2008 Chinese milk scandal

Stripped shelves in a supermarket in China as a result of the contamination (September 2008)

The 2008 Chinese milk scandal is a food safety incident in the People's Republic of China involving milk and infant formula, and other food materials and components, which had been adulterated with melamine. With China's wide range of export food products, the scandal has affected countries on all continents. In November China reported an estimated 300,000 victims have been claimed; six infants have died from kidney stones and other kidney damage, 860 babies still hospitalized. The chemical appeared to have been added to milk in order to cause it to appear to have a higher protein content. In a separate incident, watered-down milk resulted in 13 infant deaths from malnutrition in China in 2004.

The scandal broke on 16 July, after sixteen infants in Gansu Province who had been fed on milk powder produced by Shijiazhuang-based Sanlu Group were diagnosed with kidney stones. After the initial focus on Sanlu, the market leader in the budget segment, government inspections revealed the problem existed to a lesser degree in products from 21 other companies, including Mengniu, Yili, and Yashili. The issue has raised concerns about food safety and political corruption in mainland China, and it has also damaged the reputation of China's food exports; at least 11 countries having stopped all imports of mainland Chinese dairy products. A number of arrests occurred as a result of the scandal; the head of Sanlu, seven local government officials, as well as the Director of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) have been fired or forced to resign in response to the incident.

The World Health Organisation referred to the incident as one of the largest food safety events it has had to deal with in recent years. It says the crisis of confidence among Chinese consumers would be hard to overcome. A spokesman said that the scale of the problem proved that it was "clearly not an isolated accident, [but] a large-scale intentional activity to deceive consumers for simple, basic, short-term profits."

In late October 2008, it was discovered that the problem had spread to eggs and possibly other food categories, as melamine was commonly added to animal feed despite a ban imposed in June 2007 following the scandal over pet food exported to the United States which was contaminated with melamine.

For timeline of events in the contamination, see Timeline of the 2008 Chinese milk scandal.

Melamine

Main article: Melamine

Melamine is used to manufacture melamine resin, a type of plastic known for its flame retardant properties and commonly employed in countertops, dry erase boards, etc. Melamine itself, as opposed to the resin, is nitrogen-rich and is sometimes illegally added to food products in order to increase their apparent protein content. It has also been employed as a non-protein nitrogen, appearing in soy meal, corn gluten meal and cottonseed meal used in cattle feed. Melamine is known to cause renal and urinary problems in humans and animals when it reacts with cyanuric acid inside the body, sometimes present in drinking water and in animal feed, so its use in food production is universally banned.

The Kjeldahl and Dumas methods used to test for protein levels fail to distinguish between nitrogen in melamine and naturally occurring in amino acids, allowing the protein levels to be falsified. Introduced into milk, it can help conceal its fraudulent dilution with water. Melamine adulteration of food products also made headlines when pet food was recalled in Europe and the U.S. in 2007.

Source of contamination

The World Health Organisation (WHO) said that melamine may be found "in a variety of milk and milk products at varying levels, from low ppb to ppm ranges." One academic suggests it may have been part of the food chain in China for a long time, as cyromazine (a melamine derivative) is a very commonly used pesticide in China. Cyromazine is absorbed into plants as melamine, and may therefore be present in the food chain, which includes poultry, eggs, fish, and dairy products. It is not known where in the supply chain the melamine was added to the milk. The chemical is not water-soluble and must be mixed with formaldehyde or another chemical before it can be dissolved in milk.

Due to poor animal husbandry, production and storage, the demand for milk far outstripping supplies, use of other potentially harmful chemical additives such as preservatives and hydrogen peroxide has been reported by independent media as being commonplace. Quality tests can be falsified with additives: peroxide is added to prevent milk going bad; industrial vegetable oil is emulsified and added to boost fat levels; whey is used to increase lactose content. However, the procurement chain is also implicated - milk agents are often politically well connected. Farmers report that salespeople had, for years, been visiting farm in dairy-cow areas hawking "protein powder" additive, which would often be delivered in unmarked brown paper bags of 25 kg each. A new version of "protein powder", capable of fooling dairies as to protein content, started being peddled approximately two years ago. Thus farmers either added melamine contaminant unwittingly, or turned a blind eye to milk adulteration to ensure their milk was not rejected. The big dairy producers were complicit in producing "test-tube milk."

Caijing reported that "spiking fresh milk with additives such as melamine" was no longer a secret to Hebei dairy farmers for the past two years. Due to fierce competition for supplies, and the higher prices paid by Mengniu and Yili, Sanlu's procurement became squeezed; its inspection system became compromised "as early as 2005 and allowed milk collection stations to adopt unscrupulous business practices", while government supervision was "practically nonexistent."

Caijing reported that the melamine in the tainted milk may have come from scrap melamine costing ¥700 per tonne - less than one-tenths of the price of 99% pure industrial grade melamine. The melamine production process produces pure melamine by crystallization; the melamine remaining in the mother liquor is impure (70%) and unusable for plastics, so it is scrapped. It said that Sanlu's baby formula melamine content was a result of tampering by adding low cost vegetable protein (such as low grade soya powder), and large amounts of scrap melamine as filler. The journal noted that low grade melamine would contain other more harmful material, such as urea, ammonia, potassium nitrate, and sodium nitrite. Among these, sodium nitrite is a known carcinogen.

Victims

On 17 September 2008, Health Minister Chen Zhu stated that tainted milk formula had "sickened more than 6,200 children, and that more than 1,300 others, mostly newborns, remain hospitalised with 158 suffering from acute kidney failure". By 23 September, about 54,000 children were reported to be sick and 4 had died. An additional 10,000 cases were reported from the provinces by 26 September. A World Health Organisation official said 82 percent of the children made ill were 2 years of age or below. The Hong Kong Centre for Food Safety said that 99% of victims were aged under 3 years. Ten Hong Kong children were diagnosed with kidney problems, at least four cases were detected in Macau, and six in Taiwan. Non-human casualties included a lion cub and two baby orangutans which had been fed Sanlu milk powder at Hangzhou Zoo.

The government said on 8 October it would no longer issue updated figures "because it is not an infectious disease, so it's not absolutely necessary for us to announce it to the public." Reuters compiled figures reported by local media across the country, and said the toll stood at nearly 94,000 at the end of September, excluding municipalities. Notably, 13,459 children had been affected in Gansu, Reuters quoted Xinhua saying. Henan had reported over 30,000 cases, and Hebei also had nearly 16,000 cases.

In late October, the government announced that health officials had surveyed 300,000 Beijing families with children of less than 3 years of age. It disclosed that approximately 74,000 families had a child who had been fed melamine-tainted milk, but did not reveal how many of those children had fallen ill as a result.

Due to the many months before the scandal was exposed, media suggests that official figures are likely to be understated. Kidney stones in infants started being reported in several parts of China in the past two years. A number of yet to be officially acknowledged cases were reported on by the media. However, those deaths without an official verdict may be denied compensation. On 1 December, Xinhua reported that the Ministry of Health revised number of victims to more than 290,000 and 51,900 hospitalised; authorities acknowledged receiving reports of 11 suspected deaths from melamine contaminated milk powder from provinces, but officially confirmed 3 deaths.

Companies

Sanlu

The scandal began with revelations of contamination of Sanlu milk products. The New Zealand dairy cooperative Fonterra, which owns a 43% stake in Sanlu, said they were alerted to melamine contamination on 2 August (almost a month before the issue became public), and claimed to have pushed hard for a full public recall. Although there was an immediate trade recall, Fonterra said that local administrators refused an official recall.

