Chen Lipeng believes the recall episode has far reaching impacts. China is the world's toy factory, the largest toy exporter globally, and Guangdong province is the powerhouse that produces 70 percent of such exports.

Following the incident, Guangdong toy exports were worth 710 million dollars in September, a contraction of 5.776 million dollars when compared to August.

And in a recently concluded trade fair, toy export transactions registered 900 million dollar, a drop of 10.7 percent when compared to the previous year.

"Foreign traders are less enthusiastic this time around, as they have become very cautious and do not place large orders like before," says a Guangzhou based Taiwanese toy maker identified as Liu.

Similar scenes are taking place in other parts of Guandong. Liu has visited Huizhou city and found that even though the Christmas festival is around the corner, many factories failed to get reasonable amount of orders.

Liu is a member of the Guangdong Toy Makers Association, where he says talk has emerged over the association's preparation to sue Mattel and its being in the process of lobbying for members' support.

On November 5th, Chen Lipeng expressed the government's solidarity with industry players, saying that government agencies would provide assistance to manufacturers or industry association wishing to initiate legal proceeding in accordance with international practice against Mattel.

"We have identified several problems. Firstly, Mattel has unjustly marked down prices for toy makers, including those from China. Second, Mattel has management flaws, especially in the standardization of quality control system. Third, its information delivery system is problematic, as it fails to transmit the latest revised standard timely to manufacturers. Last, there are flaws in product design."

When contacted, Guangdong Toy Makers Association declined to comment on the said legal proceeding. A spokesman would only go as far as to say, "We have done what is needed or what will be required".

Lawyer Zhu Lieyu of the Guangdong Guoding Legal firm, points out that Chinese suppliers are only obliged to meet product standards stipulated in the contract signed with Mattel. However, the suppliers are not required to meet the American quality requirements.