Why Beijing musn't forget the lesson of 2008 milk scandal

February 28, 2019 17:56
Many parents in China continue to harbor doubts about the quality of domestically-made dairy products following a milk powder contamination scandal in 2008. Photo: CNSA

In March 2013, the Hong Kong government put in place restrictions of export of baby milk powder, stipulating that no more than 1.8 kilograms of powdered formula (equivalent to about two cans)  may be carried by travelers aged 16 or above on their first trip out of the city within a 24-hour period.

The emergency measure was devised due to a serious shortage of infant formula in Hong Kong at that time, as most of the products were either snapped up by mainland visitors or parallel traders.

Now, six years into the implementation of the export control, the Food and Health Bureau (FHB) tabled a document to the Legislative Council on the matter on Monday, in which it said it decided to keep the status quo on the export curb.

The decision was arrived at as the FHB is worried that relaxing or lifting the export control could potentially trigger a surge in demand once again in the mainland for parallel-traded powdered formulae and disrupt the local supply chain in Hong Kong.

Besides, according to the FHB, convictions in cases pertaining to breach of the export control have remained high at about 3,800 per year in number since 2016, with no noticeable downtrend. It suggests that parallel trading activities in powdered formulae are still persistent, hence the decision to retain the existing policy.

The move to maintain the status quo in the city’s export control on powdered formulae reflects a stark reality: even after more than a decade, the “Made in China” infant formula is still unable to inspire confidence among consumers.

As we all know, the decade-long stampede among mainland parents to scramble for foreign instant formula stems from a dairy product scandal in the country back in 2008, when about 300,000 mainland infants and toddlers were poisoned by melamine-tainted milk products produced by, among others, Sanlu Group.

In the wake of the food safety scandal, desperate mainland parents flocked not only to Hong Kong but also all around the globe including Europe, North America, Australia and New Zealand by the hundreds and thousands to scramble for safe baby formulae.

Ten years on, today mainland parents still remain deeply distrustful of domestically produced dairy products, even though the mainland’s dairy association and the Chinese authorities had released a report claiming that Chinese-made infant powdered formulae products on sale in the nation had attained a passing rate of 99.5 percent in a sample surveillance, and that 100 percent of samples tested were free of major monitored banned additives, including melamine, for the ninth consecutive year.

Simply put, mainlanders are still distrustful of locally manufactured powdered formulae. Half of the amount of export of the infant formulae produced in the European Union, the United States, Australia, New Zealand, Switzerland and Mexico has gone to China.

Now, unless the Beijing leaders and the mainland entrepreneurs have learnt that painful lesson, their ambitious “Made in China 2025” blueprint will likely have a bumpy time in the days ahead.

Suffice it to say that the biggest challenge to the “Made in China 2025” is actually not the US, but rather, China itself.

If Chinese manufacturers continue to cut corners and bend the rules, the so-called “Chinese dream” could well turn into a nightmare.

This article appeared in the Hong Kong Economic Journal on Feb 26

Translation by Alan Lee with additional reporting

[Chinese version 中文版]

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Hong Kong Economic Journal