Warning signs ignored

A Shaanxi milk agent reportedly publicly discussed his fears about unauthorized substances being added to competitors' milk. His complaints to regulators and dairy makers in 2005 and 2006 never yielded any result; his story was picked up by China Central Television, who ran a report complete with footage of adulteration in progress, yet the Shaanxi Quality and Technical Supervision Bureau said they failed to find evidence of wrongdoing.

The bulletin board of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) indicated a rare occurrence of kidney stones in children–all causally traced to Sanlu milk formula–was flagged by at least one member of the public in June 2008 and by a urologist in a paediatric hospital on 24 July 2008. Neither received definitive replies. The paediatrician, who specifically asked the AQSIQ to refer his observations to epidemiologists, was asked to refer his query to the Health department.

In June, Jiangsu media reported a two-month surge in the number of babies diagnosed with kidney disease; in July, a parent of a sick baby in Hunan questioned Sanlu’s milk powder and complained to the AQSIQ. Gansu Province sent a report to the Ministry of Heath on 16 July to alert that one local hospital had identified an increase in the incidence of kidney ailments among babies in the months earlier, and that most victims had consumed Sanlu’s baby formula. The health ministry sent investigators to Gansu in early August.

Cover-up allegations

Fonterra notified the New Zealand government on 5 September and three days later, the Prime Minister Helen Clark had Beijing officials alerted directly. News reports began circulating in mainland China on 9 September, the news broke internationally a day later by Reuters. The state-controlled media report did not initially identify the company involved, postings on Tianya.cn, a Chinese social portal, named Sanlu as the culprit. Sanlu initially denied the allegations.

A State Council investigation revealed that Sanlu began receiving complaints about sick infants as far back as December 2007, but did no tests until June 2008. It said leading government officials in Shijiazhuang city had failed to report the contamination to provincial and state authorities (until 9 September) in violation of rules on reporting major incidents involving food safety. According to the People's Daily, Sanlu wrote a letter to Shijiazhuang city government on 2 August 2008, asking for help to "increase control and coordination of the media, to create a good environment for the recall of the company's problem products....to avoid whipping up the issue and creating a negative influence in society."

According to accounts confirmed by media reports and health officials, the company tried to buy off critics and cover up the contamination. In a memo dated 11 August, Beijing-based public relations agency Teller International advised Sanlu to seek cooperation with major search engines to censor negative information. It was reported that the agency had repeatedly contacted key account staff at Baidu and proposed a ¥3 million (US$440,000) budget to screen all negative news. After the memo began circulating on the internet, Baidu denounced in a communiqué on 13 September 2008 the approaches by said agency on several occasions, saying that the proposal was firmly rejected as it violated their corporate principles of unbiased and transparent reporting.

Helen Clark said of the local government: "I think the first inclination was to try and put a towel over it and deal with it without an official recall." Western media speculated that China's desire for a perfect summer Olympic Games contributed to the delayed recall of the baby milk, citing a guidelines allegedly issued to Chinese media that reporting food safety issues, such as cancer-causing mineral water, were "off-limits" although the Central government denied issuing this guidance. Hebei provincial vice-governor said his administration was only notified by Shijiazhuang on 8 September. However, a journalist at Southern Weekend wrote an investigative report in late July for publication about infants who had fallen ill after consuming milk powder from Sanlu. Six weeks later, senior editor Fu Jianfeng revealed on his personal blog that this report had been suppressed by authorities. While this was happening, Sanlu was honoured in a national award campaign called "30 Years: Brands that Have Changed the Lives of Chinese." The press release on the award, written by a senior public relations manager at Sanlu, passed as news content on People's Daily and in other media.

Sanctions

On 15 September, the company issued a public apology for the contaminated milk powder; Sanlu was ordered to halt production, and to destroy all unsold and recalled products. Authorities reportedly seized 2,176 tons of milk powder in Sanlu's warehouses. An estimated 9,000 tons of product had been recalled.

Tian Wenhua, Chairman and General Manager of Sanlu and Secretary of the Sanlu Communist Party chapter was stripped of her party and functional posts during an extraordinary meeting of the Hebei provincial standing committee of the CCP; four Shijiazhuang officials, including vice mayor in charge of food and agriculture, Zhang Fawang, were reportedly removed from office. Shijiazhuang Mayor Ji Chuntang resigned on 17 September. Li Changjiang, minister in charge of the AQSIQ, was forced to resign on 22 September after the State Council inquest concluded that he was responsible for the "negligence in supervision". Investigators also blamed the Shijiazhuang government. Local Party Secretary Wu Xianguo was fired on the same day.

Arrests

Sanlu GM Tian was charged under Articles 144 and 150 of the criminal code. A spokesman for the Hebei Provincial Public Security Department said police had arrested 12 milk dealers and suppliers who allegedly sold contaminated milk to Sanlu, and six people were charged with selling melamine. 300 kg of suspicious chemicals, including 223 kg of melamine, were confiscated. Among those arrested were two brothers who ran a milk collection centre in Hebei for allegedly supplying three tonnes of adulterated milk daily to the dairy; the owner of another collection centre which resold seven tons of milk a day to Sanlu, was arrested, and his operation was shut down.

Zhang Yujun (alias Zhang Haitao), a former dairy farmer from Hebei, produced more than 600 tons of a "protein powder" mixture of melamine and maltodextrin from September 2007 to August 2008. He and eight other traders, cattle farm owners and milk purchasers who bought the powder from him were arrested in early October, bringing the total to 36.

During the week of 22 December 2008, 17 people involved in producing, selling, buying and adding melamine in raw milk went on trial. Tian Wenhua, former Sanlu general manager and three other company executives appeared in court in Shijiazhuang, charged with producing and selling milk contaminated with melamine. According to Xinhua, Tian pleaded guilty, and told the court she learned about the tainted milk complaints from consumers in mid-May. She then apparently headed a working team to handle the case, but did not report to the Shijiazhuang city government until 2 August.

Effect on the company

The value of the company plunged as a result of the scandal. On 24 September, Fonterra announced that it had written down the carrying value of its investment by NZ$139 million (two-thirds), reflecting the costs of product recall and the impairment of the 'Sanlu' brand because of the "criminal contamination of milk". By 27 September, China Daily reported that Sanlu was close to bankruptcy, and might be taken over by the Beijing Sanyuan Foods Company. The company is also facing lawsuits from parents (see #Anger at Sanlu).

The Beijing Review said that Sanlu expects to have to pay compensation claims totalling 700 million, and it became clear that the company would be broken up and sold.

On 25 December, Shijiazhuang court accepted a creditor's bankruptcy petition against Sanlu. Media commentators expected the Sanlu distribution network to be sold.

Chinese majors

On 16 September, the AQSIQ released test of samples from 491 batches of products sold by all 109 companies producing baby milk powder. It said that all 11 samples from Sanlu failed the melamine test. Sanlu, whose products sell at half the price of equivalents on the market, recorded the highest levels of contamination among all the samples tested, at 2,563 mg/kg or parts per million ("ppm"). Tainted samples were found among 21 other suppliers, where concentrations ranged from 0.09 to 619.00 ppm.

