Caterpillar Case Study

Essay by chitran2212 November 2014

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1. Can consumer goods from China be trusted?

China had developed a new identity as a more hospitable and accommodating country

after hosting the Olympic Games. However, the positive views of the Olympics was later

negated by two major scandals in the consumer goods sector, which led consumers to

doubt the quality of goods manufactured in China. The first incident occurred in 2007

when Chinese manufacturers were found to have used lead paint in the production of

many children's toys, while the second took place in 2008, popularly known as the

Chinese milk scandal. Both these eclipsed the reputation China had gained after the


Meanwhile, reports justify the fact that the United States continued to rely on China for

production of low-cost goods post these scandals. Even after the lead paint incident,

Chinese exports to the United States grew by double digits in 2007.

Imports to the EU

from China increased by nearly 30 percent in 2007. Moreover, some analysts argue that

the world would continue to rely on China as the major supplier of manufactured goods

since recalls will not drive away investors or companies. China will only be watched until

it has established an internationally suitable quality control standard.

2. How can retailers ensure that their products are safe?

Retailers should check whether the products meet the specific quality standards fixed by

the legislature before importing them. However, bribery and corruption allow certain

products to pass the quality tests, even without meeting the necessary standards. An

example of this could be the presence of lead paint in toys and tainted milk, both

produced in China. One alternative for the retailers could be to avoid imports from

countries subject to product scandals. However,it is often...