China Esquire

Was reading China Law Blog’s treatment of Chinese branding and trademarks here where Dan Harris takes issue with a Newsweek article, which states in part:

The simplest explanation for China’s failure to build global brands is cutthroat domestic competition. In most product categories, hundreds or thousands of firms compete for domestic market share, leaving profit margins razor thin. . . . And because foreign brands have taken much of the market’s high end, most companies are forced to compete on cost, leaving little room for investment in R&D or marketing. . . . Finally, the recent string of product recalls—including poisonous pet food and faulty tires—has left consumers wary of made-in-China goods.

Of course, I would take issue with this article as Dan does. His thoughts, and mine, after the jump.

Continue Reading »

Looks like Chinese manufacturers are causing yet another legal fuss here.  This time its drywall.  CNN ran an article yesterday entitled “ Chinese-made drywall ruining homes, owners say“.  It seems that people in multiple states–Florida and Louisiana–are having issues with dry wall emitting corrosive gases.  And it’s gotten bad enough to not only trigger three law suits, but three separate class actions.  (2 in Florida, 1 in Louisiana)

CNN reports:

Officials are looking into claims that Chinese-made drywall installed in some Florida homes is emitting smelly, corrosive gases and ruining household systems such as air conditioners, the Consumer Product Safety Commission says.

The Florida Health Department, which is investigating whether the drywall poses any health risks, said it has received more than 140 homeowner complaints. And class-action lawsuits allege defective drywall has caused problems in at least three states — Florida, Louisiana and Alabama — while some attorneys involved claim such drywall may have been used in tens of thousands of U.S. homes.

Continue Reading »

I didn’t think I’d be seeing any interesting resolution of the milk scandal from earlier this year that would be worth posting…  but lo and behold, Yahoo decided to post an article ( h/t to China Digital Times) entitled “ Chinese Dairies to Compensate Melamine Victims“.  I’d seen news about the Sanlu trials, but didn’t think anything special enough to comment about them.  (that may change of course)  But here’s the article, which triggered some thoughts:

Chinese dairy companies that sold melamine-tainted milk are ready to pay compensation to the families of the nearly 300,000 children who became ill or died from drinking contaminated infant formula, a state news agency reported Saturday.

Twenty-two dairy producers will make a one-time cash payment to the victims’ families, China’s Dairy Industry Association announced, although it did not disclose an amount, the official Xinhua News agency said.

“The money for compensation is in place now and will soon be handed to the people who have custody of the sickened children through various channels,” the association said. The group did not specify a date.

The issue of compensation for the young victims has been a highly sensitive one, with Chinese courts so far not accepting any lawsuits filed by the families.

It’s interesting to consider that the courts refuse to accept lawsuits, and that payment up until this point has been handled only by the government.  (in an attempt to tide public unrest and excessive use of the legal system)  Now it looks like the companies are ready to turn in a compensation package…  but more than that, I wonder if this is more or less the formal apology to the people.

People who understand the U.S. legal system understand that often these sort of tort cases go on because plaintiffs want an apology.  And they proceed to trial because of “principle”.  Settlement is sometimes the goal of plaintiffs, but often, more so the goal of the lawyers involved.  (and yes, I’ve done plaintiff’s work)  I think that many of the plaintiffs I’ve represented would have gladly taken less if the company was crazy enough to just admit liability and issue an apology.  (that never happens for PR, liability, and a whole host of other reasons)  But what if they did?

And so I am left wondering if Sanlu and other dairies are making this event into a pay-off or an apology…  the former would place them in good company with American corporations.  The latter would place them into foreign territory…  and yet, everyone already knows the companies sold tainted goods.  The court of public opinion is already against them.  And what better way to stave off lawsuits than to just give the darn apology?  Is it that hard?  It is in America.  Perhaps this isn’t the case in China…  I’m curious as to how the companies are going to maneuver the PR around this case.  I hope its an apology…  its about time someone finally stepped up to the plate and owned up to their mistakes.

