With tainted products, companies walk fine line

Allison Linn Senior writer • Profile • E-mail

Wal-Mart’s disclosure this week that it had quietly pulled dog treats from store shelves about a month before publicly disclosing a potential hazard illustrates the fine line companies walk in safeguarding their customers while  protecting their own reputations.

“It is truly a balancing act,” said Bill Keegan, who heads the U.S. crisis and issues management practice for public relations firm Edelman, although he declined to discuss Wal-Mart specifically because his company does business with the giant retailer.

How a company manages that balancing act — and the potential impact on its bottom line — is facing increased scrutiny as more and more well-known manufacturers and retailers deal with safety issues stemming from Chinese-made products.

“We have never seen a 12-month period like we have seen this year, if you look at everything going back to dog food to tires to toys to shrimp and seafood,” Keegan said. "Made in China now has a stigma attached to it that’s going to be very difficult for them to overcome."

Wal-Mart acknowledged this week that it had pulled Chinese-made dog treats off its shelves in late July, following customer complaints, but had not made any public statement. The company later disclosed that subsequent tests showed the treats contained low levels of a toxic substance called melamine and that consumers should return the treats for a refund.

Wal-Mart’s disclosure raised concerns because some customers had continued feeding their dogs the potentially hazardous treats without knowing that the store was investigating a potential problem. Those fears were stoked by the fact it was only the latest of many incidents involving potential hazards to children and pets from products imported from China.

Wal-Mart spokeswoman Deisha Galberth said company officials believed they had to gather more information before making a public statement.

“We thought that we were very proactive in pulling it off the shelves as soon as we had complaints,” she said.

Don Mays, senior director of product safety planning for Consumer Reports, said he doesn’t fault Wal-Mart for testing the product before alarming customers — although he noted that it might not have hurt to give people an informal notice so they could choose whether to keep using the treats.

Still, Robert Passikoff, president of the consulting firm Brand Keys, doesn’t expect to see Wal-Mart’s reputation suffer too much from the debacle. While Wal-Mart certainly has plenty of other challenges to its reputation, he said the company is well-known for being tough on suppliers. He suspects that in this case that will help consumers feel confident that Wal-Mart will have little tolerance for any similar future problems.

Mattel Inc. might not fare as well. The toy maker last week announced its second major recall involving millions of popular toys that were manufactured in China and could contain either lead paint or small magnets that pose a safety hazard.

The fact that Mattel had to recall so many toys, and had to do it twice in short order, could make it harder for consumers to be forgiving, Passikoff said.

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