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China's baby-milk scandal Formula for disaster/The Economist

China's baby-milk scandal

Formula for disaster

Sep 18th 2008 | SHIJIAZHUANG

From The Economist print edition

A scandal in China over deadly baby milk

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AP

“QUALITY and safety are the foundations of social harmony,” proclaim
posters at the headquarters of the Sanlu Group in Shijiazhuang, capital
of China’s northern province of Hebei. Sanlu was until recently one of
China’s biggest producers of milk powder. Now, dozens of people, many
clutching infants, queue in the hot sun outside to return powder that
could be contaminated with a potentially lethal chemical. The harmony of
China’s consumers has rarely been so tested.

The safety scandal engulfing not only Sanlu, fingered as the main
culprit, but much of China’s dairy industry, is an embarrassment to
China’s leaders. In July last year, after widespread complaints at home
and abroad about tainted Chinese-made food and medicine, the authorities
executed a former head of the country’s food-and-drug safety agency for
taking bribes. This year, to improve monitoring, the agency was put
under the Ministry of Health. The sale of tainted milk powder, which has
so far made more than 6,000 infants ill and by Thursday September 18th
had killed four, shows controls remain dangerously slack.

The government blames middlemen who collect milk from dairy farmers.
They allegedly added water to increase its volume and, to disguise this,
mixed in melamine, a chemical used to make plastics, which can deceive
inspectors about the milk’s protein content. Melamine gained notoriety
last year when several pets in America died after eating food
contaminated with it by Chinese-made additives.

The central government has boasted it was quick to react to the latest
problem. But the chronology revealed so far suggests otherwise. It has
fuelled speculation of a delay to make sure the Olympic games in August
were not marred by a food scare.

The government of Gansu province in China’s west says it told the
Ministry of Health on July 16th about an unusual upsurge of kidney
stones among infants who had all drunk the same brand of milk. It was
not until September 1st that the ministry says its experts tentatively
concluded that the powder had caused the sickness. Still, nothing
appeared to happen.

Prodding from the government of New Zealand may have been what
eventually goaded the Chinese authorities into action. On September 8th
it told them what it had learnt from Fonterra, a New Zealand dairy
company that owns 43%% of Sanlu. Fonterra says it was told by Sanlu of a
problem with the powder on August 2nd, six days before the games.

Helen Clark, New Zealand’s prime minister, said Fonterra had tried “for
weeks” to persuade local officials to allow a public recall. Instead, in
an unpublicised recall, powder was withdrawn from shops. Fonterra has
defended its decision to keep its information under wraps for so long.
“If you don’t follow the rules of an individual market place then I
think you are getting irresponsible”, says the company’s chief
executive, Andrew Ferrier.

Eventually, on September 11th, Sanlu announced a nationwide recall of
700 tonnes of powder. Two days later the Ministry of Health gave its
first news conference on the crisis and the cabinet declared a national
food-safety emergency. A government investigation found smaller traces
of melamine in milk powder from 21 other companies, including leading
brands such as Inner Mongolia Yili Industrial Group (an Olympic sponsor,
though the government says no melamine got into the dairy supply for the
Olympics or the Paralympics, which ended this week).

Heads are now rolling. Several milk dealers have been arrested. The
mayor of Shijiazhuang has been dismissed. Sanlu’s boss, Tian Wenhua, has
been fired and arrested. Around the country, milk powder is being
withdrawn from shelves, leaving, as one Western expert on China’s dairy
industry puts it, “not much but Nestlé”, a Swiss group whose milk powder
is not implicated in the scandal. Sanlu’s production has been halted.
Some other companies are recalling their milk powder too. The government
has extended its investigations to a variety of dairy products.

But officials still appear nervous about public reaction to the news.
Chinese journalists say the Communist Party’s Propaganda Department has
ordered all but the party’s most trusted media to refrain from
investigating the story. At Sanlu’s headquarters people lining up to
return their powder complain that the local press has barely covered the
issue.

Extra police have been deployed around Sanlu’s headquarters and the
city’s main children’s hospital. Across China, anxious parents are
flocking to have their infants tested for kidney stones. One grandparent
blames the scandal on corrupt collusion between dairy businesses and
local officials. “It would not have happened in the days of Mao Zedong”,
he says. Harmony has yielded to discord.

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