US Consumer Concerns About Chinese Food Safety

This is too juicy to pass up writing about. Trader Joe’s, a very successful retail food chain based in California, has pulled all Chinese-made food products from its shelves.

Click here for a brief news item from AFP: US store chain cuts sales of food from China

From the article:

US grocery chain Trader Joe’s said Monday it would stop selling food imported from China due to customers’ concerns about the products’ safety.

“Our customers have voiced concerns about products from this region and we have listened,” Trader Joe’s spokeswoman Alison Mochizuki said in a statement.

“All single ingredient food items sourced from mainland China sre scheduled to be out of our stores by April 1,” she said.

What this means is that (1) if an ingredient for a food product is sourced from China, that food product may still be sold in Trader Joe’s and (2) Trader Joe’s may eventually sell foods that are made entirely in China sometime in the future.

This is the very definition of “growing pains,” folks. The same sort of process occurred in Taiwan, thirty or forty years ago. Here’s how it works:

Stage One: A developing country offers competitive advantages in labor costs and manufacturing speed. Many first world countries switch their manufacturing to this country.

Stage Two: The developing country’s factory owners achieve some success, and then through a combination of penny-pinching greed, lack of foresight and vision, and general lack of understanding of what the foreign market demands, start sending product with quality problems. In the case of products like foods, toys, and tires, this is downright dangerous. Consumers in the first world country react, the media plays up the problems, and the flow of orders starts to dry up as buyers look elsewhere, maybe paying a bit more.

Stage Three: The government of the developing country realizes that if something isn’t done to reign in these factory bosses, the country’s export manufacturing business is going to go to hell in a handbasket. They clamp down on dangerous practices, enforcing compliance with safety regulations.

Stage Four: The developing country recovers its export market, and continues to develop its technology and safety measures.

The interesting question here is, with enforcement in China so haphazard and hit-and-miss, will China successfully get through Stage Three to Stage Four? Several efforts have already been made to crack down on abusers, but in China, where the emperor is far away, the subjects often do what they want.

Bottom Line: If you are sourcing your products from China, you’d damned well better be on the ground, or hire someone trustworthy to be on the ground, watching your suppliers like a hawk. There are many fantastic suppliers in China, but many are still learning how to deal with your standards.



Filed under Business, China, Sourcing

6 responses to “US Consumer Concerns About Chinese Food Safety

  1. sfewings

    Very interesting,
    Stage Three also involves the the factory bosses recognizing the need to comply with a standard so they stay in business. I understand that is already happening in the toy industry.
    Two comments:
    Trader Joe’s is a food chain that caters to more discerning customers so it is not surprising that they before others would take a stand like this.
    There is large and growing anti-China sentiment in the US at the moment. A stand such as this will unavoidably involve have political ramifications. Not unlike the current poisoned dumpling scandal in Japan.

  2. truettblack

    Excellent point. Many of the factory bosses will in fact self-govern, but many of them simply won’t ever “get it.” It isn’t a matter of stupidity, per se, it is rather a matter of business culture. To wit, for many (not all) business owners in China, if you can get away with it, go for it. Get while the getting is good. Etcetera.

    Trader Joe’s is also very, very skilled at offering low prices for very high quality products. It is a marvel in specialty foods, in this food consultant’s humble opinion.

    I didn’t mention it in my post, but I too wonder how many other retailers will follow. I predict that whatever boycott occurs will be fairly short-lived, but I do think more merchants in the US will follow suit.

  3. truettblack,
    During the recent milk scandle in China I can’t help thinking about your comment “if you can get away with it, go for it. Get while the getting is good.”

    I also think of your comment where if a Chinese businessman cheats a partner to his advantage he considers himself and is considered a successful businessman.

  4. I misquoted you in my comment above. From your entry

    “In fact, lying to achieve some business or social aim, and getting away with it, is considered to be a sign of intelligence and social skill among many Chinese.”

    A poor rendition from my memory of your original observation. See how wars are started!


  5. truettblack

    No problem, Stephen, cheers. But you’ll have to take me out to your favorite joint in Perth and buy me a local brew if we are ever there at the same time.

    One of my training clients, a gentleman who managed his company’s factories in China for fifteen years, recently corroborated the statement you quote above, though he did say the situation is improving.

    To be fair, there are many very reputable Chinese suppliers of food ingredients. However, if you’re going to source from China, you really have no way of knowing if you’re going to get a good one or not unless you get yourself there, or hire a reputable consultant. Even then, you have to be careful. There are “show factories” that visitors see, all sparkling clean and sanitary. And then there are the real factories, which may not be bio-hazards, but which are not as clean as the show factories. Further, as I mentioned in this post, everything may be fine for the first few orders, lulling you into a false sense of security, and they you’re hit with something insane like melamine in your milk powder.

    These recent events are terribly unfortunate for the victims and the companies that trusted their suppliers in China. One of my other clients, owner of an Australian food business that doesn’t use China-made food ingredients, told me that one of his friends owns a company that sells milk powder, some of which is sourced from China. His friend’s comment about the recent crisis was “Who would ever think to test for melamine? I mean, of all of the things you test for–metals, pesticides, the lot, nobody would think to test for something used to make plastic. What kind of person makes a decision to use that in milk powder?” From what I’ve seen of the news, there were many people who made the decision to use melamine, and now they will pay the price.

    I need to write a post on changing trends in China sourcing. Labor costs have risen dramatically, as have logistics costs. The sourcing strategies of many foreign businesses need to change to account for these developments, along with the situation we’re discussing here.

  6. Pingback: More on Chinese Food Safety « The Lingua Franca

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