China takes steps to enforce food safety standards

The recent arrest of two managers of a Chinese milk producing company serves as a salient reminder that the new food safety laws are being enforced in China.

On 31 December 2009, the Xinhua news agency reported that Shanghai Panda Dairy Company (Panda) was producing milk formula that contained an unacceptably high level of the chemical melamine. The arrest of the corporate representatives and two managers, charged with producing and selling toxic milk powder, followed.

This latest finding of production of food tainted with dangerous chemicals follows hot on the heels of the 2008 baby formula crisis in which at least six babies died and in excess of 300,000 were left ill. At that time Panda was found to have dangerous levels of melamine in its milk products but was allowed to resume production after undertaking to improve the quality of its products. Melamine can artificially raise the level of protein in milk formula products while reducing the cost of production. It can collect in the human body causing kidney stones and, eventually, kidney failure.

In the wake of the 2008 crisis, the Chinese government enacted stringent food safety standards aimed at controlling the quality of foods and providing harsh penalties, including criminal sanctions, for those who break the law. The laws which came into force on 1 June 2009 had been criticised for dividing responsibility for the monitoring of over half a million food producers amongst the General Administration of Quality Supervision, Inspection and Quarantine, the State Food and Drug Administration and the Ministries of Health, Agriculture, Commerce and Industry, leading to a sharing of responsibilities and a lack of inter-departmental coordination. However, the latest response to the tainted products produced by Panda is a positive sign that the Chinese State is taking the issue of food safety seriously.

Further evidence of the seriousness with which China responded to the 2008 crisis included the execution of a farmer and a milk salesman found guilty of tainting milk products with melamine in 2008 and the arrest in December 2009 of three people suspected of selling melamine-tainted milk products in the Shaanxi province, who all now stand accused of producing and selling toxic food. In total, 21 people have been convicted for their roles in the 2008 crisis, which led to the bankruptcy of China’s largest dairy manufacturer, Sanlu Group, and the life imprisonment of its boss.

The food safety standards do not allow food products to contain any additives that are not approved by the State, allow for ongoing inspection of food products, enable the State to order that production of dangerous foods ceases and allow for product recalls. In addition, the laws allow for consumers to be compensated up to 10 times the value of the food purchased if they have purchased substandard products.

With Chinese food exports growing, up from $4.5 billion in 1986 to $25.7 billion in 2006, the safety of food produced in China is becoming an increasingly international issue and one that the Chinese government will continue to battle with in an industry that is highly dispersed and where growth and market share may well be placed above safety. Despite this, the quick reaction and destruction of the tainted products produced by Panda provides encouraging signs that health and safety standards are increasingly at the top of the agenda for the Chinese State and are an area where managers will continue to be forced to take personal responsibility for the safety of the goods their companies produce.

The impression that health and safety standards are not enforced in China is misplaced and foreign companies operating in China would do well to heed this latest warning.

Norton Rose Group