toy store, who was stocking up for the holiday sales and asked how he knew the items he was purchasing were safe.

 

He replied: “I don't know.”

 

Yes, he actually said, “I don’t know.”

 

The store owner then told the reporter that “he holds the Toy District wholesaler responsible for passing along toys that meet U.S. safety standards.”

 

So the reporter asked the wholesaler how he knows his toys are safe.

 

“When the container arrives in the harbor, it gets inspected. If it's not safe, it won't be released to the public,” was his response.

 

These answers concern me.

 

CPSC needs everyone in the supply chain to understand the new toy safety requirements and to be able to communicate them downstream, as well as to the public.

 

CPSC is working very hard to keep up consumer confidence in the safety of toys that are in the marketplace; but, we can’t do it alone.

 

From manufacturers to importers, from wholesalers to retailers, I want everyone to be aware of and to talk about the independent, third-party testing requirement and the certificate of conformity requirement.

 

I want everyone to know and be able to talk about the lead content and lead paint limits, cadmium limits, the limit on phthalates, and the mandatory toy standard.

 

You may not agree with all of these safety requirements, but to keep the $20 billion worth of toys flowing from this region into the United States, knowing about these requirements and complying with them is vital.

 

There was also that the wholesaler’s comment: “when the container arrives in the harbor, it gets inspected. If it's not safe, it won't be released to the public.”

 

Well, CPSC certainly has a stronger presence at the ports than ever before, and we are seeking additional funds to hire more staff to work at more ports.

 

But, I don’t want consumers to be misled into thinking that we are anywhere close to having the capacity to inspect each shipment of toys that arrives at a U.S. port.

 

That is a vision we have, but it does not reflect the current reality.

 

The reality is that the responsibility starts with the manufacturers and exporters—a responsibility not to cut corners when it comes to complying with our requirements.

 

If you fail to send a new toy through a third-party lab, produce a legitimate certificate, or adhere to ASTM F963, there will be consequences.

 

Your products may be stopped at import, rejected by the importer, rejected by the retailer, caught by CPSC in the market, or potentially recalled at the consumer level.

 

I don’t want any of this to happen to you or your company. That is why I’m here today.

 

I am here to educate, inform, and empower you to take the necessary steps now to ensure that your products flow through the stream of commerce.

 

But please do not think that this toy fair is the only time that you will hear from CPSC.

 

One of the most important symbols of CPSC’s commitment to year-round education and outreach to the business community in this region is our foreign office in Beijing.

 

It was almost 1 year ago to the day that I was in Beijing to officially open the CPSC’s first-ever foreign office.

 

It was only natural to open our first foreign office in Beijing, given the growth and importance of Chinese consumer goods in the U.S. market, and our cooperative relationships with AQSIQ and other government counterparts in the region.

 

The Beijing office is fully functioning and has been very busy. In just the past 12 months, our Regional Product Safety Officer and Product Safety Specialist have provided training on U.S. product safety requirements to more than 16,500 industry representatives—2,500 in person and more than 14,000 via live webcasts.

 

I believe this outreach effort has helped manufacturers turn more of their attention toward best manufacturing practices, which is a principle that I have been promoting.

 

Now our Beijing office is actually part of a larger office that I established at the agency—the Office of Education, Global Outreach, and Small Business Ombudsman.

 

I believe that by establishing an office dedicated to addressing the questions and concerns of the regulated community, CPSC can facilitate the transfer of knowledge across industries and borders.

 

This, I am confident, will ultimately create safer toys and safer products through better educated manufacturers.

 

I am hopeful that our new Office of Education also can collaborate with colleges and universities on special educational courses in the United States and here in China.

 

In fact, CPSC is already involved in ongoing conversations with several institutions of higher learning to explore the development of meaningful certification programs related to best manufacturing processes in China.

 

It is my hope that this initiative can result in academia playing a leading role in educating and training a future generation of experts in supply chain management.

 

In closing, I would like to emphasize that the three areas I spoke about this morning—the new CPSIA requirements, the concept of “safety by design,” and educating everyone in the supply chain—all have something in common.

 

They all contribute to CPSC’s strategic approach aimed at promoting prevention.

 

I believe that prevention must win out over reaction—from manufacturing to distribution, the toy industry and CPSC should continue to work cooperatively to prevent injuries by getting it right from the start.

 

I predict that the year 2012 will be another successful year in toy safety, especially if everyone rallies around this approach.

 

There will always be some injuries with toys that we cannot prevent; but there are thousands of injuries that we can prevent by designing in safety and designing out defects.

 

Superior designs and fewer manufacturing defects will lead to fewer seizures at U.S. port and fewer recalls.

 

I want both of those statistics to decline this year, and that can only happen if all of you step up your attention to safety issues now.

 

I know the industry is up to the challenge.

 

And I know that each of you is up to the challenge because many of your companies already have a mission that is committed to safety, injury prevention, and the well-being of your customers.

 

The issues I raised today are certainly not exclusive to the manufacturers and suppliers in this region. So one month from now, I will be in New York City to make the same points at the largest toy fair in America.

 

From Hong Kong to New York—and everywhere in between—I want us to be partners—partners in promoting the new toy safety rules and partners in preventing toy-related deaths and injuries.

 

As a wave of safe, compliant toys flow into the United States this year, reaching stores shelves and American homes, I trust that we can achieve our shared vision—a vision of children, happy and safe at play, with smiling parents watching over them.

 

Let’s do the work now that is needed to achieve this vision throughout 2012 and beyond.

 

Thank you all for you time today, and congratulations to the Hong Kong Trade Development Council, the Federation of Hong Kong Industries, the Hong Kong Toys Council, and the Toys Manufacturers’ Association of Hong Kong for organizing another great toy fair.