LAWFUEL – The Legal Newswire – The Chinese government is investigating…

LAWFUEL – The Legal Newswire – The Chinese government is investigating a Hong Kong-based company that Mattel Inc. says supplied it with 1.5 million toys believed to be contaminated with lead paint, according to a government official.

The WSJ reports that the company, Lee Der Industrial Co., has told the government that it might have been cheated by its own paint supplier, the official said, highlighting both the difficulty American companies face in policing increasingly long supply chains and the prevalence of lead paint in China.

Mr. Liao, the senior official at the Entry-Exit Inspection and Quarantine Bureau of China’s southern Guangdong province, where the Hong Kong company’s factory is located, said that while the government is investigating the factory, the factory hasn’t been shut down. Mr. Liao didn’t give his full name during a telephone interview. “During this period, they will not export toys overseas,” Mr. Liao said.

Employees at Lee Der Industrial’s office and warehouse in Hong Kong declined to comment yesterday, although a man who answered the phone at the office confirmed that the company makes toys for Mattel and has a factory in Guangdong province. At the company’s office and warehouse, boxes of toys were scattered about, including those labeled Fisher-Price. Officials at the company’s office in the city of Foshan, where the factory is located, weren’t available to comment.

Last week, Mattel, of El Segundo, Calif., recalled Chinese-made toys believed to contain lead paint. The toys included items involving popular characters like Elmo and Dora the Explorer. At first, Mattel declined to release the name of the factory.

It reversed course late Tuesday. Industry observers said it is possible the Chinese toy factory was duped by one of its own paint suppliers, which might have substituted cheaper lead paint for what the company ordered. A Mattel spokesperson said the company is still investigating the matter on its own. She added that the company had informed many of its competitors of the factory’s name before Tuesday’s disclosure and the news of the government’s probe.

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