China's Growing Counterfeit Dilemma
At CSCC, we have been watching the continuing saga on counterfeit foodstuffs coming out of China. The country has always been known for counterfeit “Channel” and “LW” apparel and leather goods as well as pirated DVDs of American blockbuster movies. But can you believe that even edible products have been given that same counterfeit treatment?
For years reports had come out of China about contaminated and/or counterfeit foodstuffs. For example, in late 2003, soy sauce made out of human hair collected from the floors of barber shops and salons was discovered. In April 2004, global news reports revealed a fake baby formula scandal that caused the deaths of as many as 200 babies. But at the time, such incidents affected only consumers in China and those of us in developed countries just shrugged and said, “Gee, I’m glad those sorts of things don’t happen here.”
After all, in the US, the Food and Drug Administration (FDA) screens products that enter our food supply, and presumably other developed nations had similar government agencies and procedures to keep these counterfeit products out.
How quickly our naïve notions crashed once American pets began to fall ill and die and counterfeit toothpaste forced American consumers to second guess the trust they had placed in some American brands.
So what can we do about this issue?
As consumers, we can embrace the idea of buying local. This is a movement that has already taken root among environmentally conscious consumers eager to reduce the carbon emissions associated with transporting food from distant farms to local grocery outlets. So in addition to the assurance we get from buying foodstuffs that we know have met minimum FDA standards in its handling, manufacture, and claims, we can get satisfaction in knowing we are supporting the local economy and doing our part for the environment also.
As businesses that source foodstuffs, drugs, and cosmetics from China or anywhere else, more rigorous monitoring of the supply chain is necessary, as well as educating supply chain partners about FDA standards and reducing price pressures on suppliers so they don’t feel the need to cut corners on ingredients and safe manufacturing processes (full disclosure: Shuster Laboratories, a provider of food safety and development services, is a sister company to CSCC). The FDA cannot realistically inspect every container of foodstuffs that crosses the border into the US and the Chinese government has repeatedly shown it has limited enforcement capacity to control the many thousands of factories that exist in the country. Therefore, much of the “policing” will have to be done by the brands and retailers that have their reputations on the line.
On the part of the US government, the FDA has asked for almost $500M in funding for its Foods Programs in 2008, which will include increased enforcement capacity relating to unsafe foods, drugs, and cosmetics.
As for the Chinese government’s response, purging officials from its food and drug agency is a start, although execution of the agency’s officials is not the most uncontroversial way to go about it. But it will be interesting to see how the government will increase its enforcement capacity and prevent future incidents of corruption within the agency’s ranks. Beijing needs to take more decisive action than laying about blame and executing people to keep food and cosmetics manufacturing investment within its borders.
Being in the auditing business, CSCC has seen an interesting trend in recent years where brands and retailers are again opting to source apparel and other consumer goods domestically. We can only speculate as to the reasons, but quality control and the demand for faster concept-to-market pressures are likely the main impetus for this trend. But unlike the apparel industry, counterfeit foodstuffs and drugs carry a very real risk of illness or death of American consumers -- simply too high a risk for American brands and retailers to bear. The continuation of such uncertain circumstances in China for any length of time will force companies to bring the manufacture of such items back to American soil where quality can be controlled more closely and corruption is less rampant.
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June Ip is the Manager of Corporate Communications for CSCC. She is an adventurous eater, having eaten such delicacies as chocolate-covered grasshoppers, fried ants, and snake soup during her travels. She has not, however, knowingly consumed hair soy sauce nor would she be interested in doing so.
