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What China Can Learn From 19th-Century Britain

Thursday, October 23, 2008

Beijing has a major problem with food contamination. The British solved a similar dilemma in the 1800s.

“Brand China” has taken a beating this year. More than ever before, Chinese-made products are associated with counterfeiting and contamination. Some Chinese fakes have been amusing, such as the computer-generated fireworks used during the opening ceremony of the Summer Olympics. But China’s tainted goods have caused hundreds of deaths and harmed tens of thousands.

In terms of brand management, China could learn a lesson from 19th-century Britain. During the mid-1800s, the British faced a serious food contamination problem. In various incidents, people died after eating desserts laced with arsenic and copper arsenite, and hundreds got sick from drinking beer that contained copper sulphate.

As economist Julian Morris of the International Policy Network explains, these problems were solved only when British food producers decided to put public safety above short-term profits. The first manufacturer to do this was Crosse & Blackwell, which stopped “coppering” pickles. It saw an immediate drop in sales, since the public was used to eating bright green pickles. However, when people realized that the copper-free pickles were safer and tasted just as good, Crosse & Blackwell became the country’s most trusted brand, driving its competitors out of the market or forcing them to follow its lead on safety.

Beijing must allow the media and the courts to do their job without government interference. Otherwise, Chinese food producers will have little incentive to improve their safety protocols.

Over the next few decades, the use of dangerous additives in British food products declined enormously due to brand competition. Litigation and regulation made the problem even rarer. Although concern about food additives has probably increased during the past 40 years, Western food has become safer and safer.

Will China allow brand competition to develop? Will it allow lawsuits from individuals harmed by contaminated goods? The evidence is mixed.

Consider the ongoing tainted milk scandal. More than 30 government officials and dairy industry workers have been arrested, and the head of the national food quality watchdog has been fired. Thousands of safety inspectors are scurrying around the country measuring food products for contamination, and government officials have vowed to quell the crisis.

Unfortunately, these actions came only after months of delay. The company at the heart of the Chinese milk crisis, Shijiazhuang Sanlu Group (SSG), tried to cover up the scandal when it first came to light earlier this year. SSG sought support from the government and demanded a media blackout. It appears that Beijing cooperated. As The Wall Street Journal Asia reported last week, a Chinese journalist wanted to blow the whistle on the milk scandal prior to the Olympics but was unable to do so. He “fell victim to a directive from the Propaganda Department forbidding negative reporting on food safety ahead of the Olympics,” the Journal noted. “This episode shows how China’s media controls make it impossible for the press to serve as an effective watchdog. Since the milk scandal erupted, Beijing has grown more restrictive, not less.”

At the same time, certain media freedoms in China are being expanded—but only for foreign journalists. Last Friday, Beijing announced that the relaxed press rules instituted during the Olympics would be extended indefinitely. Foreign journalists will be able to travel and report without seeking permission from provincial government officials. However, Chinese nationals will not be afforded such privileges, even if they work for foreign news outlets.

Neither can Chinese nationals expect any serious legal protection. Lawyers representing the families of children harmed by the tainted milk have filed three cases against SSG. So far, these cases have not been accepted by the courts; even if they are, the most the families can expect is compensation for their medical expenses.

The changes most needed in China are simple: openness to media scrutiny, greater business competition, and an independent judicial system. The present system leaves Chinese children less protected than American pets. (Thousands of U.S. pet owners are close to reaching a $32 million settlement over last year’s Chinese pet-food contamination case.)

When people are given evidence that products from certain companies are harmful, they will voluntarily and rapidly switch to competitors with better products. This is what happened in 19th-century Britain. Beijing must allow the media and the courts to do their job without government interference. Otherwise, Chinese food producers such as SSG will have little incentive to improve their safety protocols.

Roger Bate is a resident fellow at the American Enterprise Institute.

Image by The Bergman Group/Darren Wamboldt.

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