Friday, September 26, 2008


The number of children affected by melamine adulterated infant formula in China continues to grow. According to the World Health Organization Outbreak Report (dated September 22) 40,000 children in China have been presented for medical treatment, and, at that time 12,000 were hospitalized. Four days ago there were three confirmed deaths related to the products, and, according to the WHO at least one child in Hong Kong has been hospitalized because of the poisoned formula.

While the WHO is, of course, an official and fairly reliable source its updates are often not "breaking news". More recent reports such as one from the CBC yesterday put the number of cases at up to 53,000 and the number of deaths at four (so far).

Meanwhile different governments are taking the matter with different degrees of "seriousness". Yesterday the European Union banned all imports of dairy based child and infant products from China, and India imposed a three month ban on all dairy based products from China according to Bloomberg.Com. In the USA and Canada so far only certain products have been flagged for recall. These include:

-Mr. Brown 3-in-1 Instant Coffee

-Nissin Cha Cha Deserts

-White Rabbit brand candies.

In Canada, at least, infant formula from China was previously prohibited from import, but it may still be available for sale, imported illegally given the lax state of inspection, at Asian food stores. The reader should note that none of the above three products that have been flagged so far are exactly "infant related" (unless your baby has to start his or her day with a good stiff cup of coffee). Like the pet food scandal last year the likely course of this story will be that gradually more and more products will be implicated, and governments such as those of the EU and India will be seen to have taken the prudent course, rather than depending upon "inspection" regimes that have been proven to be haphazard and the furthest thing from complete. According to the CBC article mentioned above officials from the Canadian Food Inspection Agency have said that a complete ban on Chinese dairy based products would be an "over-reaction" as "many are still safe". Does this remind anyone of what happened last year with pet foods ? It also begs the question of "how the hell do they know?". Have they checked each and every product, in all its various shipments (batch #s from China may be next to useless) ? That should take them the next two decades, devoting all their resources to this one question (2 centuries if a new Conservative government has its way and depends on the 'self-regulation-cough,cough, of the corporations). about a poll of the parents in China about what would be an "over-reaction".

No doubt this story will grow in the days to come. To keep abreast of it please check the WHO Disease Outbreak Reports mentioned above. From an American perspective watch the Food and Water Watch website. The Center for Science in the Public Interest website also has current news, but their site is difficult to navigate to find current matters.

Despite the sang-froid of the Canadian officials some Asian food chains such as T&T have responded by pulling many more products than those named by the CFIA. Wise move actually. Down Hong Kong way, according to Canwest News Service, foods made under the very famous Heinz brand name, have been pulled by the company because melamine was found in some of the formula. Heinz none the less.

Ah, the age of globalization. Continued scandals such as this are continued proof of the anarchist contention that production of essential things such as foodstuffs should be as decentralized and local as possible. They are also proof of the anarchist contention that people cannot rely on the "benign" procedures of government and business for their protection. Independent organizations, whether they be unions, communities or research and regulatory agencies not funded by government, are as essential component of safety in a global world.

Here's yet another view, from the IUF website, about the meaning of this scandal, one that says that such things are not the result of occasional crooked Chinese businessmen but rather of the whole corporate system under which the whole world suffers today.

Melamine milk contamination exposes the reality of 'global brands':

Behind the melamine milk scandal lies an emerging crisis in corporate branding. One of the reasons for the heavy promotion of "global" brands was so that consumers wouldn't know (and would eventually stop caring) where products are made. Now with a major food contamination scandal that has killed at least 4 babies in China and sickened thousands, consumers are asking why their favourite "local" ice creams, biscuits and dairy products are made overseas.

The major transnational food companies spent the 1980s in a frenzy of mergers and acquisitions, buying up local brands and grabbing bigger market shares. The takeover boom continued into the first half of the 1990s and was complemented by a massive shift in company financial resources into marketing these brands, building an image and creating consumer loyalty. By the mid-90’s companies like Nestle, Unilever and Kraft had built up extensive brand portfolios and held the largest market shares in a range of food products - everything from cooking oil to ice cream, instant coffee and biscuits. They were also under investigation for monopoly practices and price fixing in several countries as a result.

