German firms pull out as Chinese fluff teddy production

Before that it was the three-month wait for 80,000 cuddly white polar bears to arrive just as "Knut", Berlin zoo's real life star, was gracing the cover of Vanity Fair and demand was exploding.

For the German soft toy maker, which started life in the late 18th century before teddy bears were even called teddy bears, with a wheelchair-bound woman making elephant-shaped pincushions, trying to produce in China was no picnic.

In an effort to cut costs, Steiff began outsourcing production to Chinese factories in 2004, and even sent 300 workers there to make sure the bears were up to scratch.

But this week, Steiff called time on its Chinese adventure.

"We are withdrawing from China step by step. For toys of high quality, China is simply not a reliable source," the Stuttgarter Nachrichten newspaper quoted chief executive Martin Frechen as saying.

But for this privately owned company, whose teddies sell for up to 120 euros each and which is trying to win back market share for its trademark bear with a button sewn into its ear, quality is everything.

The multi-billion dollar toy industry has been at the forefront of the massive shift of manufacturing to China where it can pay workers a fraction of what it pays them in the West.

Four out of five toys sold in Europe were made in a Chinese factory, and China exported 22 billion of them of them in 2006.

But problems with quality and a series of scares about safety has made firms a lot more wary.

But safety and quality problems remain, and stricter import laws are having the effect of reducing the cost advantage of going east, firms say.

"There are going to be new regulations in the European Union," said Ulrich Brobeil from the German toymakers association DVSI, so it is set to be "easier and cheaper to manufacture in Germany or in nearby countries."

Cost in China have risen sharply in recent months. Wages for Chinese workers are going up and up, and in the past year alone, the cost of producing in China has risen 30 per cent, estimates Reinhard Doepfer from the European Fashion and Textile Export Council.

Apart from China, "Albania, Macedonia and Serbia-Montenegro are the hot topics for German industry," Doepfer said. "(But) I can't see production coming back to Germany, no way."

Indeed Steiff is not moving back to Germany, but to Portugal.

Vocabulary

sneaking, adj: like a feeling that is at first very weak but keeps getting stronger

cuddly, adj: inviting to hug or embrace tenderly

demand, n: collective wish or need of people to have or use something

pincushion, n: cushion the size of the palm of a hand, used by dressmakers to stick their pins in for safekeeping

to outsource, v: to have a different company (often overseas) do something that usually your own company would do

up to scratch, adj: of as high a quality as expected or needed

to call time on, v: to end

forefront, n: position of the greatest importance

fraction, n: (small) part

wary, adj: cautious; watchful

Questions

1. When did Steiff start producing in China?

a. 1788

b. 1971

c. 2004

d. 2006

2. Why is Steiff pulling out of China?

a. political unrest

b. unreliable quality

c. the Olympic Games

d. transportation problems

3. How can you recognise that a teddy bear is made by Steiff?

a. It can speak Chinese.

b. It costs 120 euros.

c. It is a cuddly white polar bear.

d. It has a button sewn in its ear.

4. What will the effect be of new European Union regulations?

a. Companies that recall products will be fined by the Chinese government.

b. It will be impossible for European countries to produce toys of high quality.

c. It will be easier and cheaper to manufacture in Germany or in nearby countries.

d. Asian countries will be given development aid in the form of quality assurance training.

5. Where is Steiff going to produce in future?

a. China

b. Portugal

c. Thailand

d. Germany

Synonyms

Which of the following words or phrases replace the ones from the passage best?

1. suspicion

a. proof

b. evidence

c. conviction

d. impression

2. iconic

a. sad

b. symbolic

c. intriguing

d. worrisome

3. melancholy

a. sad

b. lifeless

c. glowing

d. piercing

4. bound

a. enabled

b. assisted

c. confined

d. supported

5. no picnic

a. difficult

b. profitable

c. beneficial

d. not wasted

KEY

Questions                 1. c, 2. b, 3. d, 4. c, 5. b

Synonyms                 1. d, 2. b, 3. a, 4. c, 5. a

By Ajarn Horst Baelz