Yes, Chinese dairies, I hope your performance shames American companies.  That would be a sight to see!

Just wanted to post quickly about more and more melamine developments.  The first is not Sanlu, believe it or not.  Not milk.  It’s eggs.  CNN published an article entitled “ Hong Kong finds excessive melamine in eggs“.  Here is an excerpt:

HONG KONG, China (AP) — Excessive levels of the industrial chemical melamine in Chinese eggs might be traced to fertilizer fed to chickens, the Hong Kong government said.

In a statement late Saturday, the government said it found 4.7 parts per million of melamine in the eggs produced by a division of China’s Dalian Hanwei Enterprise Group based in the northeastern port city Dalian.

The legal limit of melamine in Hong Kong is 2.5 ppm.

Hong Kong Secretary for Food and Health York Chow said the melamine may have come from fertilizer fed to chickens that laid the eggs. “The preliminary opinion experts have given us is that there is a problem with the fertilizer,” Chow told reporters.

Chow said Hong Kong officials will step up checks of eggs imported from China.

This really has got to stop.  But unfortunately, without severe legal and/or regulatory penalties, the only way that this sort of stuff will ever stop is when the bottom line gets hurt…  badly.  (like I am betting Sanlu will probably never recover its profitability)

That being said, it sure doesn’t help the perceptions of China here in the U.S.  I had some acquaintances I know decide to stop buying Chinese produce because of some rather suspect tasting stuff in some pears recently.  It didn’t seem to matter that no one got sick.  The normal reaction is that this stuff must be no good because its from China.  I don’t necessarily agree with the reasoning, but I do note this: the public perception around these parts is getting worse…  and this is the SF Bay Area.  No wonder Obama and Biden get so much support when they bad mouth China (or Japan/Korea for that matter) in the rest of this country…

The other thing I wanted to highlight was something that Stan Abrams caught.  (Dan Harris also posted on it, and I commented on both)  I am not going to comment at length right now, but depending on how interesting the complaint is, I just might have to chime in…  in a more in-depth manner than just commenting. From Radio Free Asia:

Parents of Chinese children who died or became ill after drinking infant milk formula contaminated with melamine say they will sue a subsidiary of a Chinese milk powder manufacturer based in the U.S. state of Maryland.
A member of one of the affected families surnamed Liu said Qingdao Shengyuan Milk Co. Ltd., a dairy products manufacturer based in the eastern China city of Qingdao, had a Delaware-registered investment subsidiary with offices in Maryland, rendering it subject to U.S. law.

“We have signed a contract with a Maryland-based lawyer who will represent us in this collective compensation suit,” Liu said.

“There are milk victim parents who are willing to pay for the legal fees and expenses and who want to pursue justice in the United States,” he said.

Very very interesting.  Will post more if and when more developments happen with this.

The International Herald Tribune (tagline: the New York Times Global Edition), published an article reiterating some not-so-surprising news, entitled “ Lawsuits in China’s milk scandal unlikely to be settled in court“.  ( h/t to CDT)

Of course, what was reported was nothing new to the readers of this blog:

The parents filed a lawsuit Monday in the arid northwest province of Gansu where the family lives, to try to wrest more than $152,000 in compensation from Sanlu Group, the maker of the baby formula that Kaixuan had been drinking.

It seemed like a clear-cut liability case – since last month, Sanlu has been at the center of China’s biggest contaminated food crisis in years. But as in two other courts now dealing with such lawsuits, the judge has so far declined to hear the case.

Chinese officials routinely favor producers over consumers and rarely hold companies or their shareholders to account even in major cases of malfeasance. Product liability lawsuits remain difficult to file and harder still to win, especially if the company involved has state ownership or close connections to officials who also oversee the courts.

But Yi and his wife are among only a handful of Chinese who have filed a lawsuit against a dairy company. The plaintiffs are all individual families and lawyers say there is almost zero chance that any judge would consider a class-action lawsuit since those are highly discouraged in China.