There was melamine contamination in 10% of liquid milk samples from Mengniu and Yili and 6% of those from Bright Dairy. On discovery of contamination, the three major producers were all stripped of their status as 'Chinese national brands'. Yili, Mengniu and Bright Dairy & Food Co. recalled tainted milk powders and apologised in separate statements. Mengniu recalled all its baby formula, and trading in its shares on the Hong Kong Stock Exchange was suspended on 17 September. Shares in other dairy companies fell strongly the next day. Mengniu's CFO attempted to reassure consumers by offering a no-quibble refund on all products, and by drinking liquid milk in front of reporters in Hong Kong. He also said that its export products were less likely to be contaminated.

On 30 September, the AQSIQ announced test results of a further 265 batches milk powder produced by 154 different companies prior to 14 September, where it found 31 batches produced by 20 domestic dairy companies were tainted with melamine.

On 1 December 2008 China's Ministry of Health issued new figures for the number of children affected by tainted dairy products, saying that nearly 300,000 babies were sickened after consuming melamine contaminated milk powder. In response to the surge of contaminated Chinese products, the United States Food and Drug Administration last month(Nov 2008) opened its first overseas inspection offices, with bureaus in Shanghai, Beijing and Guangzhou.

Trade and industry impact

Chinese industry

The State Council ordered the testing of product of all dairy producers, and to this end, some 5,000 inspectors were dispatched. The mainland Chinese market has grown at an average annual rate of 23% since 2000. In 2006, milk production reached 30 million tons, ten times the volume of a decade before. It was valued at some ¥122 billion (US$18 billion) in 2007, and consumers have severely lost confidence in the industry.

The events have exposed the often incestuous relationship between local business and local government. In addition to the tax revenues to local authorities - Sanlu contributed ¥330 million in 2007, many companies invite local officials to become "silent partners" in their corporations - in return for "protection" at the political level; former Sanlu chairman Tian Wenhua, was made honorary deputy to the Provincial People's Congress. The scandal has also highlighted structural problems of inadequate production volume, inherent quality and poor production methods. The Inner Mongolia region produces over one-fourth of China's milk, and Mengniu and Yili have invested millions to establish state-of-the-art dairy facilities in its capital, Hohhot. The companies still rely on small-scale farmers for over 90% of their production because of the capacity constraint of the modern facilities. Both companies were said by farmers and agents to have habitually purchased milk which failed quality tests, for only two-thirds the normal price. A new policy was put in place on 17 September to stop that practice.

POS materials from Yili Dairy declaring clean bill of health from AQSIQ

Consumer panic resulting from the contaminated milk has lessened demand for dairy products, causing hardship to more than 2 million Chinese farmers who have nowhere to sell their milk, and no means to support their dairy cows. Farmers have been pouring away milk, and contemplating selling cows into a buyerless market.

Since the scandal erupted, sales have fallen by 30-40% on a comparative basis, according to the Chinese Dairy Association. The Association estimates that the financial effect of the order of ¥20 billion, and forecasts that confidence may take up to two years to be fully restored. In an effort to prop up sales and retain their market share, dairy firms have cancelled their common accord not to use promotions in order to fight the sales decline: substantial discounts (including BOGOF), free gifts and other point of sale incentives were being offered to shoppers. Their new products are conspicuously labelled "safety inspection passed" to allay consumer fears.

Foreign operations in China

Mengniu-Arla, joint-venture between Danish/Swedish co-operative Arla Foods and Mengniu. halted production on 16 September 2008 after three out of 28 tests taken from Mengniu showed traces of melamine; contaminated batches had been recalled.

Mengniu, milk supplier to Starbucks, was replaced by Vitasoy when the coffee retailer eschewed milk in favour of soya milk in its China operations. KFC also suspended selling Mengniu milk.

Tokyo-headquartered Lotte Group, a major snacks maker, recalled its Koala's March cookies in Hong Kong and Macau because of contamination, and promised to "look deeply into all the details of the manufacturing process" in order to preserve customer confidence. The range was also ordered off Dutch and Slovakian shelves. Its Chocolate Pie was seized when samples tested positive in Malta.

On 29 September, British confectionery group Cadbury withdrew all of its 11 chocolate products made in its three Beijing factories, on suspicion of melamine contamination. The recall affected the mainland China markets, Taiwan, Hong Kong and Australia. Tests in Hong Kong found excessive amounts of melamine in China-made Dairy Milk products.

On 30 September, Unilever recalled its Lipton milk tea powder after the company's internal checks found traces of melamine in the Chinese milk powder used as ingredient. Heinz recalled cases of baby cereal in Hong Kong after discovering they contained melamine. Nestlé's factory in Heilongjiang was also implicated: the Taiwanese Department of Health forced the delisting of six Neslac and KLIM products on 2 October for containing minute traces of melamine, although the minister said they did not pose a significant health risk.

Since the milk crisis broke, Nestlé says it has sent 20 specialists from Switzerland to 5 of its Chinese plants to strengthen chemical testing. On 31 October, it announced the opening of a $10.2 million Beijing research and development centre, to "serve as the base and the reference in food safety for Nestlé in Greater China." Nestlé Chief Technology Officer said that the centre was equipped with "highly sophisticated analytical tools for detecting trace amounts of residues and undesirable compounds like melamine or veterinary drugs or natural toxins".

Olympics

There were concerns that dairy products consumed during the 2008 Summer Olympic games may have been contaminated. Li Changjiang, the then Director of AQSIQ reassured the international community that all the food, including dairy products, was indeed safe. "We took special quality management measures aimed at food supply for the Games."

Outside mainland China

PRC Customs said that exports of dairy products and eggs in 2007 were valued at US$359 million, a year-on-year increase of 90%. Since the news of the melamine contamination began to circulate, at least 25 countries stopped importing Chinese dairy products. A number of countries have imposed blanket bans on Chinese milk products or its derivatives —among which are Bangladesh, Bhutan, Brunei, Burundi, Cameroon, Chile, Colombia, Dominican Republic, Gabon, India, Ivory Coast, Maldives, Mali, Nepal, Papua New Guinea, Paraguay, South Korea, Suriname, Tanzania, Togo, and the United Arab Emirates — joining Indonesia, Taiwan, Japan, Singapore and Malaysia which have imposed specific bans on mainland Chinese dairy products which have tested positive for melamine. White Rabbit Creamy Candy was blacklisted after tests by health authorities around the world identified it as being contaminated.

On 25 September 2008 the EU announced a ban on imports of baby food containing Chinese milk. The European Commission also called for tighter checks on other Chinese food imports; isolated contaminated products were found in the Netherlands and the French authorities ordered all Chinese dairy products off shelves; Tesco removed White Rabbit as a precaution from its stores in the United Kingdom. In the United States of America, which was otherwise unaffected by the scares, the US distributor of White Rabbit candies recalled the product when samples found in Hartford showed traces of melamine. The candy's maker and subsidiary of Bright Foods, Guan Sheng Yuan issued a recall to the 50 countries to which it exported.

