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Food Safety and China: Scandal and Consequence

By Vaughn M. Watson

This year thousands of decaying pigs contaminated the Huangpu River, affecting the 23.47 million residents of the Shanghai metro area. In Beijing, vendors were passing off rat as lamb at the city’s ubiquitous nighttime barbeque vendors. And in May, cadmium, a metallic carcinogen, was found in rice crops in the southernmost provinces of the country, home to almost 105 million people in the Pearl River Delta. Not surprisingly, food safety is an issue of growing concern among Chinese consumers, and the increasing number of scandals could lead to a revision of international food safety practices across the country and worldwide.

This change in Chinese consumer habits has been documented for the past five years. It all began in Gansu, one of China’s westernmost provinces and a home to vital sections of the Silk Road. In 2008, government officials reported that several children had fallen ill and most likely due to San Lu baby formula powder. Despite apparent cover-ups by the government and possibly by San Lu and its New Zealand-based partner Fonterra, the story became public. This was the birth of a widespread distrust of domestic products, especially among middle-class Chinese.

The 2008 scandal, in which San Lu milk and infant formula products were found to contain traces of melamine, a chemical found in plastic and adhesives that can cause renal failure, rocked China. By the end of 2008, China’s Ministry of Health reported more than 300,000 children may have been affected by the contamination.

As mass recalls began, Chinese consumers began looking toward foreign companies and products. Seemingly ignoring the fact that Fonterra owned almost half of San Lu at that time, Chinese consumers ordered the companies’ infant formula products online in droves. Some even made trips to Australia and Hong Kong specifically to purchase infant formula or had friends abroad send them. In fact, restrictions had to be placed on sales of the product to prevent domestic shortages. With this kind of consumer behavior, it should come as no surprise that by the beginning of this year, China was found to account for 23 percent of the global market for baby food and infant formula, according to research previously published in an article in The New York Times.

In early August of this year, Fonterra admitted to finding traces of Clostridium Botulinum in their whey protein concentrate, a main ingredient in infant formula. The contaminant, a bacterium found in soil, can cause botulism. The spokesman said the bacterium may be due to a dirty pipe, but scientists claim this is unlikely.

What has baffled and infuriated consumers further is that Fonterra may have known about this contamination for over a year. This is reminiscent of the 2008 San Lu case, in which Fonterra took months to reveal San Lu infant formula’s high melamine content because it was waiting for government action.

Surprisingly, the government has acted relatively quicker than it had previously. According to a Reuters report, China barred all imports of New Zealand whey protein concentrate products on Sunday, barely one day after the scandal was announced. As was the case in the 2008 scandal, the products will be recalled and contained. The amount of whey protein that was contaminated may be upwards of 35 tons, according to a Reuters report. Fonterra CEO Theo Spierings also issued a public apology and says he hopes the embargo on Fonterra products will be lifted within several days’ time, a necessary move in order to appease the Chinese market. Again in 2012, according to Reuters reports, 90 percent of Chinese infant formula imports came from New Zealand. The majority of that 90 percent came from Fonterra.

The widespread distrust of domestic food products caused by this string of scandals has already taken root in China. Farmer’s markets selling organic, locally grown goods are cropping up throughout China’s major cities, and farms that provide home delivery of organic fruits and vegetables have cropped up on the outskirts of Beijing.

While China’s growing distrust of local products has caused an overreliance on imports, continuing scandals on the part of companies like Fonterra are now causing distrust in foreign products as well. And because of the nationalist Chinese nature of equating all things foreign with each other without a regard for geopolitical boundaries, continuing incidents such as these could discredit foreign imports in general, isolating the coveted (and highly profitable) purchasing power of the approximately 1.3 billion Chinese consumers.

It is likely that such consequences will not be felt for a few years. Just as the effects of the 2008 milk scandal on domestic products are just starting to be reported on now, it could take a few more years before economists notice observable change in tastes for imported goods.

On a more optimistic note, these scandals could also bring about a revision of supplier safety practices. Because of the country’s purchasing power, a revolution in food safety could very easily find grassroots in China. Rapid changes are already occurring in terms of the growing popularity of local farms and products. If food policy is not taken more seriously, middle-class, Chinese consumers may turn to these cleaner and safer products out of sheer desperation.

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Vaughn M. Watson is an editorial assistant at World Policy Journal.

[Photo courtesy of Mary Mackinnon]

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