“This is a product liability case that in a Western country would turn into a class-action lawsuit,” Zhang continued. “But I think social stability is the government’s main concern. They don’t want to see so many people getting involved in one lawsuit – this might threaten social stability.”

So, that’s 3 lawsuits against Sanlu that have been reported.  And 3 lawsuits where the judge has declined to hear the case.  How convenient.  I am still not sure how a judge can elect to not hear a case like this for what is obviously political reasons.  I am not saying that American judges don’t get political.  (some very much do)  But on the whole, at least they don’t look like puppets for the government or government-based policies…  That being said, I thought once was normal, twice okay… but 3 dismissals already.  Either that Chinese judge is really scared of the government or just plain unwilling to go with Chinese public sentiment. I’d say the former.

Government officials have told parents and lawyers in the milk cases that their complaints can be resolved through out-of-court compensation payments.

Local governments in Sichuan Province employed the same strategy with grieving parents whose children died in school collapses during the May 12 earthquake. Over the summer, the governments gave compensation to the parents if they signed papers agreeing to drop demands for investigations into shoddy school construction. Most of the parents accepted the money.

As with the school collapses, the milk scandal involves a web of complicity tying company executives to government officials, which means any lawsuit is politically sensitive. To prevent a public airing of grievances, the government will pressure complainants to sign individual compensation agreements, said Teng Biao, a lawyer in Beijing who is collecting material for a possible class-action lawsuit.

“Traditionally in China, politics is always higher than the law,” he said.

Sad indeed.  I look forward to the day when the rule of law takes over.  I don’t want to reiterate my point that I think the government’s handling of the crisis ends up encouraging bad behavior, so I will just quote from my prior post:

I don’t think the Chinese government’s method of compensation is all that fair in terms of pain and suffering (and time and nuisance value) by just paying all treatment fees.  But it is great in terms of promoting social stability and trying to quell the unrest.  What’s the downside?  Ultimately, such an action likely will encourage would-be offenders to continue to market garbage products.  And of course, true justice isn’t really served.  The government ends up shielding the companies at the cost of damaged parties.

Maybe the fourth time will be the charm…

Well, it seems like national government assistance and local government discouragement (a.k.a. pressure) didn’t prevent what the government as a whole was trying to avoid all along with Sanlu: the lawsuit.  While I had thought it would be some time before one of these cases was filed, I was wrong.

The first lawsuit was reported by Bloomberg today ( h/t to CDT, which always does a good job scooping me):

The parents of a one-year-old boy sickened by tainted milk powder filed a lawsuit against Sanlu Group Co., seeking 150,000 yuan ($21,913) in compensation, the Beijing Youth Daily reported.

The boy was found to have kidney stones after he drank more than 100 bags of Sanlu’s milk powder since he was born in July 2007 in Henan province, the state-run newspaper said over the weekend, court documents.

Sanlu officials were unavailable for comment today and haven’t returned calls over the past two weeks. The company, in a letter of apology on its Web site, has said it “is heart stricken by the damage that we’ve caused.” Government and business offices are closed in China for a week-long holiday.

This should be interesting since I didn’t think that pain and suffering could be recoverable.  Since I don’t have a pleading in hand, I cannot comment on what causes of action are being used as the grounds for the case…  and of course, what the grounds for the damages are.  But this should prove to be an interesting test case.  If the family makes out well, then the floodgates may open wide for litigation.  Just imagine how much a wrongful death case could potentially be worth as it strikes the heart of Chinese values in family.

However, the problem?  Local government pressure.  And also the Chinese aversion to litigation to solve problems unless push really does come to shove.  I don’t know how much of a chilling effect these two things will have on the likelihood of lawsuits.  Should prove interesting.  (almost makes me wish I could do a sociological study about this instead of talking about law)

Stay tuned.  I know I will.

UPDATE: China Law Prof Blog picked up the Chinese version from Beijing Youth Daily.

