ARTICLE: "Chinese Dairies Face a Worsening Crisis: Slow Response to Tainted Formula Fans Consumer Fears," by Loretta Chao, Wall Street Journal, 19 September 2008.
We're talking a $21b domestic dairy industry, and over 6k ill babies, including many with kidney stones.
Here's the part I like:
Liu Jinhu, an analyst for Sealand Securities in Shenzhen, said that if Chinese dairy companies want to avoid being overtaken by foreign counterparts they will have to rebuild their supply chains and practice better corporate responsibility. The milk-powder scandal "might become a watershed for China's dairy industry to find its rebirth," he said. In the long run, it will to consolidation and a shuffling of the industry, he said.
Again, not long after the Sichuan earthquake, we're talking lots of public anger at local government officials.
The problem was inevitable, said Chinese experts, due to the poorly regulated supply chains and the bad reporting methods concerning problems, meaning no ability to trace it back up the chain.
From know-your-customer to know-your supply chain, right out of Great Powers.
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Comments (3)
Guess if you are a Chinese parent (or a baby there), maybe you want a strong government to regulate the market, instead of waiting for a market driven solution based on your pain. Some problems are indeed self-limiting, but so are kidney stones. That kind of problem is worth spending some effort to avoid.
Posted by hof1991![[TypeKey Profile Page]](http://www.thomaspmbarnett.com/weblog/nav-commenters.gif)
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October 5, 2008 3:33 PM
Has anybody else noticed the similarities between the Chinese dairy industry that watered down milk to raise profits and then added toxic chemicals in order to hide their misdeeds and the folks at Fannie Mae who watered down mortgage backed securities with sub prime mortgages and then hid the dilution with accounting legerdemain? It is the difficulty of determining how many bad mortgages are in these securities packages that is devaluing all of them, in other words, making them toxic to the financial health of the institutions that hold them.
Posted by Mark in Texas | October 5, 2008 6:04 PM
Market cheating tends to look the same, whether you're talking mortgages, milk or heroin. It's usually a watering-down process.
Posted by Tom Barnett | October 6, 2008 1:46 PM