Country or region	Brands (*see official list)	Reaction
Australia	White Rabbit, Koala, Kirin milk tea, Cadbury,Dali Yuan, Orion cake	Food Standards Australia New Zealand issued a general warning on White Rabbit candies after testing found melamine contamination at 180 ppm. The authority also pulled Lotte Koala's March biscuits from all stores as a precaution after discoveries of melamine were found in them overseas. A total of 6 products contaminated with melamine have already been recalled throughout Australia.
Argentina	Yili, Cadbury, Koala's March	The National Administration of Medicines, Food and Medical Technology (ANMAT), decided to ban the import and sale of 48 products of Chinese origin that contain milk or any of its derivatives as a preventive measure. The ANMAT published lists of the products, ranging from powdered milk to candies and cereal bars, and issued a general warning to the public to abstain from consuming them.
Bangladesh	Diploma, Red Cow, Dano, Yashili, Sweet Baby, Nido, Anlene.	The Secretary of Food Department said that whilst they were testing, they would only advise people to avoid Cadbury's products following a recall elsewhere for want of enough evidence to ban this product. In late October, a court banned 8 milk products on the basis of test results from an unaccredited laboratory, the results were challenged by Fonterra, Nestlé, and Arla. Officials noted that the results were "inconclusive and confusing",and have ordered retesting, withdrawing the products pending further tests.
Canada	Nissin Cha Cha Dessert mix	The four largest manufacturers of infant formula in Canada confirmed to the federal department that they did not use milk ingredients from China. Mengniu strawberry yogurt, only distributed in Alberta and Saskatchewan (and with no English or French labeling), was recalled by its importers for possible melamine contamination.
Chile	none	Chile announced the prohibition of any type of Chinese food products that contain Chinese milk effective 26 September, and removed more than 2,000 packages with these items in order for analysis, although the Ministry of Health said that there was no evidence there was contaminated milk in Chile.
Hong Kong	various*, incl Sunflower Biscuits, Yili, Nestlé, Cadbury Dairy Milk, Dutch Lady	Authorities ordered a recall of Yili products after 8 out of 30 tested positive for melamine. Several multinational brands were implicated in the affair: Nestlé's Dairy Farm Pure Milk with 1.4ppm melamine was found; H.J Heinz recalled their Vegetable Formula Cereal; Cadbury's chocolate products made in China were also affected. The Hospital Authority set up special unit at the Princess Margaret Hospital to deal with potential cases. Hong Kong's first victim was diagnosed on 20 September. The Hospital Authority chairman said that in excess of 19,000 children had been given free kidney checks at its 18 outpatient clinics; Ten children were diagnosed with kidney problems. At least three of the victims came into contact with contaminated milk whilst living on the mainland.
India	n/a	On 25 September 2008 India announced the ban on import of dairy items, including milk and milk products, from China for three months following reports of contamination.
Indonesia	various*, incl M&M's, Oreos, and Cadbury's Dairy Milk	The Health Ministry of Indonesia imposed a pre-emptive import ban on dairy products from China, while offices of the Indonesian Food and Drugs Supervisory Agency (IFDSA) gave orders to withdraw Chinese dairy products from stores. The government also withdrew the local distribution permit given to the only dairy product from China. The health ministry said it had found melamine in twelve products, including products from Mars, Kraft Foods and Cadbury's. Mars disputed the Indonesian tests as being "impossibly high", and inconsistent with results from agencies across Asia and Europe.
Italy	Various products	On 16 October, a tonne of smuggled Chinese powdered milk, suspected to be contaminated, was seized in the Naples.
Japan	Marudai (recall), Chocolate Pillows, various products	Japan's central government was urged to suspend Chinese dairy imports by regional authorities. All importers were instructed by the government to test dairy imports from China for melamine or face huge fines and penalties. Japan found melamine in 4 items of imported croissants, and various other pastries, chocolate, etc. Pizza chain Saizeriya discovered melamine in tests done on its pizza dough.
Laos	various products	On 28 September, the government stopped all imports of milk products, such as milk-flavoured toffees, milk and milk powder from China. Tests done on samples taken from markets of Vientiane revealed two milk products containing melamine.
Macau	various*	On 23 September, a 16-month-old boy in Macau who is said to have been brought up on Heilongjiang-manufactured Nestlé powder was diagnosed with kidney stones. Three girls who participated in a government-sponsored milk program were diagnosed with kidney stones. On 30 September, Unilever began recalling Lipton milk tea powder after found traces of melamine during the company's internal tests.
Malaysia	Khong Guan, Khian Guan, Julie's	Malaysia had banned dairy items from China in early 2008 because of foot and mouth disease in Chinese cattle. Although it had not yet ascertained the full extent of products affected, the Malaysian Health Ministry extended the ban to include candies, chocolates and all foods containing milk on 23 September. Following the positive testing of Khong Guan biscuits, Chinese produced ammonium carbonate was banned. Dutch Lady Milk Industries, whose milk in plastic bottles was tested positive in Singapore, reassured consumers that the tainted range was from China, and were not sold in Malaysia.
Myanmar	milk and infant powder (9 brands)	Chinese dairy goods are widely sold in Myanmar, but the Government issued no official warning and locals remain ignorant of the contamination. Yashili and Suncare recalled milk powder exported to Myanmar. On 30 September, the Myanmar government banned on all Chinese milk products throughout the country.
Netherlands	Koala's March
New Zealand	Wahaha	Tatua Co-operative Dairy Co, a large exporter of lactoferrin was alerted that melamine had been detected in its own product. The company confirmed contamination at less than four parts per million (4ppm), saying it would investigate.
Peru	White Rabbit, various products	On 1 October 2008 the authorities in Peru began confiscating Chinese candy, cookies, buns, chocolates and other milk-based foodstuffs from shops mostly in Lima's Chinatown district. Already five types of milk-based products have been banned in Peru.
Philippines	Yili, Mengniu, Jolly Cow, Lotte	On 24 September, the Philippines prohibited the importing and sale of Chinese milk, and asked stores to surrender them at state centres for inspection. Senator Pia Juliana Cayetano, the head of the health and demographics committee, warned that some retailers might repack powdered milk for resale in smaller bags to unsuspecting customers. The scares also resulted in fear of milk shortage in the country.. The Bureau of Food and Drugs (BFAD) lifted the ban on Sunflower Blueberry Filled Sandwich imposed following positive tests in Hong Kong, after local tested showed no signs melamine.
Qatar	n/a	Local distributors reaffirmed that "almost nothing... from China" ever makes it to Qatar, thus dairy and baby food products sold in the states were unlikely to be affected by melamine contamination. Qatar imposed a ban on the import and sale of White Rabbit candy, a product not officially sold in the state.
Russia	Milk powder, various products	On 30 September, Russia banned the imports of dairy products from China. Russian authorities seized two tonnes of dairy products imported from China which contained melamine. On 3 October, milk powder containing melamine was discovered in Tomsk.
Singapore	various*, incl Cadbury, Silang House of Steamed Potato, Dutch Lady	On 9 October, Agri-Food and Veterinary Authority found traces of melamine in three more Chinese made products. So far 13 Chinese food products have been found to contained melamine and Singapore has called for a total disposal of all contaminated products.
Slovakia	Koala, Pepero	Three to four times the legal limit of melamine were found in chocolate biscuits and snacks not yet commercialised. Also an illegally-imported milk drink was found to contain a high concentration melamine.
South Korea	Tatua, M&M, Snickers, Kit Kat, various products	The government declared an official import ban on all Chinese dairy products after traces of melamine were discovered in a sample of the popular Mi Sarang Custard snacks produced in China which are distributed by Haitai. The Korean Food and Drug Administration ordered all current Chinese dairy products on the market to be recalled and destroyed. Officials found melamine contamination in Nabisco Ritz cheese sandwiches and in rice crackers made by a Chinese company. Authorities discovered melamine in lactoferrin imported from New Zealand Tatua Cooperative Diary Company.
Sri Lanka	n/a	The Consumer Affairs Authority (CAA) took out a court order on Edna to halt sales, pending an inquiry, after learning it had imported milk from China.
Switzerland	Lemon Puff Munchee, S&P, White Rabbit	On 13 October, the Swiss Federal Office of Public Health issued warnings of melamine contamination found in milk cookies from Thailand and biscuits from Sri Lanka. However Ceylon Biscuits Limited said it did not source milk ingredients from China.
Taiwan	various, Mr. Brown Coffee, Nestlé, Julie Butter Crackers	On 22 September, Taiwan suspended imports of all mainland Chinese milk products and vegetable-based proteins until the problem of contamination in mainland Chinese milk supplies had been addressed. The Department of Health failed four Taiwanese companies' products for melamine; the Taipei City named 14 bakeries as being users of contaminated milk, while tests showed that none had used contaminated products. The bakers were angry at being falsely accused and threatened to sue for damages. A two-year-old girl recently arrived from Guangzhou was reportedly the first victim in Taiwan. She was diagnosed with signs of a hardening kidney on 24 September. The Department of Health delisted six Neslac and KLIM products on 2 October, despite the minister saying their melamine levels did not pose a significant health risk. A DPP whip criticised the government's policy and testing standards on melamine as being "clear to nobody". Nestlé issued a statement saying it failed to understand the delisting request, arguing that "the 0.05 ppm detection limit currently applied in Taiwan is up to 50 times below recognized and accepted international standards", and the delisting would cost the company NTD1 billion. On 30 September, Premier Liu Chao-shiuan said that Taiwan would demand an apology and possible compensation from mainland China over tainted milk. On 28 October, mainland Chinese authorities made a formal apology to the people of Taiwan for troubles caused by imports of melamine-tainted daily products.
Tanzania	milk powder	Tanzania reported on 23 September that it had suspended Chinese dairy product imports and seized about 34 tonnes of milk powder (not baby formula) from China. Tanzania Food and Drugs Authority temporarily stopped issuing of permits for importation and distribution of milk and products containing milk from China, and ordered all businesses with relevant products to surrender their stocks.
Thailand	Dutch Mill, Mali condensed milk, S&P Milk Cookies	On 30 September, Thai authorities introduced restrictions on Chinese dairy products after discovering melamine on two samples of imported Chinese milk powder. On the previous day, Thailand impounded about sixty tonnes of contaminated milk powder.Authorities recalled all locally produced unsweetened condensed skimmed milk formula with a palm oil after finding high melamine contamination at the Thai Dairy Industry's factory. Hajuku Strawberry Stick is manufactured by Yantai Arari Confectionery and Food, Laboratory tests showed a level of melamine of 5.07 mg/kg in the strawberry stick
UAE	n/a	On 25 September, United Arab Emirates enacted a ban on all dairy products from China. All supermarkets and food outlets have been directed to remove the products from their shelves.
United Kingdom	n/a	Supermarket chain Tesco recalled the sale of all White Rabbit candy in is stores throughout UK. Meanwhile a chocolate-covered spread that was sold around sex shops in UK was found to be contaminated with melamine.
USA	Mr. Brown, Blue Cat	The Food and Drug Administration (FDA) issued an advisory on 12 September over the possibility of contaminated milk powder being sold in speciality markets serving the Asian community in the U.S., while assuring consumers that no formula approved for sale in the U.S. was made in China. All manufacturers and marketers of baby formula in the U.S. assured the FDA that they received no ingredients from China. Another recall was made for Lotte Koala cookies due to fears of melamine contamination throughout the United States.
Vietnam	various milk powders, Yili, Khong Guan, Pokka, Hanoimilk	On 24 September, Vietnam banned all Chinese dairy products after finding melamine in a shipment of 101 tons of powdered milk from China. On 2 October, the health ministry reported the discovery of melamine in 18 food products imported from China, Thailand, Indonesia and Malaysia. On 4 October, the authorities ordered schools to stop serving milk until the origins of their supplies had been certified. Hanoi Mil, Vietnam's third-largest dairy product company said it had recalled several products including sweetened yoghurt earlier this month after tests found melamine in 11 of its products.

