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A number of internationally known brands including Nestle, Kraft, Haagen-Dazs, KFC and Heinz have been relegated to Chinese consumer blacklists over the past year amid controversy over questionable food quality standards.

Consumers accuse multinational firms with good reputations in Western countries of adopting double standards, but experts say that the controversy shows how Chinese shoppers are becoming increasingly aware of their interests. This can also lead the way to strengthened government supervision.

On March 15 last year, environmental group Greenpeace reported that products from two leading US food manufacturers Kraft's Ritz biscuits and Campbell corn soup contained genetically engineered (GE) soybeans. Kraft and Campbell had previously agreed not to use GE ingredients in Europe, but haven't done so in China, Greenpeace said.

Two days after the Ritz biscuits report, the Chinese media was flooded with news that Sudan I a red, chemical dye thought to cause cancer had been discovered in two products sold in China: KFC's New Orleans Roast Chicken Wings and New Orleans Roast Chicken Legs. Sudan 1 is classified as a carcinogen by the International Agency for Research on Cancer, and is banned under European Union regulations.

In another scandal involving a multinational brand, Haagen-Dazs was found producing ice cream cakes without a permit next to a toilet and rubbish bin in an ordinary apartment in Shenzhen.

All of these discoveries happened within a few months of each other, so leading Chinese Internet portal sohu.com conducted an online survey last June. Out of 96,218 respondents, 56 per cent say they believe the scandals were just the tip of the iceberg. Three-fourths say they will never trust those brands again and will be cautious when buying their products.

"International companies should pay close attention to quality guarantees and the safety of their products," says Zhang Wenkui, vice-president of the Corporate Research Institute, affiliated with the Development Research Centre of the State Council. It can take decades to establish a brand, a company's reputation can be destroyed overnight.

Crisis management

The survey also found that a multinational's initial response to a scandal attracts even more consumer attention, with 96 per cent of respondents saying companies have a responsibility to stop production and sales when any problem is found. Products should be immediately recalled in these situations, the respondents added.

Approximately 98 per cent agree that a responsible corporate citizen should immediately inform consumers when it discovers quality or safety problems.

Nestle issued an apology on June 5, 10 days after excess iodine was detected in its Jin Pai Growing 3+Milk Powder for babies and young children. It insisted that the high iodine levels were not a threat to public safety.

"We apologize for deviating from national standards regarding the iodine content of some Nestle milk-based powder products," the company said. It refused to pull the powder off store shelves or compensate consumers,howerver.

Fang Shumin, mother of a three-year-old baby, says that she was shocked to hear that iodine levels in Nestle Jin Pai Growing 3+Milk Powder could harm babies.

"I'm even more astonished that this big international company did not inform consumers immediately and refused to pull the products," says Fang, adding that she will never buy any of Nestle's products again.

Josef Mueller, president of Nestle China, made a public appearance as a featured guest on China Central Television's BizChina programme, where he apologized and repeated the company line.

"This happened in spite of our total commitment to comply with national standards," Mueller said.

Not surprisingly, critics are saying the apologies have come a little too late for the company to reverse the damage done in the minds of many Chinese consumers.

Qiu Baochang, a lawyer for the China Consumers' Association, was quoted as saying Nestle was only reacting to the negative publicity, and that the apology was only a "late response" to pressure.

An online survey taken suggests up to 87 per cent of consumers will stop purchasing Nestle products.

Market improvement

Multinationals have managed to get away with shoddy practices and have largely escaped serious punishment. The market is simply too immature for the authorities to be able to effectively monitor the food production industry, Zhang says. But foreign companies usually have their own corporate codes, which are generally higher than China's national standards, he adds. Problems only occur when some multinationals loosen standards or take advantage of lax supervision, loopholes and low public awareness.

Penalties are not strict enough to discourage this and government roles have yet to be clearly defined at the departmental level, leading to overlapping administrative measures or inactivity. There is an urgent need for established product quality supervisory and recall systems throughout the country, along with new legislation.

"China's food safety authorities are busy updating standards, and increasing the use of new materials and new technology," says Zhang Renwei of the Shanghai Food and Drug Administration. But new standards must be based on research and data, two areas where China is still quite weak.

"The most we can do is to learn from developed countries."

(China Daily 03/13/2006 page5)