Well, last week I posted “ sanlu + government help = no lawsuits?” where I discussed the policy of the Chinese government to offer help in lieu of allowing Sanlu and other entities to suffer through lawsuits, the lack of damages and use of civil litigation, and other such thoughts.  And of course, lawyers looked very good because they were helping their people enforce their rights at hospitals and other places.

Turns out that this rosy picture isn’t so rosy after all: enter the Chinese government’s “encouragement” to lawyers to stop taking on these cases.  (a.k.a. government pressure)  Reuters published this article entitled “ China milk victim lawyers say pressed to quit” ( h/t CDT) yesterday:

Chinese lawyers seeking redress for infant victims of toxic milk say they are facing growing official pressure to abandon the efforts, blaming growing government sensitivity over the health scandal.

[L]ocal rights advocates and lawyers have mobilized to support families seeking redress, possibly by suing dairies or officials who failed to disclose the problem.

But on Sunday, organizers of the campaign and some of the lawyers said officials in some provinces have pressured volunteers or their bosses to give up the campaign.

“About two dozen of the lawyers have called these past days to say they want to quit the volunteer advice group,” said Li Fangping, a Beijing lawyer who helped organize the group soon after public news of the poisonings emerged.

“Some of them said that they or their offices were told they’d face serious repercussions if they stayed involved.”

Frankly, I am not all that surprised.  I was hoping that the government would continue to work with lawyers to ensure public safety and allow the victims to receive important treatment.  I was also hoping that the government would see cooperation with lawyers are promoting a peaceful society.  But alas, the government, as always, has decided to cast lawyers as troublemakers…  and harmful to a harmonious society.  I think its a bad policy choice as usual.

It’s not like the lawyers were instigating civil lawsuits or anything–they were merely allowing victims access to government sponsored treatment for free.  I wonder if the government appreciates any group that would portend to be a rival to itself in terms of being helpful to the public…

But the rash of warnings suggests the government does not want lingering political and legal fallout from the milk scandal.

“I’d guess they see this issue as just too sensitive for lawyers and court cases,” said Zhou Shifeng, a volunteer lawyer from Beijing who said he had heard of the pressure.

“When the interests involved are too powerful, they will devise ways to get lawyers to quit, not necessarily direct orders.”

Many hundreds of parents have called the volunteers to ask about compensation, and possibly suing Sanlu Group, the north Chinese dairy whose milk powder has been blamed for many of the illnesses, said Li.

Lawyers in Beijing said law officials there had nudged them to be “aware of the general picture” and to heed and have trust in the government’s handling of the scandal.

But in other parts of the country where many children are sick, apparently from milk powder, the advocates received tougher warnings, some said.

“The local judicial authorities just don’t want any of us to take part,” said Chang Boyang, a lawyer from central China’s Henan province who helped organize the group. “The pressure on law offices was too heavy. We had to compromise.”

While it may be the case that many asked about suing Sanlu, there were no indications that any lawyer was actually about to do the dirty deed. In fact, it seemed like most lawyers were already hesitant to do so.  So why in the world is the government stepping in to ensure that it won’t happen?  My feeling was that the government was already acting like a safety valve on public pressure.  Now its just attempting to make its feelings known in a way that is plainly ridiculous.

I think what the government is afraid of is that the true general picture will come out of this scandal: lax, lazy, and/or corrupt administrators; a government that looks terribly slow and lame in light of the fact that this was known for months; more PR touting just how bad China product quality has become.  But you know what?  It’s already happened.  The cat is out of the bag.  And no matter how hard the government tries, you cannot unring the bell.  It’s done.

If the Chinese government continues to believe that this sort of thing is too sensitive for the courts and the judicial system, then what good is the judicial system anyways?  Other than as an appendix to the Party?  Zip.  Zilch.  Nada.  And that’s the problem in my mind.  If the government got over its need to save face 110% of the time, I think rule of law would actually help the country as a whole…  and also help the government get to work on actually running the country, and not worrying 110% of what the rest of the world thinks about it.  It’s rather counterproductive.

Just had to vent a little since I see my fellow lawyers being slightly oppressed.