The US FDA said that while in general, food containing melamine below 2.5 parts per million did not raise concerns, its scientists were "currently unable to establish any level of melamine and melamine-related compounds in infant formula that does not raise public health concerns." On 12 November 2008 FDA issued a general alert against all finished food products from China, saying that information received from government sources in a number of countries indicates a wide range and variety of products from a variety of producers have been manufactured using melamine-contaminated milk was a recurring one problem. In late November, after FDA found traces of melamine in one Nestle and one Mead Johnson infant product, the FDA concluded that melamine or cyanuric acid alone, "at or below 1 part per million in infant formula do not raise public health concerns" in babies.

Response

International agencies

The European Food Safety Authority (EFSA) warned that children who ate large amounts of confectionery and biscuits with high milk content could theoretically be consuming melamine at more than three times above prescribed EU safety limits (0.5 mg/kg of body weight). The EFSA said that children with a mean consumption of products such as milk toffee, biscuits and chocolate containing contaminated milk powder would not be at risk, and that adults would not be at risk even in the worst case scenarios.

The World Health Organization, which was only notified on 11 September, asked Beijing why it took so many months for the scandal to become public, and to establish whether failure was deliberate or due to ignorance. WHO's China representative, Hans Troedsson, said the issue of who knew what and when was critical... Because if it was ignorance, there is a need to have much better training and education ... if it is neglect, then it is, of course, more serious."

Following a spate of mass national bans, the WHO urged national food safety authorities on 25 September 2008 to test Chinese dairy products for health risks before slapping on import bans or recalls. WHO and UNICEF also jointly decried the "particularly deplorable... deliberate contamination of foods intended for... vulnerable infants and young children" On 26 September, the WHO warned health officials around the world to be alert for dairy products of Chinese origin that could be tainted. Anthony Hazzard, the Western Pacific director of the World Health Organization said countries had been advised by the International Food Safety Authorities (INFOSAN) to focus particularly on smuggled formula.

The WHO referred to the incident as one of the largest food safety events it has had to deal with in recent years. It says the crisis of confidence among Chinese consumers would be hard to overcome. It saw regulation failing to keep pace with the rapid development of the food and industrial production as opening the gates to all types of misbehaviour and malfeasance. The spokesman said that the scale of the problem proved that it was "clearly not an isolated accident, [but] a large-scale intentional activity to deceive consumers for simple, basic, short-term profits."

WHO Director-General Margaret Chan reminded Chinese mothers that babies not breastfed were being deprived of the best nutrition offered by nature, while risking being exposed to the effects of melamine. She added: "We need to try our very best to tell [mothers] the difference [between breast milk and formula]. Of course breastfeeding is the best food for babies." Chan said the melamine-in-milk scandal showed "the impact and power of globalisation" in food distribution and highlighted "the importance of seamless cooperation from farm to consumer."

Chinese public

Anger at Sanlu

File:D1-5822.jpg

An example of the parodies which have been circulated by Chinese citizens angry over the contamination

The case has brought anger and resentment at milk producers, and has sown uncertainty and confusion among the population: queues have formed outside Sanlu's offices for refunds. The Sanlu website was hacked several times and its name as displayed in the header bar changed to 三聚氰胺集团 ("The Melamine Group") in a play of words on the character "三" (number 3), which is the first word of Sanlu's Chinese name: 三鹿 (Three Deer); "Melamine" was also added as a product name by a hacker. As has been increasingly common practice, netizens have vented their anger on Internet bulletin boards. Prevalent food scares have increased the number of on-line parodies circulated by netizens. Those inspired by Sanlu have been along themes of passing the buck, stones, or the virtues of not being able to urinate. Celebrities who have endorsed dairy products have also been mocked in photoshopped images.

