In the wake of domestic food scandals in China, it is western food manufacturers that are coming in for heightened scrutiny and criticism, says Paul French, China editor

Anyone even vaguely following the news from China in the past couple of years cannot have failed to notice that there’s a problem with food – melamine in milk, steroids in pork, zinc in fish, Sudan-1 dye, exploding watermelons, toxic plasticiser and the disgusting sounding “gutter oil” to name but a few.

The government is concerned about the ongoing food scares. It’s become a “social harmony” issue – distraught parents of dead babies fed poisoned formula, angry shoppers in Shanghai refusing to buy bottled water after it is revealed to be tap water, restaurant patrons trashing the joints after finding their food cooked in gutter oil (“recycled” oil collected from drains and sewers, in case you were wondering).

The Chinese premier, Wen Jiabao, said recently: “Product quality and food safety have a bearing on people’s health and their vital interests, trust in companies and [China’s] international reputation, and it must be paid the utmost attention.” An astounding statement of the blindingly self-evident from Beijing.

Subsequently there has been a raft of new bodies, regulators and laws. But, as ever in China, enforcement remains lax and the food scares just keep coming.

Chinese consumers now have extremely low levels of trust in just about any domestic food or drink brand. Among many self-protection strategies – including going vegetarian, avid label reading, and trading up to organics to avoid pesticide contamination – concerned consumers now buy overseas brands. Imported products, or those manufactured in China by foreign companies, are generally thought to be safer.

One manifestation of Beijing’s response seems to be what are being termed “strike back” campaigns – finding foreign transgressors and targeting them relentlessly in a game of “look, they are as bad as us”.

Local problems

To date, pretty much all the food scares have concerned domestic Chinese manufacturers and brands. Even when a foreign company, such as KFC, was implicated it turned out to be a product sourced from a local supplier that contained the banned carcinogen Sudan-1 dye. But it’s still a growing risk factor for foreign food and drink brands in China.

Some big names have been caught up in “strike back”. We’ll take two examples.

China’s General Administration of Quality, Supervision, Inspection and Quarantine (AQSIQ) recently declared many brands of mineral water to contain unhealthy levels of nitrite. Water is a serious safety concern – so many chemicals have been found in China’s drinking water it is impossible to classify the biggest problems. There is lead, zinc, cadmium and other metal residues and run-offs as well as high levels of fluoride, various pesticides, fertilisers and detergents to name a few. This has all led to strong growth in the market for bottled water, both local and foreign brands, in the hope that it may be better quality. 

However, following several minor scandals involving Chinese brand bottled waters, it just so happened that the AQSIQ investigation only found foreign brands to have dangerous levels of nitrate – including the French brands Evian and Volvic – and no domestic brands. Despite the media being told to report the story heavily, anecdotal evidence suggests that few Chinese consumers fell for the ruse.

We’ve also seen the Wal-Mart organic pork scandal – another “strike back” campaign by Beijing. Wal-Mart did mislabel pork and this was widely reported. But when local journalists found the same problem in domestic supermarket stores they were told not to report that by the government. That’s “strike back”.

The scandals keep coming – benzopyrene-laced sesame oil and cadmium-stuffed squid, for example. Foreign brands are now looking for strategies to avoid being caught up in both food scares and “strike back” campaigns.

For many foreign brands it is also increasingly often simply a process of paying to acquire AQSIQ’s official mark that denotes the product has passed the AQSIQ’s safety standards.

In times of “strike back” and concerns over the targeting of foreign food brands and retailers by the government, many believe that the safety mark may be one form of protection. Checking of the product requires a processing fee of about $400 per item and a premises inspection once every three years, at a cost of $9,500 per visit.

Some brands feel they have no choice but to pay up. 

Paul French has been based in China for more than 20 years and is a partner in the research publisher Access Asia-Mintel.