UPDATE: Looks like CNN got in the act with a video about this story too.

I knew I would see a story about the legal ramifications about the Sanlu milk formula scandal sooner or later.  The Christian Science Monitor finally wrote up an interesting article today entitled “ What China’s tainted milk may not bring: lawsuits.“  ( h/t to CDT)  Of course, part of me didn’t like the title already since most everyone knows that I am pro-litigation and pro-lawsuit as an effective means of enforcement by private parties.  (At least, that’s true in America)

But I find the article interesting:

Li Fangping, a prominent human rights lawyer, is busy organizing victims of the poisoned infant formula scandal rocking China and offering pro bono help. But he is not planning to sue Sanlu, the formula manufacturer – not yet.

A case that in the United States would attract swarms of lawyers eyeing the prospect of millions of dollars in damages is primarily a political, not legal, issue in China.

For reasons to do with China’s still-developing law and its authoritarian political system, lawyers are treading carefully around the Sanlu incident, in which four babies have died and nearly 53,000 suffered kidney problems after drinking adulterated powdered milk.

Well, I am sure that part of it also has to do with the fact that lawyers who get on the bad side of the government don’t end up doing too well.  Imprisonment and harassment by the government come to mind.  In America, you may get death threats, but very rarely will anyone actually act on it.  And of course, you even more rarely have the U.S. government breathing down your neck.

That being said, I have to admire Mr. Li for organizing people and then offering to help them out without cost.  Pro bono work is an admirable thing, and for him and other lawyers to offer it in China is truly a good and decent thing to do.

The government is seeking to forestall legal repercussions by pledging free medical care for all babies affected by the tainted milk. Mr. Li is holding his fire until he sees how fully that pledge is kept.

“We are still waiting to see how the government’s compensation policy works,” he says. “If consumers accept it there will be no need for a lawsuit” against Sanlu.

Instead, Li and more than 70 other lawyers offering their help gratis are concentrating on cases where hospitals are not abiding by the Health Ministry’s public promise that treatment will be free. They are advising the parents of victims about the practicalities of claiming compensation from the government for the expenses they incur in treating their babies.

This is a very interesting thought here.  Why have lawsuits when you can have the government step in and make sure that plaintiffs are made whole?  (okay, it’s arguable that the plaintiffs aren’t made whole because they aren’t compensated for pain and suffering, but I don’t want to go there in this part of my post)

People in America have been clamoring for “tort reform” for years.  I get these obnoxious emails from David Lovett about the need to cap medical malpractice awards and “protect” physicians.  That’s such a crock.  (licensed physicians who are repeat offenders just shouldn’t be allowed to practice without supervision or other restrictions…  and if someone is dumb enough to insure them, then they have to pay.  Period.)  But is capping damages the most just thing to do?  I don’t think so.  So here’s a thought for President Bush (and I don’t agree with his assessment): if you want to have true tort reform, then perhaps the government should foot the bill wherever possible.  Interesting thought in my mind.

I don’t think the Chinese government’s method of compensation is all that fair in terms of pain and suffering (and time and nuisance value) by just paying all treatment fees.  But it is great in terms of promoting social stability and trying to quell the unrest.  What’s the downside?  Ultimately, such an action likely will encourage would-be offenders to continue to market garbage products.  And of course, true justice isn’t really served.  The government ends up shielding the companies at the cost of damaged parties.

The central government has promised to pay all the medical costs arising from the scandal, the extent of which is still being discovered: On Sunday a Hong Kong hospital reported the first case outside mainland China of a child found with kidney stones after drinking tainted milk.

“If their children recover, and the government has paid for their healthcare, how can they sue Sanlu?” asks Liu Renwen, a legal scholar at the China Academy of Social Sciences. “I don’t think many will try.”

I think its quite easy actually.  But until lawyers are willing to do it, it won’t happen.  Perhaps thats why the Chinese government knows that lawyers can be agents of reform/change if they don’t work with them…

The 1986 principles of Chinese tort law do not allow citizens to claim damages for moral or spiritual suffering – what US lawyers call “pain and suffering” – only material damages to compensate for medical bills, for example.

