The Poisonous Supply Chain

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Remember Sudan Red? It was the carcinogenic additive found in products from KFC, Heinz and others in China (and elsewhere, including some products in the UK) back in 2005. It seems that lessons have still not been learned and that dangers are still lurking…below the surface of pet food, among other places. The FT notes that:

    “China’s government has called for stronger super¬vision of its food industry, saying officials should “grasp well” the task of cracking down on illegal fertilisers, pesticides, livestock drugs and feed additives.

    The order from the State Council, or cabinet, comes amid international concern about the safety of Chinese food products, following the deaths of US cats and dogs that ate pet food made with contaminated wheat gluten and rice protein imported from China.

    Beijing this week reversed earlier denials and acknow¬ledged that local companies had illegally shipped rice protein and wheat gluten that contained melamine, a chemical used in fertilisers and industry. This has been blamed for causing a number of animal deaths in the US and has prompted the recall of nearly 100 brands of pet food made with the tainted ingredients.”

When the food contamination issue last hit the headlines, my firm was engaged to conduct some investigations into the supply chain, and to find out about how reputable, international brands had managed to find themselves selling poison to their loyal customers. At that time (and, I suspect, again now) the problems occurred to two main reasons.

    • Firstly it was about money – Chinese suppliers at the bottom of the food chain wanted to bulk up their profits by bulking up their products (red dye for a better colour of chilli powder, or melamine for more protein in pet food). Further up the chain, companies that should have been buying, in and processing, whole chillies were saving on costs by buying powder instead (so they had no way controlling what was in it). Trust went ahead of testing, and the products ended up in consumers’ bellies.

    • Secondly it was about complacency (and money, of course). People who should have know better saved on time and cost by relying on what they were told. Supply contracts lacked sufficient detail, procurement processes were not robust, due diligence was not done, and site inspections and product tests were not carried out.

Of course the costs of prevention would have been far less than the costs of the cure. Hindsight may be a wonderful thing but, as the Scouts like to say, it is better to “be prepared”. A little due diligence, testing, and risk management can go a long way…a lot further (in the right direction) than reliance on regulators. This is again highlighted by the current trial of the former head of the State Food & Drug Administration, Zheng Xiaoyu. China Examiner (h/t China Digital Times) reports:

    “China’s former top drug regulator went on trial Wednesday accused of taking bribes to approve untested medicine, including an antibiotic that killed at least 10 patients last year before it was taken off the market.

    Zheng was fired in 2005 on charges he took up to $780,000 in bribes to approve medicine that had not been tested to ensure its safety. He was expelled earlier this year from the ruling Communist Party.

    Zheng’s case prompted a sweeping investigation of the Chinese drug industry. Authorities ordered a review of 170,000 drug licenses, most of them granted in 1999-2002, when Zheng was in office.”

Anyone who bribed their way into the market in those years (or any other time) will face some sleepless nights. As will anyone who has a long chain of unknown and untested suppliers. As I have said before, Due Diligence = Sound Sleep.

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2 Responses to “The Poisonous Supply Chain”

  1. Finance information » Blog Archive » The Poisonous Supply Chain Says:

    […] have been buying, in and processing, whole chillies were saving on […] Read more at Jeremy Gordon Related entries Good To Know E-Business Tips Good T […]

  2. Archive » “Made In China”: Managing The Backlash, Protecting The Brand| China Business Blog Says:

    […] ing more misery for the “Made in China” label. I have recently reported on a range of poisonous and dangerous goods from China that have resulted in corporate recalls and consumer fe […]

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