As previously reported, the head of China’s Food and Agriculture minister was executed for corruption and dereliction of duty earlier this year. That sets the tone for measures that will be taken in in China to maintain standards. But it is more extreme than one would like. So, with the spate of product quality issues in the summer, Vice Premier Wu Yi has been appointed head of a task force to raise standards in China. As BusinessWeek reports she has a good chance of making a positive change quickly.
Wu is off to a fast start. In the three weeks since she took over the job, Chinese authorities have banned the use of lead paint in toys, shuttered 953 unlicensed food processing plants, closed more than 2,000 factories making fake goods, and suspended the licenses of 1,200 drug and medical equipment companies. As she did when she oversaw the fight against SARS four years ago, Wu will likely create a nationwide campaign to motivate the public, boost coordination among various ministries and agencies, and fire officials who resist change.
We must remember though, that most stakeholders are happy with the rough playing field, including western brands outsourcing manufacturing to China. It is western markets that push Chinese factories to produce more product, more cheaply and turn a blind-eye to standards that would not be accepted at home. It is the “child-labour” story with different actors, but the same directors. Businesses operating in China know its standards are more permissive – that’s why they’re there:
… more than one-fifth of China’s food products failed government safety-tests last year. Corruption, blackmail and counterfeiting are rampant. Eight buyers at Carrefour, a French supermarket chain, are under investigation for accepting kickbacks from suppliers. Zheng Xiaoyu, a former boss of the SFDA, was executed earlier this year for taking bribes to approve fake drugs and certificates claiming that the paint used by Mattel’s suppliers was lead-free. Yet many foreign managers working locally say bosses in Europe or America do not understand these problems, or do not want to hear about them.
Higher standards in China will mean higher prices globally which will mean some short term pain and an incentive to recreate opportunities at home.