Fonterra’s problems continue to mount in the melamine-tainted infant formula scandal in China involving its minority-owned San Lu joint venture.
The number of Chinese infants made ill by the toxic formula has now risen to over 13,000 hospitalised, with 4 deaths being linked to the formula. The numbers requiring clinical care but not hospitalization has climbed to greater than 54,000 children, according to the Xinhua news agency. China's chief quality supervisor Li Changjiang, director of the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ), has resigned. Wu Xianguo, the Communist Party chief of Shijiazhuang, the capital of northern Hebei Province was also sacked on Monday. The New Zealand government, through Prime Minister Helen Clark, has now criticised Fonterra’s ineffectual crisis management, saying that the cooperative had failed to act fast enough to alert Chinese national authorities to the health safety problem and for its 4 delay in publishing information in New Zealand on the problem, points made in earlier posts on this blog as the story broke. It’s about time the 12,000 dairy farmer stockholders of Fonterra called for the resignation or firing of the executive responsible for the mis-management of Fonterra’s interests in San Lu and the consequent loss of buyer confidence in the Fonterra brand in some international markets.
Fonterra ought to issue a public apology to its customers for its failure to ensure adequate quality control and for the harm done to its most vulnerable consumers, infants. It ought to also take concrete steps to assist in the recovery of these children. Failure to do so will demonstrate Fonterra only pays lip service to the concept of corporate social responsibility.
Showing posts with label Shijiazhuang Dairy Group. Show all posts
Showing posts with label Shijiazhuang Dairy Group. Show all posts
Tuesday, September 23, 2008
Sunday, September 14, 2008
New Zealand Government Blew Whistle to Chinese Goverment on Fonterra Subsidiary
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.
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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