Before the government offered free medical treatment, some parents had reportedly spent small fortunes on medical care for their sick children. Children who fell ill before the scandal broke on 12 September are not entitled to free medical care offered by the State. Parents of at least two such victims, one from Henan and one from Guangdong, have filed writs against Sanlu despite government pressure. Parents of the Henan child have claimed ¥150,000 for medical, travel and other expenses incurred after their child developed kidney stones. On 20 October, the parents of one baby who died from contaminated milk appealed to New Zealand for justice on TV ONE. They were quoted as saying the perpetrators of the milk scandal responsible for the death of their child deserved to "die a thousand deaths". A total of nine cases were filed against Sanlu in Shijiazhuang. Following weeks of discussions, and in the absence of a compensation plan, a group of 15 lawyers have filed a collective suit on behalf of 100 families against Sanlu, seeking medical and other expenses as well as compensation for trauma and for death of offspring.

Anger at political leaders

There is growing resentment that country's leaders are not troubled by the food security turmoil faced by ordinary citizens: in a speech delivered by Zhu Yonglan (祝詠蘭), Director of the State Council Central Government Offices Special Food Supply Centre (CGOSFSC) in August 2008, Zhu disclosed that her firm which was set up in 2004 to source high-quality, all-organic foodstuffs from farms working under the strictest guidelines, for supply to top political leaders, their families and retired cadres.

"The State Council Party and State Organisations Special Food Supply Centre... is supported by the State Council Logistics Base, Central Security Bureau farms, and supply bases spread over all 13 provinces, municipalities... and autonomous regions. These bases supply the 94 ministries’ and commissions’ veteran cadres with high quality organic food products... [Our] products accord with the highest standards."

...Everyone knows that at present average production facilities use large quantities of chemical fertilizers and pesticides. Antibiotics and hormones are used in the raising of animals. Aquatic animal products are raised in polluted waters. All of these toxins end up in the final food products (all kinds of produce, meat, dairy products etc.). It goes without saying that these are harmful when consumed by humans."

Zhu Yonglan, Director of the CGOSFSC - speech to Shandong KR Biomedical, 18 August 2008

Ordinary Chinese are asking whether the government ever intends to do more than just apologise, after Premier Wen Jiabao apologised, saying he felt "extremely guilty" about the poisoned milk products, just as he had previously asked the people's pardon for the deaths of coal miners, the polluted drinking water, and train passengers stranded by the authorities' inadequate response to the severe snowstorm during the New Year.

Author Qin Geng (秦耕) said:"The big picture in this case was the interest of one-party rule above anything, not that they would put the safety of the people first". Qin concluded what the Chinese public were told by the state-controlled media the contamination of milk is a well orchestrated process, and they are "very sad, very frightened and very concerned."

Quest for milk substitutes

Poorer consumers reliant on local milk powder, which is approximately half the price of imported brands, have been left without alternatives to feed their children. Many have now lost faith in local brands, and others are uncertain which brands are safe. Supermarket shelves have been swept bare from product recalls. Shops in Hong Kong have reported a rush for imported formula from cross-border shoppers, and some retailers are reportedly rationing their stocks. Mainlanders have also been rushing to import milk powder from Kinmen. Wet nurses are enjoying a resurgence in popularity in major cities. New Zealand media reported Chinese sailors and expatriates have been buying local dairy produce for sending back to relatives in China.

Taiwan

Half a million participated in anti-China demonstrations

Main article: 1025 demonstration

The melamine food scare became a focal point against the warming relations between Taiwan's government and the mainland Chinese government, and a major demonstration was held on 25 October 2008 to voice dissatisfaction with Taiwan's increasingly closer ties with Beijing, notably related to the incident. Protesters fearful at reunification blamed the Kuomingtang for the melamine scare, and criticised it for failing to stand up to mainland China over the contamination. One citizen voiced concern that President Ma Ying-jeou's promise for closer ties with mainland China would bring in more tainted products to Taiwan. The Minister of the Department of Health, Lin Fang-yue, was heavily criticised for raising the legally acceptable limit of melamine in food products from zero to 2.5 ppm. The public outcry subsequent to the move forced Lin to resign. His successor, Yeh Chin-chuan, announced a return to the original zero-tolerance policy to melamine.

PRC government

Top leaders' comments

AQSIQ announced the revocation of all exemptions from inspection previously granted to dairy producers, who were asked to cease citing the privilege in their advertisements.

File:20080921 Wen Jiabao.jpg

Premier Wen calls on a child sickened by tainted milk powder at Beijing Children's Hospital

The State Council ordered an overhaul of the dairy industry, and promised to provide free medical care to those affected. Formally, the State Council released its initial findings, and a top-level official apology of the incident both came on 21 September. Wen Jiabao apologised while visiting victims in hospitals.

This incident made me feel sad, though many Chinese have been understanding. It disclosed many problems for government and company supervision of the milk sources, quality and marketing administration... The government will put more efforts into food security, taking the incident as a warning. What we are trying to do is to ensure no such event happens in future by punishing those leaders as well as enterprises responsible. None of those companies without professional ethics or social morals will be let off.

— Wen Jiabao, China's Premier (21 September 2008)

President Hu Jintao said on 1 October 2008 :"Food safety is directly linked to the well-being of the broad masses and the competence of a company... Chinese companies should learn from the lessons of the Sanlu tainted milk powder incident."

On 6 October, putting the blame on "illegal production and greed", the country's "chaotic dairy production and distribution order", and the "gravely absent supervision" for the crisis, the State Council announced new dairy industry regulations.

On 9 October, in an attempt to control the damage to Chinese dairy exports, officials at a World Trade Organization meeting insisted that contamination had been "accidental", directly contradicting the WHO observations. Chinese trade representatives criticised countries which have imposed blanket bans on Chinese food products. They urged member states to base import restrictions on scientific risk assessments, and to use official WTO notification mechanisms. On 11 October, Deputy Health minister Liu Qian stated that all the foreign companies' application for compensation for dairy products recall would be dealt with on a commercial basis, although government may use diplomatic channels if necessary, if problems were encountered.

Stepped-up inspection program

According to a senior quality inspectorate official, the government aimed to establish nearly 400 product testing centres within the next two years, and 80 of these would be food testing centres. Working groups were established in nearly every single province in order to set up new food testing centres and replace outdated equipment.

On 24 September 2008, China's newly appointed AQSIQ chief Wang Yong said that the government would "carry out 'forceful' measures to deal with the chemical contamination"; it's inspectors had removed 7,000 tonnes of melamine contaminated dairy products from shops all over China.

