China's Food Industry

1,319 views

Published on

China's food industry - the business and the dangers

Published in: News & Politics
1 Comment
3 Likes
Statistics
Notes
No Downloads
Views
Total views
1,319
On SlideShare
0
From Embeds
0
Number of Embeds
33
Actions
Shares
0
Downloads
0
Comments
1
Likes
3
Embeds 0
No embeds

No notes for slide

China's Food Industry

  1. 1. 噢弥陀佛 Eric Wu
  2. 2. Table of Contents 1. Introduction to China’s Food Industry 2. Impact of China’s Food Scandals 3. Causes of China’s Food Industry Problems 4. Solutions for China’s Food Industry 5. How the World Views China 6. Impact on Singapore’s Food Industry
  3. 3. China’s Food Industry in Figures 500,000 large-scale food processing companies, 350,000 small and medium-sized enterprises (SMEs) and over 20 million privately owned businesses in the food retail line (Xinhua, 2008)
  4. 4. China’s Food Industry in Figures China’s agricultural industry makes up 11% of China’s GDP from service, construction and other industries
  5. 5. China’s Food Industry in Figures 3% of China’s Total Exports are Food and Agricultural Products (Starmass, 2007)
  6. 6. What do China Export? Vegetables Live Poultry Herbs & Spices Seafood Fruits Fruit Juices Meat Products Rice
  7. 7. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com
  8. 8. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Ginger Excessive levels of pesticide, Aldicarb Sulphoxide 32,000 tons exported from China to USA  No reported illnesses, recalled by FDA in time
  9. 9. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Pet Food Melamine in wheat gluten, an ingredient in the pet food Thousands of cats and dogs died or suffering from renal failure
  10. 10. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Cough Syrup Glycerine substituted with diethylene glycol Made into cough syrup in Panama More than 300 died
  11. 11. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Dumplings Dumplings contaminated with insecticide exported to Japan Over a hundred people fell ill Sabotage by worker who did not receive his pay
  12. 12. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Milk Infant formula and milk tainted with melamine (Sanlu group) 6 babies died; thousands with kidney diseases Many countries affected
  13. 13. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Pork Pigs fed with metabolism accelerator, Clenbuterol Over 70 Chinese fell sick
  14. 14. Timeline of Food Scandals 2006 20102007 2008 2009 Source: nytimes.com Milk ‘Melamine milk’ in 2008 repackaged and distributed in China Lessons not learnt from 2008
  15. 15. Source: Youtube.com
  16. 16. The Melamine Trail Melamine
  17. 17. Filth Pathogens Pesticide Residues Unsafe Additives Labelling Unlicensed Manufacturers Veterinary Drug
  18. 18. Impact of China’s Food Scandals
  19. 19. Impact of China’s Food Scandals Trade & Economy Health Social & Political
  20. 20. Trade & Economy Slow down in growth trade activity 0 5000 10000 15000 20000 25000 30000 35000 40000 1990 2000 2006 2007 2008 Value(Million$) YearSource: World Trade Organization 2009
  21. 21. Companies Involved in the Food Scandals Some companies had made huge losses while other had to declare bankrupt Loss of reputation Loss of confidence from the investors
  22. 22. Health Melamine Swollen kidney; Kidney stones Renal problems Death (6 infants total) Fake Eggs Dementia (Memory Losses) Most unforgivable when lives are involved Problems may be chronic; long-term effects need time to surface
  23. 23. Health Melamine Swollen kidney; Kidney stones Renal problems Death (6 infants total) Fake Eggs Dementia (Memory Losses) Most unforgivable when lives are involved Problems may be chronic; long-term effects need time to surface
  24. 24. Social and Political Melamine Swollen kidney; Kidney stones Renal problems Death (6 infants total) Fake Eggs Dementia (Memory Losses) Most unforgivable when lives are involved Problems may be chronic; long-term effects need time to surface
  25. 25. Social and Political Internal Loss of trust and credibility in Chinese manufacturers by consumers, especially the locals Manufacturers forced to either find alternative sources of raw materials or lose confidence of consumers
  26. 26. Social and Political External Strained relationship with other countries Taiwan and China US and China UN called for a unified regulatory agency against China food issues
