Since the 2008 melamine-tainted milk scandal, little has changed in the Chinese dairy industry. Interest groups and nationalism are to blame.
BEIJING - How difficult is it to find safe milk in China? The answer is: really, really hard.
That does not stop dairy producers from swearing their products are top quality. The China Dairy Industry Association recently announced that domestically produced baby formula was of higher quality than imported formula. China’s new standards for baby formula, the association claimed, are the strictest in the world.
Meanwhile government regulators have intensified a crackdown on violations linked to the milk-powder industry, threatening that unscrupulous businessmen would be severely punished. The government also announced that it would tighten supervision of baby milk quality to the same standards used for pharmaceuticals.
However, despite of all these guarantees, the majority of Chinese try to avoid buying local milk for their babies.
It stands to reason that since dairy farming is not a strategic industry for China, it can follow market principles. The public can vote with their feet and buy foreign milk if they don’t trust Chinese products. The problem is that the rest of the world isn't prepared for the massive and sudden increase in Chinese demand. Several countries have been forced to put in place limits for Chinese travelers, to prevent them from buying up all their powdered milk stock.
The order by the Hong Kong government restricting the quantity of milk formula that Chinese people can buy over-the-counter has created a spat between Mainland China and Hong Kong.
It’s no surprise that the Chinese dairy industry has become concerned about the issue. This is not because they regret that Chinese children are not drinking local milk, but rather because they are concerned about the market being occupied by imported milk.
Lowered safety standards
In 2008 China imported around 140,000 tons of milk formula, while in 2011 this number soared to over 650,000 tons, and this is not even counting imports through private overseas purchasing services. This has led dairy producers to urge Chinese consumers to “give up their blind faith in foreign formula brands.”
The question is that if they are not to "blindly trust" imported than who can consumers trust? Since the 2008 melamine-tainted milk scandal, apart from the Sanlu group which was directly involved in the scandal, and was consequently forced into bankruptcy and its top managers sentenced to prison terms, there has been a string of scandals involving milk of dubious quality. The public has simply lost all faith in Chinese milk formula.
Meanwhile, China Dairy Industry Association is extremely anxious. This is why they recently announced that Chinese milk followed stringent standards and had the best quality in its history. As a trade association, it is their role to save the industry from crisis. But what it fails to say is that in reality, it has lowered its standards so that all milk producers can pass. Wang Dingmian, president of the Guangzhou Dairy Association, says the new standards are a retreat to standards that haven't been used in 25 years and that they are the weakest of their kind in the world.
As world's second economy, China should be committed to improving the wellbeing of its population, however it isn’t even able to provide infants with safe milk. Five years after the tainted-milk scandal that affected 300,000 infants and killed six of them, most of the government officials who were held accountable for the scandal have resurfaced, and even been promoted.
Recently, the government announced that milk powder quality would be monitored using the same standards used for drugs. It also announced that a three-month milk powder safety campaign would be launched to weed out unqualified producers and boos consumer confidence.
This news conveys two messages: First, there are still industry vulnerabilities that need to be threatened and loopholes that need to be dealt with. Second, there are companies that still do not follow quality and safety standards, and they will be eliminated. Why is it that after all these years these issues persist? And is Chinese government capable of establishing a long-term monitoring mechanism for baby formula?
Currently, the Ministry of Industry also plans to orchestrate alliances, mergers and acquisitions between the country’s biggest baby milk formula producers so to achieve industrial concentration. However, we are not convinced that there is a connection between the milk quality and concentration. Case in point the fact that the Sanlu Group was the largest infant formula seller in China.
In the end it is not that difficult to provide our children with safe milk. They key for the government is to decide what comes first: children or the dairy industry? If the government chooses the health of its children, then it will enforce strict regulations and force the industry to stick with them, regardless of whether the producer is domestic or foreign. Only milk that meets these stringent standards should be allowed into Chinese households. And if no Chinese companies can comply, and domestic milk prices collapse – so what?
The Chinese milk industry has to go through the process of rebirth that comes after sinking so low. The melamine-tainted milk scandal should have been a turning point for Chinese producers. But because they were protected by the government, they missed the opportunity, which has resulted in the corruption that is prevalent today in the sector.
And one final point to consider: if the government loosened control over imported milk, our domestic milk might even become safer.