Thursday, July 5, 2007

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For China Inc., it's going to get worse before it gets better

David Barboza reports in the New York Times on another nail in the coffin that is China's reputation for product quality:

China said on Wednesday that nearly a fifth of the food and consumer products that it checked in a nationwide survey this year were found to be substandard or tainted, underscoring the risk faced by its own consumers even as the country’s exports come under greater scrutiny overseas.

Regulators said the broad survey of foods, agricultural tools, clothing, women and children’s products and other types of goods turned up sizable quality and safety failure rates for products that are sold domestically.

The government said, for instance, that canned and preserved fruit and dried fish contained excessive bacteria; that 20 percent of the fruit and vegetable juice surveyed was deemed substandard, and that some children’s products were defective or laced with harmful chemicals.

The announcement came in the midst of a growing scandal over the quality and safety of Chinese-made exports and follows a series of international recalls involving everything from contaminated pet food ingredients and counterfeit toothpaste to toxic toys, defective tires and contaminated seafood.

The General Administration of Quality Supervision, Inspection and Quarantine said the survey, conducted in the first half of this year, showed quality and safety improvements compared with conditions in the period a year earlier. But the announcement also suggested that Chinese consumers are at serious risk of being harmed by purchasing tainted foods, substandard goods and suspect or defective equipment.

Regulators said, in effect, that goods sold in China were far more hazardous than the exports that were driving the country’s economic growth and now partly the subject of safety and quality debates.

This is going to be a huge, long-term headache for Beijing. Brand images are not easy to change, and China has been beset by a perfect storm of health and safety scares over the past six weeks. Furthermore, as Barboza points out, improving the brand is not merely a function of the central government "getting it" (and cases like this one suggest that they do not "get it" across the board):
Experts say aggressive and opportunistic entrepreneurs continue to take advantage of the country’s chronically weak enforcement of regulations, choosing to blend fake ingredients into products; to sign contracts agreeing to sell one product only to later switch the raw materials for something cheaper; and to doctor, adulterate or even color foods to make them look fresher or more appetizing, when in fact they might be old and stale.
strong enforcement of regulations will require a widespread change in both the government and business cultures, and addressing head-on issues of corruption.

In other words, this problem won't be going away anytime soon.

posted by Dan on 07.05.07 at 09:44 AM



Chrysler signs deal to import Chinese cars to the U.S.

posted by: bluhawkk on 07.05.07 at 09:44 AM [permalink]

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