More China food scares, this time involving toothpaste and seafood. Three Japanese companies have begun to recall millions of tubes of toothpaste made in China after they were found to contain diethylene glycol, a chemical used in antifreeze. The US Food and Drug Administration recently issued an alert warning of the same problem.
This forced Proctor & Gamble, maker of the best-selling Crest brand, to reassure US and Chinese consumers that it rigorously tests the ingredients of its toothpaste and does not use the suspect Chinese suppliers. US consumers got the added assurance that their Crest is made in the US.
Meanwhile, the FDA is imposing stricter controls on farmed seafood from China, including staples of the US diet like shrimps and catfish. Chinese fish farms routinely use four substances that are illegal in the US to protect seafood from exposure to fungi, according to the FDA.
Then there is the problem of the defective Chinese-made tyres. According to federal regulators, 450,000 Chinese-made tyres have been sold in the US without an important safety feature designed to stop the tread separating from the rest of the tyre – see this (free) Wall Street Journal story for more. And let's not forget contaminated Chinese pet food, which was responsible for the death of an unknown number of pooches in the west — see this EngagingChina story for more on that one.
The world is an unsafe place and it seems to be getting less safe as more products get manufactured in China. That's probably the knee-jerk reaction of many consumers in the west to these safety scares.
Fearing a backlash against Made in China goods, Beijing made a rare official response on Thursday to the concerns about Chinese seafood. Wang Xinpei, a commerce ministry official, said the government “has paid great attention” to the issue of safety, especially regarding food products, adding: “It can be said that the quality of China's exports are all guaranteed.”
So that's OK, then. Everyone can keep chomping on cheap seafood and keep going to the discount store to stock up on cheap toothpaste and dog food.
As we have said before, almost most without realising it, the west has become heavily dependent on China for food, just as happened in the past with T-shirts and toys. China currently exports more than $30bn annually in food and drugs to Asia, North America and Europe, so a lot is at stake.
China has been caught off guard by this issue which strikes to the heart of the whole debate about China's current development model. “Pile it high and sell it cheap” has become the motto for much China's export sector and the key to its phenomenal economic growth.
The west is apparently waking up to the consequences of its insatiable appetite for cheap Chinese imports, namely, goods are often shoddy quality or, in some cases, downright dangerous.
Chinese companies could do a lot more by ensuring that their oft-expressed desires to boost quality, improve safety and protect intellectual property rights are put into practice — by employing external auditors, for example. EngagingChina wrote earlier about the opportunities that the China quality problem creates for western testing and quality assurance companies.
One aspect of this whole debate that is not often explored is that of the Chinese consumer. The west has often arrogantly assumed that Chinese consumers put up with contaminated toothpaste or false Louis Vuitton handbags because they cannot afford the “real thing”.
But as disposable incomes rise, Chinese consumers are prepared to pay more for better quality goods — assuming, that is, that they are given the choice. Shaun Rein of the China Market Research Group tipped me off about his recent article the BusinessWeek article on this issue. He writes:
And while Americans have rightly become increasingly worried about the safety of products produced in China, Chinese consumers are just as worried. They do not want to feed their babies contaminated baby food or deadly drugs any more than Americans do. One 38-year-old woman we interviewed imports her baby formula from Japan because she trusts that the product will be real. Another female shopper said she only shops at international stores such as Wal-Mart and Carrefour because she can trust that the products are of high quality. “
So rather than sitting back and exhorting suppliers to clean up their act and officials to do their job properly, EngagingChina believes western retailers and brand-name manufacturers can exploit these consumer concerns to their advantage, turning quality and safety into competitive weapons.
They need to impose strict and comprehensive controls not just on food ingredients but on the whole supply chain, which means supplier certification procedures, spot checks on factories and blacklists of suppliers found to be cutting corners.
If they do not, foreign brands in China run the risk of losing their reputation if they are then found, knowingly or otherwise, to be employing the same shady practices or dubious ingredients more usually associated with local competition. The case of premium ice-cream maker Haagen-Dazs, whose Shenzhen operation was found to be operating without a sanitation permit, is one glaring example but there are others — see this article.
Prices may need to rise to pay for all those tests and procedures, but I suspect many manufacturers and retailers will be surprised to see how many consumers are prepared to pay a bit more to sleep more soundly at night — and not just in the west.