On 4 October, the Ministry of Agriculture announced it had drawn up an emergency rescue plan with the Ministry of Finance to give special subsidies to dairy farmers, seriously affected by the lack of demand following the contamination scandal; local governments had already drafted policies to stabilise the dairy industry; 150,000 officials had been sent to overhaul the entire supply chains from cattle feed to milk-collection; 18,803 milk-collecting stations had been registered and checked by these officials. The ministry was reported to have investigated 98 dairy producers and farms, banned 151 illegal companies and indicted three manufacturers for feed containing melamine. During an investigation into melamine contamination at Yili and Mengniu in Hohhot, police arrested six more people for allegedly selling and mixing melamine into raw milk. The AQSIQ announced on 5 October that all tests showed all milk produced after 14 Sept were free from contamination. The General Administration of Quality Supervision, Inspection and Quarantine stated all dairy products made before 14 September will be tested for melamine. They gave notice to all supermarkets, shops, and all city, town and village-level vendors to urgently remove and seal up all milk powder and liquid milk made before 14 September, pending further testing.

The Ministry of Health and five other government agencies issued a joint statement on 9 October, setting the legally acceptable level of melamine content in infant formula at 1 ppm (1 mg/kg), and at 2.5ppm in other dairy products (including milk). The Chinese Centre for Disease Control and Prevention said that any amount exceeding 1 ppm would give reason to suspect its presence was intentional."

Public relations

On 26 September 2008, in order to quell the disquiet over the speech by Zhu Yonglan of the CGOSFSC regarding leaders' insulation from the food-security issues faced by the general population, Xinhua issued a brief statement, in Chinese, denying the existence of the Centre, the award, or any person named Zhu Yonglan, saying these were "purely rumours".

On 16 September, the AQSIQ tests on baby milk powder produced by 109 companies showed 69 batches from 22 companies to be melamine-contaminated; the State Council attempted to reassure that formula produced by most companies in China was safe. It said: "the number of companies with melamine-tainted milk accounted for 20.18% of the total of milk powder companies in China; the number of tainted batches accounted for 14.05% of the total batches tested." On 30 September, the AQSIQ said its tests on 265 batches from 154 companies showed that "only 18%" had tested positive for melamine: "of the 290 dairies nationwide 154 dairies, representing 87% market share, 134 of these dairies had tested negative for melamine."

On 16 September, the AQSIQ published results of tests on 408 liquid milk producers, and found "most diary products were safe to drink", although the test results showed nearly 10 percent of batches from Mengniu, Yili and Bright were contaminated.

The government stressed that no new cases of melamine-related illnesses had been detected since 20 September, and that test results on samples from 31 brands of baby formula, 84 brands powder for adult consumption, and 75 domestic brands of liquid milk produced after 14 September did not contain melamine, the AQSIQ said. To demonstrate that its emergency measures had been effective, the Ministry of Agriculture said the rate of raw milk dumping because of the contamination scandal has decreased from 23.6% on 22 September to 4.6% on 1 October.

Censorship

Behind the scenes, mainland media was ordered to tone down coverage of the unfolding scandal to prevent unrest. News editors were ordered to adhere to the official copy of Xinhua. Traditionally, media knows to avoid negative news coverage, and CCTV shifted reporting emphasis on the forthcoming launch of Shenzhou VII. The announcement of the AQSIQ test results was relegated to the final item on the CCTV evening news.

The Wall Street Journal reported that the suppression of bad news had not improved since the scandal was uncovered: media rigidly adheres to the official line, as ordered; Chinese consumers were ill-informed about the extent of global recalls. It reported local journalists saying that discussion of the causes of the crisis, government responsibility, questions about government complicity with dairy companies, was strictly off limits.

On 2 January, a website created by individuals protesting against Sanlu was also blocked by the authorities. A group of parents whose children were rendered ill by melamine-contaminated milk held a news conference to draw attention to the plight of their sick children; five were allegedly detained by police and taken to a labour camp outside Beijing. They were released a day later.

Pressure on the legal profession

A group of 90 lawyers from Hebei, Henan and Shandong - the three worst affected provinces - had made pro bono offers to assist victims, and a list of their names was published. Organisers of the group declared that they had come under pressure from officials to not to get involved in the issue. The Beijing Lawyers' Association, a part of the Communist Party apparatus, asked its members "to put faith in the party and government". Other members of the group have reportedly received less subtle requests. Authorities are said to fear social unrest if law suits were unleashed. Pro-Beijing Hong Kong journal Ta Kung Pao reported that central authorities, fearful of the effect of mass law suits, held a meeting with lawyers' groups on 14 September, asking them to "act together, and help maintain stability" 「服從大局，保持穩定」

Chang Boyang, one of the group of volunteer lawyers, said he had filed a suit in Guangdong against Sanlu on behalf of the parents of one victim. One was already filed in Henan. Chang said that Henan's justice department had ordered 14 Henan lawyers to stop helping the kidney stone victims, saying it had become a political issue. He claims he was told by the official to "follow the arrangements set out by the government", and was further threatened: "If this suggestion is disobeyed, the lawyer and the firm will be dealt with." Zhang Yuanxin, lawyer and officer in the Xinjiang Lawyers’ Association said that the actions of certain departments in government have "set back the development of the legal profession". He said that it was "intolerable" for government to interfere in the affairs of the judiciary, denying the right of ordinary citizens to sue.

An official said that central government had issued instructions placing the cases on hold, pending a decision on how to handle the cases in a unified manner. Furthermore, that court was instructed not to give any written replies or accept Sanlu-related cases in the meantime.

Other third parties

On the economic root cause

Stratfor believed that the act of adulterating milk and baby food in full knowledge of potentially severe sanctions, including execution, seemed like "an act of desperation." It noted that in 2008 dairy farmers became squeezed by growing costs of livestock, feed, facilities, and government-imposed price caps. Mengniu's share price fell 12% since October 2007 due to higher costs of raw milk (due partly to rising costs of cattle feed) and price controls– anti-inflation measures targeted at the dairy sector announced on 16 January. Milk suppliers accordingly resorted to subtler cost-cutting methods to preserve diminishing profits.

On the damage caused

Joseph Sternberg of the Wall Street Journal said that Beijing's failures of food-safety act are "much more pernicious, and disgraceful, than at first it appears... [not only has this] milk poisoned thousands of infants with melamine, it also poisons the society at large with fear." Lawyer Bill Marler, speaking at a food safety conference in Beijing, said that this food scare has harmed the "made in China" brand abroad. He remarked: "If this product had gotten into the United States, it would have been 'game over' for a lot of products in China."

The similarities between China today and New York 150 years ago shouldn’t come as a great surprise. Adulteration on such a scandalous scale occurs in societies with a toxic combination of characteristics: a fast-growing capitalist economy coupled with a government unable or unwilling to regulate the food supply. In such get-rich-quick societies, there is a huge temptation to tamper with food, particularly when margins are low. The rewards are instant, and it’s not always easy for consumers to detect the difference between the pure and the doctored—particularly with a substance like milk, which we have been taught to trust implicitly.

Bee Wilson, The New York Times

An op-ed in the New York Times compared this to the "swill milk scandal" in New York in the 1850s in which 8,000 children reportedly died from milk from cows fed swill which was then whitened with plaster of Paris, thickened with starch, eggs and hued with molasses."

The hopeful news in all this is that in the process of creating so much toxicity both the distressed loans and the distressed food are teaching us important lessons about the limits of scale and regulation that support the massive globalization of the last decade. We are learning that regulators have lost the ability, if they ever had it, to truly monitor the extent of the danger. David E. Gumpert, San Francisco Chronicle

An article published in the San Francisco Chronicle likened the regulatory failures of the milk scandal to the distressed assets in the subprime mortgage crisis, and questioned whether regulators in either case ever understood or truly monitored the extent of the danger.

