Apr 15 2008
food safety standards being incorporated into a draft law
The China Daily mentioned in an article last week ( h/t to China Digital Times today) that some of China’s new ideas for a food safety system won’t just be suggestions: they are being drafted into a new law. That is indeed interesting. Here is how the article reads in part:
The new product identification and tracking system, which has been in the spotlight recently over concerns it may raise production costs, has been written into the draft food safety law, a senior quality control official said Tuesday.
The system has become part of the draft food safety law and will become a legal obligation for all food companies if it is passed by the Standing Committee of the National People’s Congress (NPC), Pu Changcheng, deputy director of the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), said at a working conference in Beijing.
“It allows every stage of a product’s production and distribution cycle to be tracked.”
Food companies, however, have argued the system will increase their production costs. More than 20 firms, including Nestle, Mars, Coca-Cola and Pepsico, have submitted a joint petition against the system to the legislative affairs commission of the NPC Standing Committee and State Council Legislative Affairs Office.
The system will require new equipment to be purchased, will slow production, and changes will have to be made to packaging and design, the firms said in the petition.
In a report submitted to the AQSIQ, the China National Food Industry Association said all 40 of the food companies it surveyed last month said the system will raise their production costs, and 31 said it will lead to price rises of up to 15 percent.
“More importantly, the system is of little use in ensuring product safety, as it doesn’t deal with the quality of raw materials,” Li Yu, scientific and regulatory affairs director of Mars China, said.
“Also, the system doesn’t apply to small food plants, and they have the most problems,” he said.
Well, I have many thoughts regarding this sort of a law. First, it is very encouraging that the government is stepping up to the plate regarding food safety regulation. Standards are fine, but laws are required if you want broader enforcement. Will this law have any real teeth? Only time will tell. (Charlie McElwee and I had some discussion about enforcement of China’s new environmental laws, and the conclusion was the same: we can only hope that enforcement steps up) But it is a very positive step in terms of possible enforcement.
Second, it means the government is acknowledging that there are issues with food safety. And it isn’t just foreign countries’ imports (think the whole pet food and shrimp scandal, and China’s backlash)–they are acknowledging that domestic products also need regulation and enforcement. Yes, China needs to become more transparent. But things like this (and the admission that the 3 gorges dam is an environmental disaster) gives me great hope that this country will indeed become more and more transparent. And be able to better dialog in a somewhat more western manner with criticisms and problems domestically.
Third, there is a big question of who is going to receive the toughest treatment? I suspect it will be the foreign and multinational enterprises, those with larger pools of resources, that receive the brunt of this. Because it is enforcement, but it is also with a somewhat Chinese sense of fair play. I think some Chinese companies will get theirs as well, don’t get me wrong. But indeed, it is the Nestles and Mars & Company’s that have the most to lose. And so they will have to eat the rising costs. (or worse, pass them on to the consumer, and only add to Chinese inflation)
Is there a benefit to this for them? Of course. If they implement and other companies don’t, then I expect that Chinese citizens with some means will start buying the more expensive, but more likely safe products, en masse. Not everyone will be able to, but the Chinese wealthy and middle classes sure will. If you have the means and you have only one child, will you feed him garbage? Over your dead body. No, everyone wants to buy with confidence. It is not a Chinese-only thing. So expect the premium products to control just that a–a slight premium.
Finally, just to be a little cynical, what will happen when some of the more shady Chinese food producers realize that Nestle and Mars sells well? Compete? No. (Some will) But I can see what happens in smaller markets by smaller, fly-by-night producers: counterfeiting. And then we have an IP / trademark problem on our hands. But we will cross that bridge when we get there.
