Last November, more than eight children suffered seizures after ingesting pieces of a popular crafting toy known as Aqua Dots. The paint used in the pieces contained traces of the “date rape” drug GHB, which at the time of production was three to seven times less expensive than the non-toxic ingredient. In June, Mattel recalled millions of toys that were decorated with lead-based paint not long after a 4-year-old died after eating a piece of jewelry that was being given away with Reebok products.

All of the products originated in China. In 2006 alone, toys made in China accounted for over half of the 467 toys that were recalled by the U.S. Consumer Product Safety Commission. Small business owners who think that the Chinese manufacturers are exclusively accountable may find themselves surprised in the event that an accident happens. As a result of the 1972 Consumer Product Safety Act, everyone involved in the production of a product, from the actual manufacturer to the distributor, can be held liable in the event of an accident such as the ones described above.

“It’s alarming,” says George Edwards, the owner and founder of Terra Toys in Austin, Texas. “It almost seems inconceivable. How could the Chinese do that?” Edwards’ concern is not a new one. When outsourcing to China was just starting to become common, he stopped carrying the new Chinese-made toys merely because the Chinese version seemed inferior to the original, not to mention that the cheaply-made toys conflicted with his vision of what a store like Terra Toys should be. “We’re looking outside the mainstream,” Edwards says. “We’re looking for unusual, well-made toys that kids actually want to play with.”

Not So Fast. 88% of the toys recalled in 2006, mainly over concerns about the materials used in the paint, were produced in China. However, according to a study released last August, American design flaws were responsible for 76% of the recalls since 1974, compared to a mere 10% based on Chinese manufacturing flaws.

That vision began in 1979 when he and his wife started their company by making over 200 toys by hand, ranging from wooden necklaces to kaleidoscopes and climbing toys. From that simple beginning, Terra Toys grew to be one of the largest independent toy dealerships in the Southwest by focusing on quality toys from around the world. When possible, Terra Toys bought from the actual toy maker. Today, however, it’s not so easy to weed out Chinese products. In a recent inventory, Edwards’ staff discovered that over 120 of the toys contained in the store were produced in China, and, against his wishes, that number is growing. “Currently there’s so much coming from China,” Edwards says, “that I can’t even imagine what this store would look like if we took it all out. I’d be driven out of business from the lack of stock alone.”

At the root of the problem, Edwards believes, is the drive by many manufacturers to create inexpensive products that last half a year at best. He was recently disappointed to find that some of his most beautiful toys, such as Russian matryoshkas (sets of hollow wooden dolls designed to fit inside each other), have begun to bear the stamp of China. “They take something that’s well-made and beautiful and somehow take some of the beauty out of it,” Edwards says. “We used to joke that soon toys will be made of wax—that’s how long they would last.”
Yet an unexpected benefit of the recalls has been a resurgence in interest in domestically made toys and independent toy dealers like Edwards. This means more money for American small businesses. Fortunately, much of Edwards’ stock continues to come from quality manufacturers, including many that Edwards knows personally.

“We’re looking to support manufacturers who make things along the lines of what we think the world should be like,” Edwards says. “I don’t think a toy should be cheaply made; I think it should be something that sustains everyone involved.” These days, Terra Toys receives dozens of calls from potential customers asking how many of his toys come from China, and Edwards is proud to say that the number is not as high as it could be. It’s also caused a renewed interest in traditional toys, which Edwards has found to repeatedly win the hearts of his customers’ children. “For a kid, everything is new,” Edwards saays, “and if you get a true classic like a set of wooden blocks or some rubber balls, both of these toys will last kids for the rest of their lives.”

For now, China is here to stay. Many small businesses not only use Chinese products for their inventory, but many are learning the profitability of having their products produced there. To entrepreneurs such as Edwards, Chinese products can be safe, but supplying them means being familiar with every aspect of production in order to ensure that the inexpensive products won’t come back to haunt the business owner.

“People who are looking to buy toys for their children can use this as a real life lesson that there is a real choice to be made. An extra dollar goes a long way,” Edwards says, “especially for the kids involved.”