Worries about Chinese product safety standards spread to the apparel industry last month, when dangerous levels of contamination were found in children's bibs and pyjamas. There's a strong possibility consumers will now pause a little longer over the 'Made in China' label and, Mike Flanagan argues, this offers new opportunities to China's manufacturing competitors.

At Clothesource, we sit on one of the world's most valuable apparel industry databases. To prevent it being stolen by jealous rivals, or by retailers fixated on getting their advice as cheaply as possible, we employ the finest security director in the industry. And we spare no expense in motivating him.

Rosewood's Jolly Doggy Munchy Strips have been known to keep our English cocker spaniel Jed from barking at next door's cat for - oh, as long as half an hour. So it was a grave strategic threat to our long-term commercial wellbeing when we discovered recently that:
Wal-Mart had been forced to recall two varieties of dog treats made in China , which had been found to be contaminated with lethal quantities of melamine, and
• Rosewood's Jolly Doggy Munchy Strips are made in China.

Now I strongly suspect Jolly Doggy strips aren't contaminated. But life's too short to pester Rosewood's and Jed's too valuable (and adorable) to risk, so the just slightly suspect treats went into the bin. Jed's next performance bonus was a sliver of the Parmesan cheese our neighbour imports - costlier, but actually rather better at aligning his performance with this shareholder's objectives.

Chinese safety standards
Worries about Chinese product safety standards have been growing around the world since March, when 150 brands of Chinese-made pet food were recalled in North America because of poisonous levels of contamination. This was followed by similar discoveries affecting toothpaste and toys.

By mid-August, the concerns began to spread to the apparel industry. On 17 August, Toys"R"Us withdrew some Chinese-made children's vinyl bibs because of safety scares. On 20 August, a British newspaper reported unsafe lead levels in Chinese costume jewellery on sale at Monsoon Accessorise.

And on 21 August, a New Zealand TV programme claimed dangerous levels of formaldehyde and unsafe flammability standards in Chinese-made children's pyjamas - followed a day or two later by similar concerns in Australia over Chinese blankets.

The China scare started with dogs that died. But there were no visible casualties of the contamination in our industry, so the media had to spread their net to find some.

At first, this consisted of reports about Chinese children being infected in May by shirts made from recycled hospital waste. The Wall Street Journal then remembered the major local pollution problem caused by Fountain Set in Dongguan during summer 2006, and ran an article about Chinese pollution, which got reprinted round the world.

But Western consumers of Chinese-made clothing and textiles still, by the end of August, seemed impervious to whatever dangers lay within a Chinese T-shirt.

Change of tack
But at this point the story began to get more complicated.

The Toys"R"Us bibs? Well they conformed to US safety levels. Tests on the bibs carried out by the federal Consumer Product Safety Commission found that an infant would have to touch or lick the bib at a rate of 2,500 times a day to absorb anything like a dangerous level of lead.

That lead-polluted jewellery in Britain, it seemed, wasn't there entirely because of Chinese malfeasance. Britain's rigorous standards on lead content in toys don't apply to lead content in costume jewellery children might wear.

The New Zealand formaldehyde problem is at least partly the result of New Zealand having laxer standards on formaldehyde than, for example, the EU. But it has since been refuted by the New Zealand Retailers Association which says the TV show carried out the wrong tests.

And - in spite of 20m Mattel toys having been recalled - there still seems to be not one single Western child who has been sick after having licked one of those 20m toys.

But, however few children might have been affected, the facts were that Mattel was getting toys in China with more lead in them than specified, and a terrifying series of accounts emerged of fake safety certificates, bribed officials and widespread misbehaviour throughout China.

'Believe in Made in China'
And China managed to get hold of precisely the wrong point.

Li Changjiang, head of China's General Administration for Quality Supervision, claimed that "demonising Chinese products...is simply a new form of trade protectionism." The Chinese even ran a TV programme - aimed at the local market - called "Believe in Made in China."

In case any of its newspapers decided to follow the West and start investigating businesses' activities, the vice director of the Information Office of the State Council reminded the media to follow the teachings of Marx in how they reported events.

And, should that be too subtle, China imprisoned a journalist for reporting on allegedly faked pork dumplings.

In other words, as so often, China's unaccountable dictatorship was getting it completely wrong. Throughout the past year, its state-controlled papers have consistently denounced as protectionist the EU's REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) legislation, which came into force on 1 June.

Meanwhile in the West, the real damage is being done. With every new scare have appeared dozens of other stories about lax Chinese standards.

Dealing with the problem
And what the Chinese can't get into their heads is that it's not because of Western protectionism that people tell and believe those stories: it's because of China's pig-headed refusal to deal with the real problem.

The British mother I saw worried about buying "made in China" baby clothes in a shop the other day wasn't worried about protecting the British economy. She's read in her newspaper (owned by an Australian turned American, printed on Swedish newsprint by Polish typesetters) that you can't trust Chinese safety standards.

So she bought something from Bangladesh instead. True, she'd read about poor working conditions in Bangladesh. But her priority was her baby - and China had done nothing to convince her she could trust what came out of China.

Stories in the West of poor Chinese working conditions, Chinese factories producing pollution, or rapidly growing Chinese emission of greenhouse gases have attracted the attention of lobbyists, activists and people asking companies embarrassing questions at annual company meetings.

But they've done little to influence how consumers spend their money.

Fears of risks to buyers' own children, however, directly influence what buyers do. For some products, those fears aren't going to influence which country they buy from very much. 98% of the costume jewellery the US imported last year came from China, so customers are gong to struggle to start buying much from anywhere else.

But with clothes, it's different. China has real competition in making clothes from over a hundred other low-income countries. Many actually have lower operating costs than China, or are a lot nearer their European or American customers. And China's competitiveness was getting ropey even before the contamination scares.

Contamination scares
Contamination scares aren't new. Unlike some other compliance issues businesses have to deal with, the brand concerned rarely faces irate customers, or political pressure.

What can really hit a business hard is the silent, mass desertion of its customers. Supermarket chain William Low never recovered from a food poisoning case in it Aberdeen stores in 1964: it was forced to withdraw from that part of Scotland, and its poor reputation prevented it from ever re-opening in the area.

"Made in China" is in danger of becoming for many customers a real "don't buy" signal. Those customers aren't being protectionist and they can't be argued with.

Ranting by Chinese officials about "demonisation" or unfairness isn't going to persuade a mother to buy a Chinese garment she might have concerns about, rather than one from Thailand or Nicaragua.

Nor will jailing reporters who blow the whistle on dubious manufacturing, or lecturing reporters on Marxism.

China's just handed the best possible present to the rest of the world's low-income countries. And if any of them feels like setting up a dog treats plant, please do so quickly. Because Jed's new found taste for the best Parmesan is costing me a fortune.

Mike Flanagan is chief executive of Clothesource Sourcing Intelligence, a UK-based consultancy that provides the western apparel buying community with objective information on apparel production, trade, price competitiveness, and apparel producers in over 100 countries.