This morning we tried to make the point that the very nature of commerce in China-- in Asia really-- is built on fraud and corruption. Reactionary American politicians like Pat Toomey (R-PA), Ron Johnson (R-WI) and John Boehner (R-OH) admire China so much-- Communism or not-- because their financial and commercial system embodies the very depths of caveat emptor taken to the extreme. In two weeks I'll be back in China and, I have to admit, I know I have to be warier than in most places about what I consume. What's in the bottled water? How safe is it to eat in a restaurant, even a highly rated one?
So it was with some interest that I noted yesterday that China will be handing out the death penalty for food safety violators. An announcement like that presupposes some real problems that need to be addressed. Their highest court has ordered lower court judges to toughen up the sentences for people violating food safety standards "amid deepening public concerns over the country's food safety following a wave of recent scandals." If someone dies because of food safety violations, the death penalty is now in order-- and government officials taking bribes to protect the criminals will also be facing harsher penalties.
From milk laced with melamine, pigs fed with performance-enhancing drugs to watermelons juiced up with growth-stimulating chemicals, a series of recent scandals have outraged Chinese consumers, despite ramped-up government crackdown and state media campaign against food safety violations.
From last September to April this year, Chinese courts have tried and convicted 106 people accused of violating food safety, including two who received life imprisonment last month in a "melamine milk" case, Xinhua reported.
As vegan as I can be-- especially when traveling in dodgy countries-- I'm not worried about being fed dog meat disguised as something else. But I am interested in the new organic food movement started to sprout up in China's cities. Can it be trusted? Maybe...
In recent years China has been hit by a number of food scandals and fears about safety have lingered. In 2008, 300,000 babies became seriously ill and six babies died after being given formula contaminated with the industrial chemical melamine. In April this year, police seized 40 tons of beansprouts which had been treated with dangerous growth promoting chemicals and hormones, while this month, watermelons started exploding in the fields because they had been treated with too much accelerant.
In March health officials discovered pork that glowed and iridescent blue in the dark because it had been contaminated by a bacteria.
Amid the scares it was reported that China's government departments were running their own organic farms to feed staff, sparking criticism that officials were putting their own safety before that of the people. ... [O]rganic farmers and a host of co-operative schemes that lease small parcels of land to urbanites who want to feel the soil under their fingernails-- not unlike British allotment schemes-- report business is suddenly booming.
Peng Xunan, the founder of the "Farmlander" allotment scheme that has 200 sites across China said the plots were being rented in ever-growing numbers, and no longer just be pensioners looking to occupy their time.
"I'd say it was split three ways between families who want to teach their children where food comes from, older people in their retirement, but in recent months definitely a growing number worried about food safety concerns after all these reports of lax food safety," he said.
Interestingly, the other China-- Taiwan-- is having a similar situation, with legislators urging tougher penalties for tainted food and better regulations for factories manufacturing food products, particularly sports drinks, juices, tea drinks, fruit jam or syrups, tablets or powders, all of which have been found to be poisoned with plasticizers.
A legislator of the ruling Kuomintang proposed yesterday to revise regulations to levy stiffer penalties on suppliers of food products that threaten consumers' health, establish an information system for all products, and change the listing of plasticizers in the second category of toxic chemical products.
...Chang pointed out that the current law only stipulates fines between NT$60,000 and NT$300,000 for using plasticizers like carcinogen di(2-ethylhexyl) phthalate (DEHP) or other toxic substances in food and beverages, not enough to deter unconscionable food processors and suppliers from harming consumers.
An integrated registration mechanism should be set up to record all information concerning raw materials, components, additives, manufacturing and packaging to help manage every step of the food and beverage supply chain, Chang said.
Such a product identity system will also help to track products, he added.
Oh-- and the crackdown and regulations... that's not what Toomey, Johnson and Boehner admire about China.
UPDATE: A Cautionary Tale
This warning about China from Richard McCormack is from the William J. Holstein blog and it makes a good point about the dangers of outsourcing and offshoring to the outsourcers and offshorers.
Thousands of American companies that have moved production to China to take advantage of cheap labor might want to consider a case study that is unfolding for a U.S. manufacturing company. Fellowes Inc., one of the world's largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.
The company's Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.
The Itasca, Ill.-based company has lost $168 million worth of business and is no longer able to produce personal shredders for the world market. It has taken its case to Chinese courts, to no avail. It has pleaded with members of Congress and federal agencies, with no results.
Fellowes entered into the joint venture in China in 2006 with a company called Shinri to build a factory in southern China to manufacture inexpensive shredders. Shinri is part of a large holding company called New United Group owned by the Zhou family. Fellowes and Shinri produced shredders bearing Fellowes' brand and incorporated Fellowes' proprietary product and process technology. The shredders were produced exclusively for sale to Fellowes and its subsidiaries. Under the agreement, Fellowes owned the tooling and intellectual property used to manufacture the shredders in the factory. The joint venture manufacturing facility had 120 Chinese suppliers.
"For over three years, this engagement resulted in a very productive relationship, with Shinri manufacturing and shipping our goods to Fellowes' locations throughout the world," says James Fellowes, a third-generation chairman and CEO of Fellowes Inc. "Shinri enjoyed a 100 percent-plus return on investment for each of the years and this return on investment was always paid on time."
But in 2009 everything changed when the leadership of the Chinese company shifted to another Zhou brother. Over the next year, the Chinese company "gradually attempted to usurp control [of our operations] in direct violation of the joint venture agreement," Fellowes told a recent hearing of the House Foreign Affairs subcommittee on Asia and the Pacific. "Shinri methodically imposed unreasonable requirements on Fellowes in an effort to extort more profit and ultimately control the global shredder business in direct violation of our contract."
Shinri insisted that Fellowes assign its 100 percent-owned tools to the joint venture. It required that Fellowes assign 100 percent of its engineering capability and its 100-percent owned Chinese sales division to the joint venture. It told Fellowes it must increase its prices immediately by 40 percent. It told Fellowes that it had to unilaterally contribute over $10 million to the joint venture and if it didn't "then Shinri would close down our operation as the legal representative of the joint venture," says James Fellowes. "When Fellowes refused these illegal demands Shinri proceeded to destroy our business."
Starting on August 7, 2010, Shinri started to obstruct shipments of shredders from the factory, forcing the joint venture to stop production. "It placed security guards and trucks at the gates to prevent the entrance of our people, the shipment of our goods and the transfer of our wholly owned assets," says Fellowes. "They expelled Fellowes' appointed management personnel at the facility and they illegally detained Fellowes' injection molded tools. This ultimately led to the bankruptcy of the joint venture."
James Fellowes immediately flew to Changzhou to meet with Chinese government officials. "They sympathized with our plight but they were either unable or unwilling to force our Chinese partners to open our factory or facilitate a purchase of the joint venture by Fellowes. The cumulative impact of these actions is an economic loss totaling over $100 million to Fellowes."
Fellowes has recently learned that Shinri is planning to compete directly against it in the shredder business using Fellowes' custom molding tools "that represent the embodiment of Fellowes' engineering investment and intellectual property," says the company CEO.
There's more... mostly about how impotent Congress is to stop this kind of theft. Maybe the fact that John Boehner owes his speakership to illegal campaign contributions from China, via the U.S. Chamber of Commerce, has something to do with that, though.
