August 17, 2007
Safety fights
Analysis of:
Toy Recall Shows Challenge China Poses to Partners | online.wsj.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Implications: 1. Quality issues are not new in China, what is new is that countries are using those as "technical trade barriers". 2. What is changing also is that China is making now more complex or health-sensitive products and is not experienced to do it
Analysis: 1. Quality issues are not new in China, what is new is that countries are using those as "technical trade barriers". Everyone plays this game of protectionism. US with "Made in China" products and China with international brands. Recently the famous mineral water "Evian" has been controlled by China as having a too high level of bacteria in it!! And the Japanese brand of shampoo SKII has been banned in China because it contained forbidden ingredients in China?!All those controls have been revealed negative but it damaged international brands. US banned imported toys and in return, China will ban US pork or chicken.
All this is purely political and is not based on transparent and mutually agreed standards. Safety is not at the core of this battle, protectionism and nationalism are. Only the involvement of world health authorities , such as the WHO or the World Organization for Animal Health (OIE) could really be a base to start discussions over mutual standards to protect consumers health.
2. What is changing also is that China is making now more complex or health-sensitive products and is not experienced to do it. China does not only manufacture simple products like before but more high-tech items with higher and sophisticated requirements both for international and its domestic markets.
For instance, in a country where the food used to be cooked and so out of danger, the rapid development of new type of food such as frozen ready-to-eat meals, ice cream and fresh milk, requires strict compliance to quality guidelines and a perfect cold chain. If those products have not concerned international markets yet, it still poses huge challenges in China. Again with quality local quality standards far different than in other countries. Only 2 years ago, Bright Dairy, the market leader of Fresh dairy in China was caught using expired milk in one of their factory. It takes time to change habits.
With the growing number of local consumer complains in the food industry and the upcoming Games in Beijing, China will have to impose strict regulations in line with international standards. Local companies will need the support of multinationals to change their current practices. They have started to do it but it will take some time. Unacceptable things are still happening. So for those who will attend the Games in 08, beware of what will be in your plates!
Analysis: 1. Quality issues are not new in China, what is new is that countries are using those as "technical trade barriers". Everyone plays this game of protectionism. US with "Made in China" products and China with international brands. Recently the famous mineral water "Evian" has been controlled by China as having a too high level of bacteria in it!! And the Japanese brand of shampoo SKII has been banned in China because it contained forbidden ingredients in China?!All those controls have been revealed negative but it damaged international brands. US banned imported toys and in return, China will ban US pork or chicken.
All this is purely political and is not based on transparent and mutually agreed standards. Safety is not at the core of this battle, protectionism and nationalism are. Only the involvement of world health authorities , such as the WHO or the World Organization for Animal Health (OIE) could really be a base to start discussions over mutual standards to protect consumers health.
2. What is changing also is that China is making now more complex or health-sensitive products and is not experienced to do it. China does not only manufacture simple products like before but more high-tech items with higher and sophisticated requirements both for international and its domestic markets.
For instance, in a country where the food used to be cooked and so out of danger, the rapid development of new type of food such as frozen ready-to-eat meals, ice cream and fresh milk, requires strict compliance to quality guidelines and a perfect cold chain. If those products have not concerned international markets yet, it still poses huge challenges in China. Again with quality local quality standards far different than in other countries. Only 2 years ago, Bright Dairy, the market leader of Fresh dairy in China was caught using expired milk in one of their factory. It takes time to change habits.
With the growing number of local consumer complains in the food industry and the upcoming Games in Beijing, China will have to impose strict regulations in line with international standards. Local companies will need the support of multinationals to change their current practices. They have started to do it but it will take some time. Unacceptable things are still happening. So for those who will attend the Games in 08, beware of what will be in your plates!
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