That is changing, however, and Chinese courts are increasingly granting moral damages. Four years ago two families from the province of Anhui won damages from another infant formula manufacturer whose substandard milk powder was blamed for their babies’ malnutrition.

“Damages are so low in China that companies can get away with it,” says Dan Harris, partner in the Seattle law firm HarrisMoure, which specializes in Chinese business law. “Why bother to recall if only 20 people are going to sue you and win $20,000 each?”

I agree with Dan here, and I continue to believe that Chinese courts need to start allowing greater damages.  It is more just.  And it will encourage the use of the legal system.  The downside to that?  It allows for less social “harmony” if you open up the courts for everyone to use freely.  (and yes, there will also be freeloaders, that’s always a downside)  I’ve talked about damages before and don’t think I need to elaborate too much… it’s pretty intuitive.

Li, as he contemplates the possibility of a lawsuit against Sanlu, says that because “this case has become politicized, it is unclear whether it can be resolved through a legal process.

“The government is trying to ensure social stability, and they do not want to see all the victims’ parents to gather together, so they probably will not allow a class action suit,” he expects.

“Individuals should be able to sue companies,” Li argues, but in the interest of social stability “the government just takes money out of the national budget” to compensate victims of scandals such as the Sanlu incident.

That’s exactly the problem.  Lawsuits are supposed to be the arena to address disputes without being political.  (At least, they are in America, though there is room for debate when an issue is extremely political)  China’s courts aren’t capable of doing that it seems.  But that’s the goal China should shoot for: unbiased courts where things are done by the rule of law, and not rule of party.

Another consideration is this: what is the cost of social stability?  I argue that it’s going to be the health and safety of your constituents because Sanlu isn’t an isolated incident.  It will happen again.  And again the government will step in to remedy the situation.  To me, that’s not ideal.

But, I must admit, it does seem like a working solution in the short run…

Yes, its Sunday and I am doing my review. (normally I do it on Saturday) But due to lack of posts recently, I wanted to put something real up yesterday. So here is my review piece. Rich Brubaker of All Roads put up a post entitled “When Sourcing in China. Cash = Control”. And it contains a lot of very basic advice–much of it common sense–which I think is helpful. Businesses going into China should not check their brain in at the visa office. Some of the highlights:

. . . [I]t is hear that I will blend a few phrases that I have heard in my time on earth… “cash is king”… and “I’ll believe it when the money is in the bank”… or “logistics is simply controlling frieght”…

Where these random cliches come together, is that I never consider a consulting deal closed until the money is in the bank, and that when sourcing in China I am only in the power position for as long as I control the money… and what amazes me is how many people forget these simple rules.

A while back I wrote a post about quality control I received an email from someone who had bought a container full of product that was crap. It wasn’t to spec, he had fully paid out, and he wanted to know how to recover. The problem was compounded by the fact that he had no other supplier ready in the wings, his current supplier knew that, and he felt stuck.

He assumed that his partner would get everything right, but failed to force his supplier to take on any risk – after all a 100% payment at shipment essentially is the best deal a manufacturer can get!

Rich’s advice to his client:

1) He needs to find a 2nd and 3rd supplier of goods as a backup

2) He should forget about returning the goods (the logistics of that alone was 6-8k USD with no indication the supplier would take it back)

3) He had to begin QCing the goods through either his own eyes, or trusted eyes

4) As long as his payment terms were as they were, his suppliers had no skin in the game and therefore there was no reason to believe this wouldn’t happen again.

For those who are sourcing in China, it really is important to understand that as long as you “owe” your supplier money, you are still in the position of power. You can change an order size more easily, you can demand a 3rd party audit, and if the QC process shows a red flad you can return product much more easily. Because until you are 100% paid up, the supplier at some level will be at a loss, and that is power.

