In breaking news, New Zealand Prime Minister Helen Clark has announced that upon receiving notice on 5 September from Fonterra, which owns 43 percent of China-based joint venture, Shijiazhuang Sanlu Group Co Ltd, the company implicated in a tainted infant formula investigation, her government convened a senior ministerial meeting that concluded that diplomatic intervention was necessary.
The New Zealand government determined that local government officials in Hebei province, where San Lu is located, had blocked Fonterra's efforts to have a full recall of the tainted product. Fonterra is now reported to have been notified by San Lu on 2 August of the problem.
Clark's government blew the whistle on the local government obstruction to the Chinese government in Beijing on 9 September. Swift central government action has subsequently been taken by the Chinese, resulting in arrests, recall of the product, and the cessation of Sanlu production.
Babies from poor rural Chinese families are reported to be heavily represented amongst the children sickened by San Lu's "Bei Bei Infant Powder". The formula is particularly attractive to these families because of the low 18 yuan price compared to higher priced imported brands.
San Lu is reported by The South China Morning Post to have known of production problems since March, to have corrected contamination issues by 6 August, but only publicly admitted the contamination last week.
Who, one wonders, owns the majority stake in San Lu? San Lu itself has been in business over 50 years which suggests at least in the past it was a state owned enterprise. The dominant partner today is the Shijiazhuang Dairy Group. Chinese business is often linked closely to local government authorities either in terms of ownership or regulatory control, that to outsiders at least smacks of what in the past has been termed "crony capitalism", if not defunct socialism. The lesson of the socialist market economy in China continues to be that the poor, those supposedly who should receive the most political and social protection, are likely to be the last to receive it.
Fonterra still doesn't think such a significant public health problem created by one of its joint ventures for its most vulnerable consumers - infants - is worthy of an official statement on its web site, as of late 14 September. Plenty of pictures of smiling Asian children consuming milk, but no statement of responsibility or a plan of action to remedy the situation. Perhaps they'll get around to it eventually when they're good and ready.
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