Although five devices were found defective, the entire shipment of 272 devices was returned. The shipment had a value of $236,294, a small amount for a company like St. Jude. But safety issues have significant commercial ramifications, which the heart device companies like Medtronic (NYSE: MDT), Boston Scientific (NYSE: BSX), and Johnson & Johnson (NYSE: JNJ) have discovered over the past two years. As have the Chinese, though for other products.Although St. Jude scoffed at the accusations, I wonder what voltage variations we should tolerate, since lower voltages imply shorter device longevity?
The most important takeaway from this story is the implication of retaliation. So far this year, the Chinese have been battered by charges of a variety of safety issues – toothpaste, dog food, cold medication, and most recently lead paint on toys. At first, they denied that a real problem existed. Then they issued a number of press releases that detailed how the government would increase surveillance to ensure that Chinese exports would be safe.