Strategic CIO // IT Strategy
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6/28/2007
01:54 PM
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Why Tainted Toothpaste Matters In The Outsourcing Discussion

As a talent war escalates in India, many companies are looking to China as the next big opportunity for offshore outsourcing. I have two words for you: tainted toothpaste.

As a talent war escalates in India, many companies are looking to China as the next big opportunity for offshore outsourcing. I have two words for you: tainted toothpaste.I hope business leaders are paying attention to all this news about tainted products coming from China, and what it says about the country's ability to uphold laws and business ethics. You'd think a communist government would have even more control over how its businesses go about squeezing out profits, but this is clearly a situation of chaos reigning.

Don't mistake this for an anti-globalization, anti-China, protectionist rant. I don't support that narrow view of the world. But, as a consumer, I'm not feeling too trustful about goods from China these days. And I'm furious over such blatant disregard for human health. Yesterday I found in my daughter's room a little hand-painted wooden toy I'd bought a few years ago with a Made In China sticker on it. I immediately thought about the Thomas the Tank Engine toy recall. Into the trash it went.

So what does outsourcing to China have to do with tainted toothpaste, seafood, lead-paint toys, deadly tires? What does it have to do with candy, pickles, crackers, and other goods found contaminated with formaldehyde and illegal dyes, seized in investigations that led to the closure of 180 food factories in China this week? A spokesman with the commerce ministry insisted China "has paid great attention" to the safety of its exports, reports the Associated Press, even while we've already rounded up nearly one million tubes of tainted Chinese toothpaste. Those in the tech industry should pay attention to this empty promise, and how it could apply to intellectual property like software code. Just two months ago, the Bush administration filed a lawsuit against China in World Trade Court, alleging the country lacks a sufficient legal structure to enforce copyrights and trademarks, after talks with the Chinese government on the topic unraveled. Again, this is no paranoid rant; the heads of some outsourcing companies have acknowledged that ensuring intellectual property protection is among the biggest challenges they face in China.

Meanwhile, companies everywhere are gearing up to do more business with China. The government there has targeted 10 cities for development as major outsourcing centers. Outsourcer Tata Consulting Services plans to add up to 5,000 people to its operations in China. IBM is opening a new computer services center in the high-tech zone of Chengdu. The Symbio Group, a company specializing in outsourcing to China, just signed an agreement with the government and two universities there to establish two software engineering institutes in Weihai, to open this fall, staffed by U.S. professors who will teach budding engineers about global innovation.

Let's welcome all those earnest young engineers to the globalized workforce. At the same time, we can't take pressure off China and its government, whose export-import trade volume is expected to top $2 trillion this year, to play by the rules.

As we march onward to globalization, we should be evolving in the areas of ethics and accountability. Not moving backwards.

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