GUANGZHOU -- Operation of a Chinese toy maker has come to a full stop after its US partner Mattel Inc. recalled about 1 million lead-tainted toys.
More than 2,500 employees with the Lida Plastic Toys Co. Ltd. based in Foshan City of Guangdong Province, which is a longtime contract manufacturer of Mattel, are temporarily laid off without pay since the world's largest toy maker announced the recall early last month.
Export business was suspended and toys worth about 50 million yuan (US$6.6 million) have been overstocked, resulting in a halt of capital inflow, said Xie Yuguang, board chairman of Lida.
Construction of three factories and a new dorm for short-term employees were also forced to stop.
Seeing no way out, Lida's boss Zhang Shuhong, a Hong Kong businessman in his 50s, hanged himself on August 11 after paying off due salaries to all employees and sending them home.
Workers said Zhang always gets along well with others and it is a pity that the "good man" who had been in charge of Lida's management since 1993 could not realize his dream of business expansion.
It was estimated that the factory, which had been producing toys to Mattel for more than 10 years without any bad records, would suffer 30 million yuan (US$4 million) in economic losses.
"We have been trusting our subcontractors and failed to conduct tests on paint materials," said Xie Yuguang, board chairman of Lida.
Initial investigation shows that Zhongxin factory, based in Dongguan City of Guangdong, had fabricated safe quality licence for color powders -- the key component for producing paint -- that contains excessive lead.