In watching buyers in China for the last 5 years now, where I am often surprised is just how easily that is lost. that the basic understanding of the power of money is lost on some who will structure their deal in such a way that they lose all ability to return items that are not up to spec. That rather than quality control in China, and then have the ability to fix it on site, many will find themselves with a container full of junk that is unreturnable.

So, a couple quick lessons in global sourcing. Make sure your goods are up to spec before they leave the country (because there is little you can do once they hit your dock), and never cash your supplier out until your final audit has been perform….

All good advice here. I harp on QC all the time, and its important. So important that you need to do it in China. And you are probably better off either having someone on the ground there from your business or having an agency that you trust A LOT. All clients should be advised accordingly.

I’ve talked about Americans decrying Chinese imported products on this blog, and the need for American and multinational corporations to get their act together in due diligence and quality control. (Dan Harris at CLB had a post on QC which quotes the good ideas from Nina Ying Sun’s post here recently, in case you didn’t read it)

Well this story was so strange that I had to post it. It’s not exactly your run-of-the-mill Trader Joe’s or even pet food melamine case. Instead, Congress is targeting importation of actual (plastinated) human bodies for display from China. ABC News reports ( h/t to Above the Law) here:

Twenty-one members of Congress have sponsored a bill that would strike a major blow to the multi-million-dollar industry that puts human bodies on display because they say the bodies could be from executed Chinese prisoners.

Republican Rep. Todd Akin of Missouri introduced the bill that would prohibit the importation of any “plastinated” human body part into this country. Atlanta-based Premier Exhibitions uses “unclaimed” Chinese bodies infused with silicone through a process called “plastination” for display across the nation in an exhibit called, “Bodies…The Exhibition.”

“This is a human rights issue about affording human dignities to people around the world,” said Rep. Akin, adding that he is concerned that the Chinese people in the exhibit did not give permission for their bodies to be on display. “We cannot verify the source of each body coming from China, so we decided the best approach was to say that in our country, you cannot import plastinated bodies,” he said.

This is arguably a QC issue: companies not verifying where their dead are coming from. Of course, I doubt that because it seems like its general knowledge that companies can get bodies without consent from China:

Gunther von Hagens who invented the plastination process puts on another show featuring plastinated bodies called “Body Worlds.” He, too, would be affected as his plastination factory is located on the German-Polish border. Von Hagens says all his bodies are donated and that he no longer works with corpses obtained from China.

So its not quite a QC issue. Because companies are knowingly doing it. This is not an issue of those “evil” and “greedy” Chinese manufacturers, and so, consumers cannot call it that. (unlike a situation such as Panama’s cough syrup with glycerine) It seems to me that the problem isn’t QC, its unscrupulous businesses using China as a source for bodies. And sadly, I would bet that those companies would go elsewhere if plastinated bodies weren’t available from China.

Note, this isn’t just a ban on Chinese plastinated bodies. It’s a ban on all such imports. So it’s not an anti-China matter.

And yes, there are domestic and international standards of decency and laws on the books on what you do with cadavers and human bodies. But this ban is not about QC or about the law. It’s about politics. Honestly, the nature of this debate is sort of sickening to me… which is why I chose law and not medicine. I am not sure I’d call it human rights when we are dealing with dead people, so it’s sort hard to come up with any sort of classification for this sort of mess.

Anyways, I thought it was interesting to at least think about. I hope it doesn’t ruin your lunch today.

Well, I’m not even sure if I can call it quality fade to be honest.  Quality fade assumes the quality was good from the start and then went down later.  Its more like just the usual cutting of corners.  So perhaps its more a lack of QC and due diligence…  and it is also a clear sign of why rampant corruption can turn deadly.  This tops the Panama cough syrup glycerine any day.

Paul Midler ran an post on Friday, highlighting an article called “Why China’s Buildings Crumbled”.  I want to display more of the article than he did because it shows how deadly cutting corners can be:

But while rescue crews fought to reach the victims, awkward questions were being asked about the tragedy. One man, gazing at the corpse of his nine-year-old cousin, said he had disturbing evidence that could explain the collapse of the five-storey Juyuan school building, along with eight other schools in the region.

