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Barbie and the World Economy

The box may say 'Made in China.' But tracing the doll's production path--from a Mideast oil field to an Anaheim toy store--raises questions about such labels and the relevance of trade numbers.


BEIJING — A Barbie doll is for sale at the Anaheim Toys "R" Us store in a bright cardboard-and-cellophane box labeled "Made in China." The price is $9.99.

But how much will China make from the sale of the pert fashion doll marketed around the world by Mattel Inc. of El Segundo?

About 35 cents, according to executives in the Asian and American toy industry--mostly in wages paid to 11,000 young peasant women working in two factories across the border from Hong Kong in China's Guangdong province.

"What China is mostly exporting is its cheap labor," said David A. Miller, president of Toy Manufacturers of America in New York.

China's cut of the Barbie doll is important because it touches one of the main political strains between China and the United States today: the growing, lopsided trade deficit in favor of Beijing.

China contends that the U.S. Commerce Department's calculation of the deficit, estimated to reach $36.2 billion by the end of the year, is distorted and unfair. U.S. political leaders view the deficit with alarm, proclaiming it America's next No. 1 trade issue, eclipsing the long-standing wrangle with Japan.

But tracing Barbie's peripatetic, multi-country path from her raw material source in a Saudi Arabian oil field to aisle 12-C of a Southern California toy store raises even bigger questions being debated in business and academic circles:

* How relevant are traditional bilateral trade calculations--a baseball-type scorecard of winners and losers--in an era of increasing globalization of products?

* If such calculations are relevant, should the deficit with China, a developing country where most exports are still labor-intensive "processed products," be placed in the same category as the deficit with Japan, a fully industrialized country that has systematically targeted key American industries?

* In the end, what does the label "Made in China"--or "Made in U.S.A." or "Made in Japan" or "Made in Mexico"--really mean?

"The America-China trade issue is a red herring," contends Arjun Appadurai, a professor of cultural anthropology at the University of Chicago who has written extensively about the international flow of commodities. "It fails to take into account a much more complex set of values, of energies, of labor and of nationalism congealed into a package that carries the emotional label 'Made in China.' "

Appadurai, editor of a pioneering 1986 book, "The Social Life of Things (Commodities in Cultural Perspective)," argues that the traditional model for calculating trade relations no longer is valid.

"The whole issue of bilateral deficits works within a framework that has been in question for some time, both in business and in government," Appadurai said in a telephone interview. "Today's forms of production are elusive and highly flexible. It is very difficult to localize a product like Barbie. But the political side can only accommodate two-player games, played between nation-states."

Complicated Trade Rules

China gets its estimated share of the "My First Tea Party" Barbie sold in Anaheim from minimal taxes and licensing fees as well as in worker wages. But, because of complicated international trade rules that define a product's point of origin, China is charged with an export value of $2 by the time the doll reaches the United States.

Eventually, after transoceanic shipping, domestic trucking, advertising and other functions that employ thousands of workers in the United States the Anaheim Barbie will achieve her full price, resulting in at least a $1 profit per doll for Mattel.

According to the U.S. Customs figures, toys imported from China in 1995 totaled $5.4 billion, about one-sixth of the total deficit figure as calculated by the U.S. government.

Several other countries contributed to the making of the Anaheim Barbie as much as or more than China did. From Saudi Arabia came the oil that, after refining, produces ethylene. Taiwan used the ethylene to produce vinyl plastic pellets that became Barbie's body. Japan supplied her nylon hair. The United States supplied her cardboard packaging. Hong Kong managed everything.

Each country took a cut along the way of the doll's $2 export value, the number used in calculating trade figures (about one-fifth of the eventual retail price). But China was stuck with the bill: In the trade ledgers, Barbie is one of its exports.

This fact is increasingly important as China's trade advantage with the United States continues to grow, alarming politicians and pushing the world's richest country and its most populous country into a testy standoff.

U.S. Commerce Department officials recently announced that, according to June figures, for the first time in history China had surpassed Japan as the country with the largest trade imbalance with the United States.

As it has in the past, China immediately cried foul, contending that the U.S. figures failed to take into account the value added to the product in Hong Kong and other way-stations.

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