"Made in China" proves false economy for some

By Sylvia Westall

GIENGEN AN DER BRENZ, Germany (Reuters) - Wafts of golden fluff whirl in the air as Irene Basan wedges a bundle of material onto a spike and gently turns it inside-out, right ear, left ear, then a snout, to reveal a Steiff teddy bear head.

She has been hand-making Steiff toys for 18 years in Giengen, the tiny south German town where the maker of collectible teddy bears -- some worth hundreds of thousands of euros -- was founded over 125 years ago.

Chasing lower costs, Steiff outsourced around a fifth of its production to China in 2003 but has now decided to come back because of concerns about quality and staff turnover.

Steiff is one of a small number of German firms which are swimming against the tide and leaving China, despite its cheaper workforce and a burgeoning consumer population. With fuel at record highs, some cite mounting transport costs.

Production of Steiff toys, which include a distinctive long-limbed bear with a melancholy growl, will come back to Germany and other countries in Europe by the end of 2009.

"A Steiff animal has to look cute, it has to look at you and say, 'take me in your arms and hug me, I'm here for you, I'm your friend,'" Steiff Managing Director Martin Frechen told Reuters.

"If the symmetry is off and if it looks like it's been run over by a car, it's not what we want. People don't pay for that."

Consisting of around 35 parts and with an average price of 40 to 70 euros ($63-$110), the toys take up to a year to learn to make and around 80 percent of the work is done by hand.  Continued...