2008 Chinese milk scandal
[23] Because of poor animal husbandry, production and storage and the demand for milk far outstripping supplies, the use of other potentially harmful chemical additives such as preservatives and hydrogen peroxide has been reported by independent media as being commonplace.
[24] Farmers report salespeople had, for years, been visiting farms in dairy areas hawking "protein powder" additives, which would often be delivered in unmarked brown paper bags of 25 kilograms (55 lb) each.
Because of fierce competition for supplies, and the higher prices paid by Mengniu and Yili, Sanlu's procurement became squeezed; its inspection system became compromised by 2005, which "allowed milk collection stations to adopt unscrupulous business practices", compounded by a complete lack of government supervision.
[27] On 17 September 2008, Health Minister Chen Zhu stated tainted milk formula had "sickened more than 6,200 children, and that more than 1,300 others, mostly newborns, remain hospitalized with 158 suffering from acute kidney failure".
[45] From 2005 to 2006, an agent, Jiang Weisuo, from Shaanxi Jinqiao Dairy Company in northern China reportedly publicly discussed his fears about unauthorised substances being added to competitors' milk.
[46] His complaints to regulators and dairy makers in 2005 and 2006 never yielded any result; his story was picked up by China Central Television, who ran a report complete with footage of adulteration in progress, yet the Shaanxi Quality and Technical Supervision Bureau said they failed to find evidence of wrongdoing.
[25] The bulletin board of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) indicated a rare occurrence of kidney stones in children–all causally traced to Sanlu milk formula–was flagged by at least one member of the public in June 2008[47][48] and by a urologist in a paediatric hospital on 24 July 2008.
In a memo dated 11 August, Beijing-based public relations agency Teller International advised Sanlu to seek cooperation with major search engines to censor negative information.
[55][56] After the memo began circulating on the internet, Baidu denounced, in a communiqué on 13 September 2008, the approaches by said agency on several occasions, saying the proposal was firmly rejected, as it violated their corporate principles of unbiased and transparent reporting.
[80] On 24 September, Fonterra announced it had written down the carrying value of its investment by NZ$139 million (two-thirds), reflecting the costs of product recall and the impairment of the 'Sanlu' brand because of the "criminal contamination of milk".
[102] Seoul-headquartered Lotte Group, a major snacks maker, recalled its Koala's March cookies in Hong Kong and Macau because of contamination, and promised to "look deeply into all the details of the manufacturing process" to preserve customer confidence.
Nestlé Chief Technology Officer said the centre was equipped with "highly sophisticated analytical tools for detecting trace amounts of residues and undesirable compounds like melamine or veterinary drugs or natural toxins".
A number of countries had imposed blanket bans on Chinese milk products or its derivatives—among which were Bangladesh, Bhutan, Brunei, Burundi, Cameroon, Chile, Colombia, Dominican Republic, Gabon, India, Côte d'Ivoire, Maldives, Mali, Mexico, Nepal, Papua New Guinea, Paraguay, South Korea, Suriname, Tanzania, Togo, and the United Arab Emirates[116][117][118][119][120] —joining Indonesia, Taiwan, Japan, Singapore and Malaysia which had also imposed specific bans on Chinese dairy products which tested positive for melamine.
[121][122] The scandal led to an erosion of trust in locally produced infant formula and from then on, many Shenzhen residents and parallel traders travelled across the border to purchase powdered milk from Hong Kong shops.
[123] Lower confidence in Chinese production, combined with the relaxation of visa requirements for mainland citizens, had resulted in shortages of infant formula in Hong Kong for an extended time.
[128] The catchment area for traffickers spread from Fan Ling and Sheung Shui southward to Yuen Long and Tuen Mun, causing localist camp such as Civic Passion and Hong Kong Indigenous to take to the streets in direct action in 2015.
Chinese premier Wen Jiabao apologised to the nation, saying he felt "extremely guilty" about the poisoned milk products, in the same way he had previously asked the people's pardon for the deaths of coal miners, polluted drinking water, and train passengers stranded by the authorities' inadequate response to the severe snowstorm during the New Year.
[182] On 9 October 2008, in an attempt to control the damage to Chinese dairy exports, officials at a World Trade Organization meeting insisted that contamination had been "accidental", directly contradicting the WHO observations.
[184] On 11 October, Deputy Health minister Liu Qian stated that all the foreign companies' application for compensation for dairy products recall would be dealt with on a commercial basis, although government may use diplomatic channels if necessary, if problems were encountered.
China Central Television shifted its reporting emphasis to the launch of Shenzhou VII, with the announcement of the AQSIQ test results relegated to the final item on the CCTV evening news.
[198] Pro-Beijing Hong Kong journal Ta Kung Pao reported that central authorities, fearful of the effect of mass lawsuits, held a meeting with lawyers' groups on 14 September, asking them to "act together, and help maintain stability".
Adulteration on such a scandalous scale occurs in societies with a toxic combination of characteristics: a fast-growing capitalist economy coupled with a government unable or unwilling to regulate the food supply.
[207] An article published in the San Francisco Chronicle likened the regulatory failures of the milk scandal to the distressed assets in the subprime mortgage crisis, and questioned whether regulators in either case ever understood or truly monitored the extent of the danger.
[213] One analyst, Willy Lam, a Senior Fellow at The Jamestown Foundation, indicated that CCP's pervasive control over political and economic resources has resulted in a lack of accountability in government systems.
[213] The Times reported that while one child in 20 in Shanghai could have kidney damage as a result of drinking contaminated formula milk, on the other hand, "like the emperors of old, the new communist elite enjoy the finest produce from all over China, sourced by a high-security government department.
"[214] Access Asia, a Shanghai-based consumer consultancy, said Fonterra was an example of western executives in China "believ[ing] advice in business books that they must avoid making their local partners 'lose face' at all costs".
[61] Bandurski cited warnings on 9 October 2008 issues of Nanfang Daily and the Information Times for consumers to be aware of that problematic dairy stock (that produced before 14 September) have reappeared in some stores under cover of aggressive promotions.
[234] Jorgen Schlundt, head of food safety at the WHO criticised China's food-safety system for being "disjointed", saying that "poor communications between ministries and agencies may have prolonged the outbreak of melamine poisoning.
A senior Agriculture Ministry official said that of a quarter of a million feed-makers and animal farms inspected for melamine contamination, inspectors found more than 500 engaged in "illegal or questionable practices".
Wu Heping, secretary general of the Heilongjiang Dairy Industry Association noted that between 75% and 90% of raw milk in some provinces had failed to reach the old protein level standard (in place since 1986) in 2007 and 2008.
