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Stricter standards needed

By LIU JIE (China Daily)
Updated: 2006-03-16 10:22

Consumer backlash against multinational food producers' shoddy practices highlights need for tighter industry regulation

A number of internationally known brands including Nestle, Kraft, Haagen-Dazs, KFC and Heinz have been relegated to Chinese consumer blacklists over the past year amid controversy over questionable food quality standards.

Consumers accuse multinational firms with good reputations in Western countries of adopting double standards, but experts say that the controversy shows how Chinese shoppers are becoming increasingly aware of their interests. This can also lead the way to strengthened government supervision.

On March 15 last year, environmental group Greenpeace reported that products from two leading US food manufacturers Kraft's Ritz biscuits and Campbell corn soup contained genetically engineered (GE) soybeans. Kraft and Campbell had previously agreed not to use GE ingredients in Europe, but haven't done so in China, Greenpeace said.

Two days after the Ritz biscuits report, the Chinese media was flooded with news that Sudan I a red, chemical dye thought to cause cancer had been discovered in two products sold in China: KFC's New Orleans Roast Chicken Wings and New Orleans Roast Chicken Legs. Sudan 1 is classified as a carcinogen by the International Agency for Research on Cancer, and is banned under European Union regulations.

In another scandal involving a multinational brand, Haagen-Dazs was found producing ice cream cakes without a permit next to a toilet and rubbish bin in an ordinary apartment in Shenzhen.

All of these discoveries happened within a few months of each other, so leading Chinese Internet portal sohu.com conducted an online survey last June. Out of 96,218 respondents, 56 per cent say they believe the scandals were just the tip of the iceberg. Three-fourths say they will never trust those brands again and will be cautious when buying their products.

"International companies should pay close attention to quality guarantees and the safety of their products," says Zhang Wenkui, vice-president of the Corporate Research Institute, affiliated with the Development Research Centre of the State Council. It can take decades to establish a brand, a company's reputation can be destroyed overnight.

Crisis management

The survey also found that a multinational's initial response to a scandal attracts even more consumer attention, with 96 per cent of respondents saying companies have a responsibility to stop production and sales when any problem is found. Products should be immediately recalled in these situations, the respondents added.

Approximately 98 per cent agree that a responsible corporate citizen should immediately inform consumers when it discovers quality or safety problems.

Nestle issued an apology on June 5, 10 days after excess iodine was detected in its Jin Pai Growing 3+Milk Powder for babies and young children. It insisted that the high iodine levels were not a threat to public safety.

"We apologize for deviating from national standards regarding the iodine content of some Nestle milk-based powder products," the company said. It refused to pull the powder off store shelves or compensate consumers,howerver.

Fang Shumin, mother of a three-year-old baby, says that she was shocked to hear that iodine levels in Nestle Jin Pai Growing 3+Milk Powder could harm babies.

"I'm even more astonished that this big international company did not inform consumers immediately and refused to pull the products," says Fang, adding that she will never buy any of Nestle's products again.

Josef Mueller, president of Nestle China, made a public appearance as a featured guest on China Central Television's BizChina programme, where he apologized and repeated the company line.

"This happened in spite of our total commitment to comply with national standards," Mueller said.

Not surprisingly, critics are saying the apologies have come a little too late for the company to reverse the damage done in the minds of many Chinese consumers.

Qiu Baochang, a lawyer for the China Consumers' Association, was quoted as saying Nestle was only reacting to the negative publicity, and that the apology was only a "late response" to pressure.

An online survey taken suggests up to 87 per cent of consumers will stop purchasing Nestle products.

Market improvement

Multinationals have managed to get away with shoddy practices and have largely escaped serious punishment. The market is simply too immature for the authorities to be able to effectively monitor the food production industry, Zhang says. But foreign companies usually have their own corporate codes, which are generally higher than China's national standards, he adds. Problems only occur when some multinationals loosen standards or take advantage of lax supervision, loopholes and low public awareness.

