Over the last several months, the international community—including the STR family (see “China’s Growing Counterfeit Dilemma” in CSCC blog article from July 13th)—has been keeping a close watch on the quality and food safety scandals emerging from China. Ranging from contamination of toothpaste to pet food to counterfeit drugs, it is becoming increasingly apparent that some of the bargains from China come with a price that can no longer be ignored.
The Response from China
In response to the scandals and increasing lack of confidence in the safety of products “Made in China”, there have been a number of varied responses from Chinese officials. Perhaps the most dramatic was the execution of Zheng Xiaoyu, the head of the State Food and Drug Administration, for receiving bribes to accept counterfeit drugs during his tenure. But the problems ran much deeper than the mistakes of one person at the top and as cases of tainted food continued to make headlines, it was evident that the problems were much more pervasive throughout the food and drug manufacturing industry. Further investigations revealed the systematic disregard that some manufacturing facilities in China had for the laws, regulations, and industry standards of importing countries (Xinhua News Service).
Consequently, the Chinese government finally had to acknowledge the extent of the problem and has since taken steps to improve the foundation of the food and drug quality and safety mechanisms in place throughout China. One such improvement will be by the National Standardization Management Commission that intends to update and speed up revisions to national and industry standards on farm produce and processed food products, many of which are 12 years old (China Daily). Another step will be undertaken by the Chinese State Council that plans to place new controls on food and drug imports and exports, including inspections of 90% of all food products by 2010 (NY times). It was unclear how the controls would be implemented and enforced as well as how the inspection process would work. Finally, as announced last week by Vice Premier Wu Yi, there will also be a four-month nation-wide campaign to address quality and food safety issues (Xinhua News Service). This campaign is expected to result in the establishment of an integrated quality monitoring network for the production of goods and products and will primarily target products with a close link to human safety and health, such as farm produce and processed food. Again, specific details and methods of implementation have not been revealed.
Although these steps show progress in the right direction, the Chinese government continues to exclude other stakeholders such as the suppliers, buyers and even service providers, which are all critical to the success of quality and food safety assurance. Combined with patchy implementation of rules and regulations, it will be difficult to transform the political culture to one of compliance and transparency (NY Times). What can these other stakeholders do to contribute?
The Role of Domestic Regulatory Agencies
The responsibility for ensuring food safety in the country of consumption tends to fall on regulatory agents such as the United States Department of Agriculture (USDA) and the Food and Drug Administration (FDA), with the latter responsible for actual food inspections. With 650 inspectors to cover 60, 000 domestic producers and 418 ports of entry, the FDA inspectors are only able to check less than 1 percent of regulated imports (NPR). This means that at the ports of entry where the Chinese exports enter the system, very few shipments actually get inspected. If the shipment is selected for inspection, the inspector will determine whether it complies with the required domestic standards. If the container meets the standards, it passes through into the US and contents are then distributed to retail outlets for purchase. If it fails inspection, the container is shipped back to the country of origin.
Even though such a low percentage of shipments are actually inspected, the rate of refusal for Chinese Shipments is relatively high. In April of 2007, for example, 257 shipments from China were refused and shipped back (NPR). With 99% of shipments passing through the border without inspection, the only surprise is that there haven’t been a lot more cases of tainted food and counterfeit drugs than already reported. What is more, the FDA plans on closing nearly half of its 13 food-testing labs which means that even fewer samples will now be tested (NPR). Basically, the FDA is reducing their role in food safety assurance, effectively transferring accountability to importing food companies. In a letter written by the agency and sent to food manufacturers earlier this month, manufacturers were told not to depend on FDA testing to assure safety but rather to assume legal responsibility and make sure all the ingredients used in their products were safe for consumers (NPR).
With the FDA at limited capacity and assurance practices still questionable in China, products unfit for human consumption will continue to enter the US, placing the burden on consumers and forcing them to determine who to depend on and trust that their food is safe to eat?
The Role of Suppliers and Buyers
The risks in food sourcing have always been there but the severity of the problem indicates that business-as-usual can no longer continue and that consumers need to be assured by all members of the supply chain that they are performing their due diligence and complying with laws and regulations at their point of production. In the past, buyers would have used a number of strategies to compel suppliers to comply with their standards, including the cancellation of contracts and returning of shipments at the supplier’s expense. In many commodity supply chains today, however, Chinese goods and products dominate supply to such an extent that importers have little choice but to buy from them. In fact, some supply chains are now almost completely dependant on China and would be crippled if Chinese suppliers sold their products elsewhere. For instance, China has become the leading supplier of many food ingredients, such as apple juice, a primary sweetener in many foods; garlic and garlic powder; sausage casings and cocoa butter (NPR). In addition, China now also dominates and controls China controls 80 percent of the world's production of ascorbic acid, a valuable preservative that is ubiquitous in processed and other foods (Washington Post).
Despite the shift in power from buyer to manufacturer, the fact remains that suppliers must meet some of the requirements established by the buyers as well as those required under various trade agreements such as the Sanitary and Phytosanitary (SPS) Measures established by the World Trade Organization (WTO). To accomplish this, government and private industry (suppliers and buyers) need to work together to establish compliance programs and meet the necessary standards. For suppliers, this means improved transparency and accountability for quality and safety; these values need to be instilled throughout the corporate culture if improvements in the system are to be made. For buyers, this means better communication of expectations as well as a variety of methods of support to help implement the necessary system.
The Role of Service Providers
As representatives of buyers and retailers, our most fundamental role in ensuring the compliance of manufacturing facilities with laws and regulations is that of an independent third party monitor. Monitoring is standard practice in many industries and helps to verify supplier compliance. However, as compliance programs mature, many buyers are now realizing that monitoring is not sufficient in and of itself to bring about compliance and that additional methods such as educational seminars and focused consultations may be more useful than continued monitoring.
Upcoming food safety seminars
In recognition of the need to elevate general awareness about building safety assurance programs, training professionals from Shuster—CSCC’s sister company—will be hosting general seminars on Food Safety in Shanghai (9/17/2007) and Shenzhen (9/20/2007). These seminars are intended for a range of participants from suppliers to exporters of food products and nutritional supplements with an aim to help provide the tools and strategies required to develop a comprehensive and safe-sourcing program. Please see our website for more information.
Information in article obtained from:
- Xinhua News Service. “China takes measures to enhance product quality, food safety”. August 27, 2007. Accessed Sept 4, 2007.
- China Daily. “China to dust off food safety standards”. June 20, 2007. Accessed Sept 4, 2007.
- NPR. “As Imports Increase, a Tense Dependence on China” By Richard Knox, May 25, 2007. Accessed Sept.5, 2007.
- NY times. “China to Revise Rules on Food and Drug Safety”. By David Barboza, June 7, 2007. Accessed Sept.4, 2007.
- The Economist. “Stoking protectionism”. August 16th, 2007. Economist Intelligence Unit ViewsWire. Accessed Sept.5, 2007.
- Washington Post. “Tainted Chinese Imports Common In Four Months, FDA Refused 298 Shipments”. By Rick Weiss Washington Post Staff Writer, May 20 2007 (A01). Accessed Sept.5, 2007.