Deadly Chinese Business Practices a Warning for Joint Ventures

By Phillip Charlier

A child drinks milk in China. Unscrupulous Business practices kills children and babies.
Picture: AFP

As of 16 September, 2008, over 1250 babies have fallen ill and 2 have died after drinking milk formula laced with the deadly chemical melamine. The milk was manufactured and distributed by the Chinese Sanlu company which is 43% owned by New Zealand company Fonterra.

The same product – melamine – was responsible for the deaths of thousands of pets in the USA last year after being added to pet food of Chinese origin.

The Sanlu company first heard reports about problems with its baby formula in March. Parents were noticing discolored urine and some babies were hospitalized. However, the corporation and lazy, corrupt local officials refused to act on the reports. New Zealand partner Fonterra urged Sanlu to issue a product recall six weeks ago but Sanlu refused to take action.

A public recall was only instigated after the New Zealand government demanded action from the central government in Beijing.

“They have been trying for weeks to get official recall and the local authorities in China would not do it,” New Zealand Prime Minister Helen Clark told TVNZ.

Clark said she learned of the problem on Sept. 5 and convened a meeting of senior ministers three days later at which she ordered officials to directly inform senior authorities in Beijing, at a time when provincial Chinese officials appeared to be dragging their feet in ordering a recall.

“We were the whistle blowers and they leapt in and ensured there was action on the ground,” Clark told reporters.

“At a local level … I think the first inclination was to try and put a towel over it and deal with it without an official recall,” she said.

In Taiwan, a warehouse containing 25 tons of the powder has been sealed. However, 9 tons of the powder has already been distributed around 9 counties and cities around the country. It is thought to have been used in everything from milk tea to bread and pastries. Taiwan health authorities have promised to strengthen border controls and to subject products to rigorous testing in the future.

The government should create a multitiered inspection mechanism for Chinese commodities after the recent import of tainted milk powder from China exposed flows in the existing system, a Consumers Foundation (CF) inspector urged Monday.

President Ma Ying-jeou has been extremely concerned about the distribution in Taiwan of tainted milk powder from China, and has called on Beijing to fully explain what happened, Presidential Office spokesman Wang Yu-chi said Monday. Upon learning of the incident, the president immediately demanded that the Executive Yuan take effective response measures. Taiwan was the only place outside China where the tainted milk powder has been sold.

Noting that the incident has caused a strong dissatisfaction and distrust among Taiwan people with China’s foodstuffs and its food safety inspection mechanism, Fu Dong-cheng, vice chairman of the Cabinet-level Mainland Affairs Council (MAC) said it is regrettable that the Chinese company has ignored food safety and public health by unscrupulously adding toxic chemicals to its milk powder.