Penalties are not strict enough to discourage this and government roles have yet to be clearly defined at the departmental level, leading to overlapping administrative measures or inactivity. There is an urgent need for established product quality supervisory and recall systems throughout the country, along with new legislation.

"China's food safety authorities are busy updating standards, and increasing the use of new materials and new technology," says Zhang Renwei of the Shanghai Food and Drug Administration. But new standards must be based on research and data, two areas where China is still quite weak.

"The most we can do is to learn from developed countries."

More cases

Camera quality

Sony Corp of China suspended the distribution of six of its digital camera models on the Chinese mainland on December 16 after the Industrial and Commercial Administration of East China's Zhejiang Province found problems with the cameras' liquid crystal displays (LCDs), automatic exposures and white balances.

The company reported that a service hotline had been set up to handle customer concerns, but did not say how to return, repair or exchange any of the six cameras in question.

The Japan-based electronics producer challenged the administration's findings, but still issued another apology on December 19, saying it would recall its six "Cybershot" models.

Misleading claims

US-based beauty products giant P&G was hit with complaints from a Nanchang woman in March over the SKII anti-ageing De-Wrinkle Essence skincare product. The woman said it was ineffective and sparked an allergic reaction.

P&G was fined for misleading consumers in its skincare product ads on April 11. The Nanchang Commercial and Industrial Bureau in the provincial capital of East China's Jiangxi Province settled on a fine of 200,000 yuan (US$24,000) after a 20-day investigation into SKII.

The bureau has also looked into SKII's ingredients in response to another consumer's accusations that the skincare formula contained "unsafe materials."

P&G China spokesperson Feng Jialu insisted the product was safe, and said the only problem was related to advertising. Sales of SKII are stable on the Chinese mainland, but media reports have suggested that 12 per cent of SKII's frequent users doubted the product's quality, based on a confidential survey conducted by P&G early last April.

Cancer risk

A US study warned on April 18 that triclosan in Colgate brand toothpaste could lead to cancer. Triclosan can react with water to produce chloroform gas. Chloroform can cause depression, liver problems and cancer, if inhaled in large enough quantities.

China forbids the use of triclosan in cosmetics, but has no rule on its use in toothpastes. which is why the health authorities did not require Colgate to pull the products from shelves as its counterparts did in Europe. Sales of Colgate toothpaste still dropped significantly, however.

Health concern

The Shenzhen municipal government in South China's Guangdong Province shut down a kitchen used by leading US ice cream brand Haagen-Dazs in June after finding it lacked a permit and failed to meet health standards.

The ice cream was primarily made next to a toilet and several rubbish bins in a house . Local government officials discovered the illegal kitchen through a tip from another citizen.

Brand owner General Mills reported that the ice cream made in the Shenzhen kitchen has been sent to the United States for the past five years without incident. The case stirred public concern, and although no other health violations were reported, business dropped sharply.

Expired food

Customers discovered expired bread and cakes on store shelves a week after Wal-Mart Beijing Zhichunlu Supercentre officially opened last May . The general manager of the new outlet blamed the mistake on inexperienced employees.

Local industrial and commercial officials warned Wal-Mart, the world's top chain retailer, to improve its supervisory system and strengthen management. Visitors dropped sharply after local media reported the news.

National standards

Nestle's Jin Pai Growing 3+Milk Powder for babies and young children was found to contain more iodine than allowed by national standards during a May 25 survey by quality inspection authorities in East China's Zhejiang Province. Similar problems were later discovered in Beijing and Kunming, in Southwest China's Yunnan Province.

The Swiss company insisted the powder was safe and refused to recall its products. Nestle issued a public statement on June 5 apologizing for exceeding national standards on iodine content in some Nestle milk-based powder products, but said the matter was not a safety or health issue.

The National Standardization Administrative Commission declared on June 8 that products in violation of national standards must halt production and sales immediately. Nestle eventually pulled the Jin Pai 3+Milk Powder from stores shelves across the country.