The U.S. Consumer Product Safety Commission (CPSC) is setting up its first overseas office for consumer product safety after failing to persuade makers of defective Chinese drywall to compensate affected U.S. homeowners.

CPSC Chairwoman Inez Tenenbaum said the new office will help Chinese manufacturers understandAmerican regulations and standards and prevent defective products, including drywalls, from being shipped to the United States.

By having a proactive preventive posture, we can reduce the number of recalls and keep our consumers safe, and also prevent the loss of revenue and damage to a manufacturer's brand, Tennenbaum said.

The office will also raise product safety concerns of the U.S. government with Chinese officials, she added.

Last year, the CPSC recalled 220 Chinese-made products, that range from lead-tainted products, poorly designed toys with small parts that could choke children, counterfeit electrical products, and children's clothes that have dangerous drawstrings or are made with flammable material. However, the agency lacks the authority to force Chinese drywall manufacturers or any other foreign companies to recall defective products, reimburse people for problems those products may cause, or even provide basic information about how they were made.

In the past, the CPSC has persuaded U.S. companies that distributed defective foreign products to voluntarily recall them and provide refunds or replacements. But those cases involved portable products like cribs, toys or toasters, not a cumbersome material like drywall, which can be removed only by gutting the interior of a home.

Though Germany's Knauf Plasterboard (Tianjin) has agreed to remove the drywall and rewire 300 homes in a pilot program and Lennar Corp., the third-biggest U.S. homebuilder, had to set aside millions of dollars to cover claims against it for the use of faulty Chinese drywall, most Chinese drywall manufacturers argue they should not be required to face claims in U.S. courts.

As a result, thousands of American homeowners have been unsuccessfully in getting reimbursed for Chinese-made drywall that they say emit so much sulfur gas that it corrodes electrical wiring and triggers breathing problems, bloody noses and headaches.and damaged wiring.

According to Tenenbaum, the CPSC decided to set up an office in China because the country is the world's leading exporter. To give you an overview of why China is so important to the CPSC, 45 percent of all consumer products sold in the U.S. come from China and Hong Kong - 45 percent. In terms of toys, 90 percent of all toys sold in America come from China and Hong Kong, she said.

In the past few years, China has worked on improving foreign consumer confidence after encountering safety scandals related to food and consumer products. In 2007, the former head of China's State Food and Drug Administration was executed for corruption. He was accused of taking hundreds of thousands of dollars in bribes in relation to sub-standard medicines, which were blamed for several deaths.

The execution took place even as the U.S. media filled headlines with reports of contaminated toothpaste and deadly melamine-tainted pet food from China. Following those scandals, the U.S. Food and Drug Administration (FDA) set up its first overseas office in China in November 2008.

We're seeing an improvement in terms of the quality of products coming out of China, Tenenbaum said.