Author: RD16 (05/30/2020)
During the National People’s Congress of the PRC, people began to hear about new policy proposals that might impact their daily lives, and one of them particularly stirred up debates on social media platforms. Per CCP state media Sina, a delegate of the People’s Congress proposed, “to remove infant milk powder from the list of cross-border e-commerce merchants”(*7). A few netizens instantly reacted, “Who on earth has determined to propose such an inconsiderate policy?”, and many echoed the same sentiment.
It has turned out the delegate of the people happened to be a top official from Mengniu, the biggest dairy product maker of China. She claimed the primary reason to ban the cross-border purchasing from e-commerce is out of the “concern” that the potential oversea formulas’ component inspection, and custom entry procedure may not be able to meet the “high standard” the Chinese industry so requires.
Well, this proposal and the supposed rational may just seem paradoxical in the eyes of many…
First of all, the domestic milk brands have not been deemed as premier quality-wise by Chinese consumers, to make things worse, some domestic brand formulas have devasted the lives of many kids and families.
Let’s dial back to year 2008, which was the year the cross-border purchasing of baby formula ascended into an instant stardom, all thanked to the infamous scandal of Sanlu milk powder broke out. Sanlu was a top Chinese baby milk product manufacturer. In order to pump up the profits by drastically reducing the cost of raw materials, they blatantly added melamine (a nitrogen-rich compound used to manufacture resin or plastic) into their product to make the milk powder appear to be protein-rich, and therefore to get certified by the industry authorities.
Things were managed to be unnoticeable at first until quite a few hospitals reported many infants and young kids got very sick, and all cases were closely linked to the intake of Sanlu milk powder. Some suffered from urologic issues, some from kidney stones, and some from rickets, of which symptoms may include weak bones development and larger-than-normal forehead (*6). Some illnesses could mean life-long impact including permanent deformity and intellectual disability. It is vital to point out that Mengniu, the very company who made the proposal of the ban of overseas milk products or competitors, was part of the 2008 milk scandal when the government inspections revealed problematic products by Mengniu.
Sadly, even the industry has vouched that they had already cleaned up their act since then, resurgence of rickets cases has been reported in Hunan province just recently, per HK Economic Times in 2020 (*6).
Secondly, plenty marketing data has demonstrated that the mainland society when it comes to diary products, all in all, deem the top oversea brands (US, Europe, Australia, and Japan) most trust worthy and favorable.
It is an open secret that products originated from mainland could be tainted by counterfeits or inferior quality ones. But in this case, the mainland consumers have voted with their wallets – that is, they care enough to spend top-dollars just to be sure to grab the most trust-worthy products for the sake of the health of their babies.
Based on a marketing survey (2017), among the top-10 most popular brands in China’s baby formula market, 8 of them are originally premier American or European brands, such as Mead Johnson, Friso, Dumex, etc.(*7). The timeline of their Chinese market inception date (early 90’s through 2008) indicates it is a time-honored national consent that Chinese people trust and favor the overseas brands.
Not only the average consumers have placed their trust and investment into those time elite brands with long-track-record, even the dairy heavyweights of China, Mengniu, in an effort to counter the pressure coming from their oversea competitors, has acted by acquiring them(*4). For example, in year 2019 Mengniu paid $1.5 billion for Australia infant formula maker Bellamy’s, followed by making an offer on another Australia’s biggest dairy company. In Nov 2019, merely a half year ago, Mengniu Dairy was expected to pay Kirin (Japan) $600 million for the Lion Dairy & Drinks portfolio.
Well, if the foreign brand milk powder composition seemed to be less than meets-the-eye, why was the domestic diary giant so eager in acquiring them, and in such a short time period?
Thirdly, the notion suggested by the Mengniu’s delegate that the cross-border product may not meet the inspection standard, simply cannot hold water.
As the cross-border e-commerce has been very popular and has become mature over the last decade, there have been plenty online sources to help people who venture out on the formula export business. For example, a guide posted as “How to Export Baby Formula to China: A Complete Guide” (*5). It informed that as of Jan 01, 2018, China’s government have introduced new regulations stating that factories producing baby formula must be registered at CFDA (China’s Food and Drug Administration). This means the formula export business community are very well aware of the relevant regulations, the rigidness of the regulations, and aim to be in full compliance in order to set sail of their business.
Last but not least, when it comes to a big political event like People’s Congress, people accustomed to the western culture would normally think any delegate of the people is supposed to represent the common folks’ best interest, not that of the biggest interest groups. Isn’t it a bit awkward that the proposal was initiated by the very advocate of the biggest diary maker, especially after the diary giant has just aimed to complete a series of oversea acquisitions? What a ‘perfect’ timing!
Hope the mainland Chinese people will somehow make this proposal dispelled, so in the future if they were to be asked, ‘What brand of baby formula will you be feeding your baby, domestic only, or a brand that has gained your trust?’, instead of being “fed” one, they would have a conscious choice to make…
*1. credit for cover shot: DINOPHOTO/SHUTTERSTOCK
*3. 2017 Market survey: https://www.chyxx.com/top/201704/516753.html
*5. Guide for export: https://www.export2asia.com/blog/exporting-baby-formula-china/
*6. Resurgence of illness: https://imoney.hket.com/article/2644727/%E5%A4%A7%E9%A0%AD%E5%A8%83%E5%A8%83
*7. Proposal made: https://finance.sina.com.cn/china/2020-05-23/doc-iirczymk3178950.shtml