The chief of a Hong Kong toy manufacturer hanged himself as the company faces millions in losses from a massive recall due to lead paint.

Cheung's body was found at about 3 PM on Saturday in a storage house at a branch company in Foshan City, Guangdong Province, according to Nanfang Metropolis Daily.

Cheung was believed to have committed suicide as 967,000 toys exported to the US were returned earlier this month and China's General Administration of Quality Supervision, Inspection and Quarantine found excessive lead in the paint. It then banned Lee Der Industrial Co Ltd's license to export products.

Paint containing lead has been linked to health problems in children, including brain damage.

The recalled toys, made for Mattel's Fisher-Price unit, include popular pre-school characters like Elmo and Big Bird and dozens of other items.

Of the nearly 1 million products recalled from the US market, Mattel said about 30 percent had reached store shelves. Mattel is recalling another 533,000 from other countries, including Britain, Canada and Mexico.

The quality administration also has banned exports from China's Hansheng Wood Products, whose 1.5 million wooden railroad toys and set parts were recalled by RC2 Corp in June because of lead paint.

Cheung's employees estimated the loss from this incident may hit at least US$30 million, including recall fees and compensation, said the report.

Paint used for the toys was purchased from a Foshan company, whose boss surnamed Liang was "Cheung's best friend."

Cheung and Liang became business partners more than a decade ago when Liang opened his firm in the city, the report said.

Cheung never married so he focused all his attention on work. He was a nice boss as he treated employees well and had never "delayed their salaries even in difficult times," a department manager surnamed Liu told the newspaper.

According to the report, Cheung was seen touring his three companies in and talking with several employees on Saturday morning.

Cheung's nephew in Hong Kong confirmed his death to the newspaper.

(Shanghai Daily August 13, 2007)