By the end of the 1990s the new logic of financialization set in. The brands themselves became valuable financial assets and their value could be boosted through a blend of Wall Street wizardry and aggressive marketing rather than better manufacturing. So there was an irrational shift to rationalization: cutbacks, restructuring and consolidation. Less is more. Now fewer brands were better. By focusing on a few global brands in overseas markets the financial value of these brands would skyrocket. Nestle and Unilever called these their “billion dollar brands”, while Kraft would “shrink to grow” - with just 10 global “power brands” by 2008.

With the focus on “global brands" many of the popular local brands bought up in the 1980s and 1990s were sold off or simply disappeared. Local jobs disappeared too with them as plants were closed, merged or sold-off. In some cases the global brand was simply the logo alongside the local brand name ... then the name disappeared, and the jobs. Unilever’s "Heartbrand"” ice cream logo, for example, carries global recognition, but is known as “Walls” in the UK and Asia/Pacific regions as well as Selecta (Philippines), Kwality (India), Algida (Italy), Langnese (Germany) and Kibon (Brazil).

With global brands location no longer mattered. Production was relocated overseas (and relocated again and again), while aggressive brand marketing ensured that consumers continued to believe they were buying a locally made product with a global identity. The locally branded frozen fish stick could make a round trip detour of thousands of kilometers for filleting in China on its way to the supermarket shelf, with no questions asked.

The power of the global brand for companies like Nestle, Unilever and Kraft lies with their ability to shift production to countries like China, while loyal consumers believed it was the same product. As an added bonus, the companies could trumpet their "green" credentials and commitment to tackling global warming while loading up the products with thousands of additional food miles. Behind the familiar local brand stands a caring, concerned global company…

Consumers loyal to the brands would also continue to believe that their favorite Kraft, Nestlé or Unilever products were made by… Kraft, Nestlé or Unilever. The global branding exercise provided a convenient cover for these companies to outsource a significant portion of production to third party contractors, known as "co-packers", to manufacture their branded products. For example, one of the melamine-contaminated Nestlé Purina pet food products recalled in North America last year, after thousands of pets were sickened or died, was made by just such a North American co-packer.

Consumers who knew the reality of subcontracting were nevertheless supposed to derive comfort from the brand owners' supposed commitment to rigorous quality control. But finance-driven global branding encouraged a tidal wave of casualizing and subcontracting work within the companies' own operations. Even quality control personnel are managed and hired as casual employees through labour hire agencies. And since they're not formally employed by the company, they can't join the union.

The contamination of milk with melamine in China has now exposed the weakness of these powerful global brands. People throughout the Asia/Pacific region are suddenly finding out that their branded biscuits, ice creams and dairy products are made in China. When did that happen? And how long will it take for these products to find their way onto grocery shelves in the rest of the world - if they haven't already? Meanwhile the companies are rushing to assure consumers that products made outside of China are safe. But who is going to look beyond the global brand to the fine print that reads “Made in ...”? Too late. Companies like Nestle and Unilever long ago obscured the meaning of “made in” to refer to anything from packaging to the printing on the package!

Even the brands of companies like Fonterra and Friesland (both dairy cooperatives that went global) could suffer serious damage to their brands. Friesland’s Dutch Lady dairy products were pulled off supermarket shelves in Southeast Asia after contamination was found in Singapore. Instead of importing Dutch Lady from nearby Malaysia (where quality control is strictly regulated and the workplace is unionized) Friesland was importing from its factories in China where it has a minority ownership stake. Meanwhile Fonterra is trying to explain why it is Sanlu (its joint venture partner in China) and not Anmum made in New Zealand (strictly regulated quality control and unionized) that is tainted with melamine....

As the contamination scandal grows there is a greater likelihood that consumers will react against the global brand regardless of whether it contains milk or milk powder from China. The global brand will be tainted. Consumers will now associate Oreo (Kraft’s top global “power brand”, recently pulled from the shelves in Singapore after melamine turned up), Friesland’s Dutch Lady and Nestle’s Dreyer’s ice cream with melamine. Expensive and aggressive marketing may fix this. Maybe.

The financial impact of product recalls and lower sales (and possible lawsuits) and new marketing drives will be passed on through the company and won’t be limited to the operations in China. Workers in other countries will face more cost cutting and restructuring as a result.


Anonymous said...

This article was originally posted on the IUF website and should be acknowledged. Thanks!

mollymew said...

Sorry about that. I tagged the reprint onto the end of my own speil and didn't do my usual mention.