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China's dairy industry reeling
after scandals
BEIJING -
Public trust in China's dairy industry is lower
than ever after several recent incidents,
including one in which infants died, an ongoing
survey has found.
An online survey by
sina.com showed recently that 80.5% of nearly
200,000 netizens said they would no longer buy
Bright Dairy products although 72.9% did once
trust the brand. The precipitous decline was
sparked by three recent incidents at the dairy in
various parts of the country reported in the
Chinese press, including the reprocessing of
expired milk and cases of altering the expiration
dates on dairy products.
Last month, a
formula milk made by multinational giant Nestle
was found to have excess iodine in it. And last
year, the public was shocked when infants died
from consuming milk with no nutritional value made
in Fuyang, in east China's Anhui province. In
spite of the national uproar triggered by the
Fuyang incidents, other problematic milk products
were found only a year later. One widely reprinted
report quoted an unnamed "industry insider" as
saying that recycling expired milk is the norm in
the domestic dairy industry, and that more than
90% of fresh milk has already been contaminated
before entering processing procedures.
"All this has affected public confidence
and will harm a growing but fragile industry,"
said Chen Yu, an analyst from Beijing Orient
Agribusiness Consultancy. The industry had been
developing at a double-digit rate between 1998 and
2003, but growth was only 1.2% last year. Dairy
companies should learn from the scandals,
strengthening their self-discipline and ensuring
the quality and safety of dairy products to give
healthy and sustainable development, Yu said.
Bright Dairy's problems were due to faulty
management during its rapid expansion through
mergers and acquisitions, he added. The company
bought the Zhengzhou Shanmeng Dairy in December
2003, but did not strictly manage and inspect the
factory. "Many dairy companies will face such
problems as they grow quickly," Chen said.
China now has more than 1,600 dairy firms,
and 90-95% are small or medium-sized companies. A
round of mergers and acquisitions is expected in
industry restructuring. Daily testing must also be
conducted during the production process, Chen
said. "To be honest, Nestle's test standards are
much stricter than any other Chinese dairy, while
the feeding of cows by individual households
increased test difficulties," he said. In
addition, iodine content is currently not an
important test item. Nestle has decided to
increase the frequency of iodine testing in all
its products to ensure they fully comply with
national standards. It will also introduce daily
testing of fresh milk before the production
process, said He Tong, a public relations manager
of Nestle.
To avoid similar problems,
industry authorities are also amending the quality
standard of raw milk, adding some testing items,
Chen said. "Another important lesson for dairy
companies is how to manage the brand assets and
how to deal with problems. Chinese companies do
not have a strong awareness of brand management.
They do not have ideas on how to maintain or build
brand value...it takes a long time to establish a
brand name, but a brand can be destroyed
overnight. Nanjing Guanshengyuan is a typical
example; the food company was closed after the
exposure of its use of year-old ingredients. The
wide extent of the problems also shows that
companies, including Nestle, lack the ability to
deal with the crisis."
The multinational
dairy giant responded more than 10 days after the
problem emerged. It promised to restock all
"NESLAC Gold 3+" products nationwide and allow
consumers to exchange the questionable products,
but the situation had already caused annoyance
among the Chinese. "Despite the industry efforts,
there is much work to be done to ensure food
quality and safety, like the establishment of a
strict control system," Chen said.
Directors of the China Dairy Industry
Association held a meeting recently to address the
problems, said chairman Song Kunkang, but he did
not give further details. "We will put out a press
release later," Song said, adding that he is
confident the dairy industry will overcome the
difficulties. "There will be no big problems, as
long as the two companies take measures to solve
them."
(Asia
Pulse/XIC) |
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