Blog: Dean BestQuestions over food safety in China return

Dean Best | 3 January 2012

A new year but the same old questions over the safety of food made in parts of China's food sector have reared their head once again.

Last week (27 December), major Chinese dairy processor Mengniu Dairy admitted that state inspectors had found contaminated milk products at one of its plants in central China.

Mengniu is listed in Hong Kong and there was an immediate financial impact on the business, with its shares falling to their lowest level in two years.

However, the impact could continue in the days and weeks ahead, with local consumer confidence in China's food sector again rocked.

Internet users have called for a boycott of Mengniu products, Bloomberg reported last week, while hackers gained access to the company's website, posting the message: "Mengniu once made the Chinese people strong and proud, but now it's doing harm to its own people."

Mengniu insisted none of the affected products found their way to market but the contamination brought to mind previous scandals. In 2008, milk products containing the industrial chemical killed six infants and sickened thousands of others. Mengniu was one of over 20 dairy companies to have seen their products tested positive for melamine.

Meanwhile, in 2004, 13 babies died in Fuyang city due to malnutrition after taking substandard milk powder.

Despite Beijing's moves to tighten up controls, last year the China Daily newspaper claimed the country's milk regulations were the weakest in the world.

Of course, Beijing could point to the fact that the contamination at the Mengniu firm was uncovered by a state inspection. However, China's dairy sector remains in need to investment to improve safety controls and product quality, which could give an advantage to the larger, multinational players in the country.

Fonterra's former local partner Sanlu was the Chinese dairy processor at the centre of the melamine scandal and, four years on, the New Zealand dairy giant is busy building an independent presence in a market that remains one of huge potential for the dairy industry.

That potential, however, will only be reaped by those who invest heavily in food safety with headline after headline fuelling the fears of local consumers concerned about what is in the dairy products they consume.


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