Louis Klarevas, a professor at New York University's Center for Global Affairs, said of the products on the list of potentially harmful products reaching the US in recent years were exclusive to China: "Yet as more large-scale labor markets compete for their share of international trade, the incentives to cut corners will increase and the temptation to overlook hazardous goods might become a more common occurrence."

On the power structure

Hu Xingdou (胡星斗), a professor at Beijing Institute of Technology, said: "There hasn't been an effort to establish a moral foundation to the market economy, and this incident is the inevitable result." Hu urged the leadership to transform the way of thinking, to repair the system, rather than dealing with problems as they arise.

The dairy scandal raises the core question of whether the ruling Communist Party is capable of creating a transparent, accountable regulatory structure within a one-party system. Time Magazine cited many analysts saying the party’s need to maintain control of the economy and of information undermines the independence of any regulatory system. One analyst, Willy Lam, a Senior Fellow at The Jamestown Foundation, indicated that CCP's pervasive control over political and economic resources has resulted in the absence of meaningful systematic checks and balances. "Institutions that could provide some oversight over party and government authorities - for example, the legislature, the courts or the media - are tightly controlled by CCP apparatchiks." A Beijing-based consultancy, Dragonomics, concurred that "the problem was rooted in the Communist Party’s continued involvement in pricing control, company management and the flow of information". Independent regulation was lacking or ineffective as local industries' were so intertwined with local officialdom.

The Times noted that while one child in 20 in Shanghai may have kidney damage as a result of drinking contaminated formula milk, on the other hand, "like the emperors of old, the new communist elite enjoy the finest produce from all over China, sourced by a high-security government department."

Access Asia, a Shanghai-based consumer consultancy, said Fonterra was a classic example of western executives in China "believ[ing] advice in business books that they must avoid making their local partners 'lose face' at all costs." It suggested that Fonterra paid a heavy price in write-offs, a wrecked business and public condemnation.

Caijing said the crisis revealed that that there had been a "serious dereliction of duty" at the AQSIQ, and that the government had failed as a "night watchman". Citing public consensus that government should limit itself to a supervisory role, it urged the construction of a regulatory system which addressed the role of regulators watching over the production process, avoiding over-regulation, 'regulatory capture' and abuse of power by regulators. "Keeping the market in order and ensuring independent law enforcement should be part of the mandate."

On the culture of secrecy

David Bandurski, journalist and researcher at China Media Project , criticised the crippling media controls by the state combined with "runaway commercial greed", and said that the censorship "suppresses information. critical to the well-being of ordinary Chinese." He asserted that increased press freedom needs to be a component of any strategy to deal with this and other future food-security lapses in China. Free media in China could compensate for the underdeveloped rule of law, and be important in keeping companies and regulators honest. Bandurski cited warnings in the 9 October 2008 issues of Nanfang Daily and the Information Times for consumers to be aware of that problematic dairy stock (that produced before 14 September) have reappeared in some stores under cover of aggressive promotions.

Former senior party official Bao Tong said "the more dark secrets are exposed, the better. You can't cure the disease, or save the Chinese people, until you get to the root of the problem." "If the Chinese government tries to play down this incident, there will be no social stability in China, let alone harmony... It will mean that this government has lost the most basic level of trust."

Widening contamination

The search widened when some manufacturers reported not using Chinese milk. The Sri Lankan manufacturer of Munchee Lemon Puff biscuits tested positive in Switzerland categorically stated that its milk powder or milk products were sourced only from Australia, Holland and Canada; similarly, Pokka products without milk or its derivatives from China were found by Vietnamese authorities to be contaminated.

Chicken and eggs

Japanese and South Korean authorities' tests on imported egg powder from China found melamine contamination. Japan found melamine in frozen fried chicken imported from China. The South Korean supplies were traced to two companies in Dalian.. On 26 October, Hong Kong authorities discovered 4.7ppm melamine in eggs from Dalian. Hong Kong Secretary for Food and Health, York Chow, suspected the melamine came from feed given to the chickens that laid the eggs. On 29 October, Hong Kong authorities discovered a third batch of eggs containing excessive melamine. The Taiwanese Department of Health said that six batches of protein powder from Jilin and Dalian were found to contain 1.90 to 5.03ppm of melamine.

Agriculture officials speculated that adulterated feed given to hens could explain melamine in eggs. The Web sites of Xinhua and People's Daily both carried a story from the Nanfang Daily that mixing melamine into animal feed was an "open secret" in the industry: melamine scrap was mixed into an inexpensive "protein powder" resold to feed suppliers.. People in the trade interviewed by BusinessWeek also confirmed it was common practice, and had been going on for "years", with most believing it to be non-toxic to animals. Melamine dealers said after Sanlu, the government started clamping down on melamine sales to food processing companies or to manufacturers animal feed.

Baking powder

File:Melamine biscuits.jpg

Malaysian authorities supervising the dumping and burying of contaminated biscuits and ammonium bicarbonate into a landfill

Malaysian authorities determined that ammonium bicarbonate, not milk, imported from China was the source of contamination at Khong Guan and Khian Guan. Malaysian authorities said it was probable cross contamination of batches from Chinese companies Broadtech Chemical Int. Co Ltd, Dalian Chemical Industries and Tianjin Red Triangle International Trading Co, and did not suspect adulteration. On 19 October, Taiwanese authorities detected melamine in 469 tons of baking ammonia imported from China. Samples tested showed up to 2,470ppm of melamine.

Impact and response

China's eggs exports in the first eight months of 2008 were valued at USD92.7 million. More than 90% went to Asian countries, and 6.5% went to North America, according to the Ministry of Commerce.

International agencies

Jorgen Schlundt, head of food safety at the WHO criticised China's food-safety system for being "disjointed", saying that "poor communications between ministries and agencies may have prolonged the outbreak of melamine poisoning."

Chinese public and the trade

Public concerns have resulted in demand and egg prices falling throughout the country. Prices at a large Beijing wholesale market dropped 10%, and prices fell by 10% the day after news of the contamination broke in Hong Kong. Wholesalers have refused stock products without melamine inspection certificates. The Beijing Youth Daily reported that farmers have been forced to slaughter tens of thousands of chickens.

PRC government

The Chinese government said that producers violating the law "could have their licenses revoked and be handed over to law enforcement organs". A senior Agriculture Ministry official said that of a quarter of a million feed-makers and animal farms inspected for melamine contamination, inspectors found more than 500 engaged in "illegal or questionable practices". Some 3,700 tonnes of feed with excessive melamine were seized.

Hong Kong regulators have requested certification of exported eggs, but the central government has not yet mounted a centralised response; although mainland authorities already require eggs to be certified as free of avian influenza and Sudan red dye prior to export following previous food-safety scares, the AQSIQ has declined nationwide testing. Local government, for example Guangdong authorities, have increased random inspections at poultry farms. They declared to "harshly crack down on the unlawful behavior of illegally manufacturing, selling and using melamine".

See also

• Timeline of the 2008 Chinese milk scandal
• Official test failures of the 2008 Chinese milk scandal
• 2008 Chinese export recalls
• 2007 pet food recalls
• Chinese protein export contamination

Notes

Verbatim quote

For verification purposes, the following are relevant citations in Chinese from the Caijing article dated 29 September 2008

For verification purposes, the following are relevant citations in Chinese from the Nanfang Daily article dated 9 October 2008

External links

• China Digital Times
• LinkTV China's Milk Shakeup