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From China Milk Scandal

September 29, 2008

<Update in the end>

The news about the contaminated baby-formula milk powder in China broke into the media in the middle of September, 2008 (BBC News). However, the cases of sick infants and the complaints to the local government and the baby-formula company started as early as last December (first complaint to Sanlu).

Not just milk powder, many products that use milk power from China, e.g. bread, cookies, 3-in-1 instant coffee and instant soups etc, might also be contaminated with melamine. In fact, the traces of melamine have been found in these products in the countries near China, e.g. Japan and Taiwan (not shown in the map from BBC below).

This is a very serious problem, considering that many countries import products made/assembled in China. So, what went wrong exactly?

Tainted Milk Flowed Through Holes in Scrutiny (New York Times; 09/26/2008 )

The dairy scandal raises the core question of whether the ruling Communist Party is capable of creating a transparent, accountable regulatory structure within a one-party system.

….

Much of the public outrage in China over the dairy scandal is focused on how the problem remained hidden for months as parents bought bad formula without realizing they were poisoning their babies. Beijing authorities say they learned about the problem only this month. They have blamed greedy corporations and local officials for wrongly hiding the crisis. But there were early warnings that were muffled by censorship or lapses in Beijing.

Analysts say the lack of a truly independent regulatory system means that high-profile gestures, like executing or firing officials, have limited impact, especially because local industries are so often intertwined with local officials.

Last year’s food and drug safety scandal had put the head of China’s Food and Drug Administration to death. Apparently that doesn’t stop it happened again.

Regarding the local-government involvement, it is the local communist party to appoint the company’s chair, who is usually also a party official.

Why China’s milk industry went sour (BBC News; 09/29/2008 )

“If you’re a minority partner in a joint venture and something goes wrong, you are always told late. Then if it’s serious and you need the co-operation of your local partner the local government will stall you,” one source said.

“You’ll believe they are reporting things up the system but then it turns out that they’re not. That’s what happened to Fonterra,” he said.

“Fonterra was misled by its local partner, stalled by the city government, and indeed threatened by that city government; they were told if you take this further we’ll close you down,” the source said.

Fonterra did take it further – it made sure its own test results were clear, that the paper trail of who they had contacted and when was clear, and decided they needed high-powered help.

New Zealand Prime Minister Helen Clark told the Beijing government, which then came down hard and fast on Sanlu.

Sanlu company officials informed the board about the melamine contamination on Aug. 2. Though Fonterra’s representatives wanted to raise a public recall, the rest of the board put off the proposal. At that time, it’s less than one week to the opening of Olympics in Beijing. What would you expect?🙄

The funny thing to me is that the Chinese state media outlets, like Xinhua, recently emphasized how much the public appreciate the government’s quick response.🙄

Related:

Update:

Courts Compound Pain of China’s Tainted Milk (New York Times; 10/16/2008 )

Chinese officials, under pressure to promote fast rates of economic growth and to enforce social stability, routinely favor producers over consumers. Product liability lawsuits remain difficult to file and harder still to win, especially if the company involved is state-owned or has close connections to the government.

….

“To protect Sanlu is to protect the government itself,” he (Teng Biao, a lawyer in Beijing who is collecting material for a possible class-action lawsuit) added. “A public health crisis like this not only involves Sanlu. It involves many officials from authorities in the city of Shijiazhuang up to the central government. It involves media censorship, the food quality regulatory system and the corrupt deal between commercial merchants and corrupt officials.”

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