The man, who gave his surname as Ren, is a 32-year-old steel worker who has worked for a decade in the local construction industry. He said he always knew that the Juyuan school was a disaster in waiting. Local officials, he said, had pocketed money that was budgeted for the school, while a private construction company had saved money by cutting corners on the project.

To boost its profits, the company used iron instead of steel in many parts of the construction of the building, Mr. Ren said. It cut back on the size and number of steel braces in the cement foundation slabs. And it used cheap materials to make the concrete walls, weakening the entire structure.

Many other survivors were convinced that corruption had played a role in determining which buildings collapsed and which were unscathed. One man pointed to a new building whose first floor had collapsed, even as older buildings around it were intact. “They used fewer bricks in the new building, so they could earn more money,” he said.

The shoddily constructed buildings are commonly called “tofu buildings” because of their weak structural condition.

They should be so lucky that this wasn’t a U.S. based tragedy or the construction companies involved would be facing a very nasty civil lawsuit and probably criminal prosecution.  I’ve hard on due diligence and QC before, so I won’t beat a dead horse.  Just another warning to be careful…  you never know when human lives depend on it.

CNN World Business ran an article this past week that states that food exports have dropped by 30% to Japan, which is a key market for Chinese food products.  I am not sure that I actually feel too badly for China in this case, but let me explain after the article:

China’s food exports to Japan, a key market, plunged 30 percent in February, hurt by a scare over poisoned Chinese-made dumplings, according to data reported Friday.

Japan is the third-largest market for Chinese exporters of fish, dumplings and other processed food, and the drop in sales is a severe blow to the fast-growing industry.

China’s food exports to Japan in February totaled 186,000 tons, down 30 percent from the same month in 2007, the General Administration of Customs reported.

Exports from Shandong, the eastern province that is the base for food processors serving Japan, fell 60 percent, the official Xinhua News Agency said.

“Influenced by such things as the `poisoned dumpling incident,’ our country’s food exports to Japan fell one after the other,” said a customs agency statement.

Chinese-made dumplings were pulled from Japanese supermarkets in December after traces of a banned insecticide were found in the dumplings and in the vomit of people who fell ill after eating them.

Bad Chinese products are nothing new.  And it is not all too surprising considering that China is become the world’s manufacturer, not just America’s sourcing base.  And as expected, there are issues of quality fade, lack of quality control, and lack of repeat due diligence.  So sometimes I actually think its a miracle that there aren’t more Chinese products issues on a regular basis.  Thankfully, most issues are not lethal, like the glycerin that Panama bought some time back for cough syrup.

But why do I say that China has no one to blame but itself?  Because it often takes the stance that it’s importing country’s responsibility to check out product issues, not the exporter’s.  The Chinese SFDA did that when it came with pharmaceuticals here (and I covered this topic in this post):

But the SFDA said that based on international practice, “safeguarding the legality, safety and quality of raw materials imported for use in pharmaceuticals is the responsibility of the importing country.”

This was the official policy regarding pharmaceuticals, so I know it’s not quite the same thing.  But it is my belief that this has been China’s stance toward food and other exported products as well.  Here was China’s response:

Chinese authorities say their investigation has found the poisoning probably was an isolated, deliberate case. They say there is little chance it happened in China and have accused Japanese police of failing to cooperate with them.

Sure, but if China is trying to implement domestic food safety standards, then it must know that there are food export issues as well.  As long as the government refuses to tackle this issue head on, and expend some serious capital and resources to deal with it, then China really has no one to blame if Japan or other countries decide to start consuming less food products from China.  That’s pretty logical actually.  And I am not trying to be cruel.  In the end, China can only blame itself if the market for Chinese exports, particularly food exports, drops.

This is a good opportunity for the government to get involved in regulating its exports.  It doesn’t need to massively regulate.  But more regulation, though costly, will be welcome.  And ultimately, it may cost China less if other countries can learn to trust Chinese exports again.