  27. 27. Profit-driven manufacturers  Social class differences Inefficient inspection systems Loopholes in food legislation and labelling laws Influences of communism Causes of China’s Food Industry Problems
  28. 28. Causes: Profit Driven Manufacturers Driven by poverty & lack of conscience Ways to increase profit: Substituting expensive ingredients with cheap imitation chemicals Increasing weights of food products by adulteration Dilution to increase overall product quantity Using pesticides and growth hormones on plants and animals to boost growth and yield.
  29. 29. Causes: Social Class Differences Gap widening between rich and poor! Between 1990 and 2005, China's Gini coefficient rose from 0.257 to 0.447 A zero Gini coefficient represents perfect income equality and a score of 1.0 indicates absolute income inequality
  30. 30. Causes: Social Class Differences
  31. 31. Causes: Social Class Differences Vast differences between urban and rural citizens Don’t you know that it (Clenbuterol) harms people? Yes. But city people have free medical care, so it’s no problem.
  32. 32. Causes: Inefficient Inspection Systems Geographical size of China Too big, cannot control Unlicensed farmers and companies No verification by authorities
  33. 33. Causes: Inefficient Inspection Systems Fake certifications can hoodwink the officials (e.g. cough syrup from china to panama)
  34. 34. Agricultural Production Production/ Processing Import/ Export Circulation/ Market Catering Service MOH • overall coordination • food safety standards • information disclosure • crisis management AQSIQ (processed foods/additives) • Production licensing • Standards (production, quality, labelling, packaging) • Inspection (product, quality, production facilities) SAIC •Inspection/ quarantine •Import/exp ort food safety incidents •Joint inspection (product quality) •Joint inspection (product quality) •Anti- counterfeiting •Consumer complaints •Consumer protection (food safety issues) •Business licensing •Trademark enforcement (anti-counterfeiting) •Consumer protection •Competition environment MOA (agri- products including live animals, feeds, etc) •Agri-production licensing •Agri standards •testing •Animal slaughter •Live animals for import/export •‘green labelled’ agri-product in supermarket MOFCOM •Swine slaughter •Foreign trade issues •Management of retailer to ensure they are responsible for food safety SFDA •Catering business licensing •Inspection of hygienic conditions in restaurants, canteen, etc
  35. 35. Loopholes in Food Legislation and Labelling Laws Not mandatory to list down country of origin of ingredients Law not robust enough (e.g. distribution of adulterated glycerine) Bribery/corruption
  36. 36. Loopholes in Food Legislation and Labelling Laws Corruption perceptions index rank in selected countries 2009 Source: Transparency International Vietnam India China South Korea Japan Hong Kong Singapore New Zealand Global rank out of 180 countries
  37. 37. Influences of Communism and ‘Wrong’ Mindsets Lack of education Communist thinking – production/profit is priority (e.g. excessive fertilisers and pesticides by farmers)
  38. 38. Actions Taken to Improve China’s Food Safety
  39. 39. Improving Fundamental Problems on China’s Food Safety Bring all relevant government bodies under a single body Improve food safety throughout the entire food chain Developed vs. developing regions of China Financial support Global cooperation Drawing experiences from other countries
  40. 40. Measures Taken by China Tighten food safety through food processing law Implement standards and policies to supervise farms and food processing units Mandatory require food samples to be tested for safety before exporting Implement 2009 China’s Food Safety Law
  41. 41. Food Safety Laws in China Implemented by National People’s Congress (NPC) 1982 Food Hygiene Law was amended in 1995 2009 China’s Food Safety Law (FSL) Rampant food safety incidents in China Aims to ensure China’s F&B industry by providing safer products to its citizens and export markets
  42. 42. Key Aspects of China’s FSL Allocate responsibility of various regulatory departments Establish food safety commission Establish risk assessment system Stringent control on the production and use of additives in food products Mandatory standards and tests on food import and export Packaging materials and increase labeling requirements Increase legal liability and requirements of private enterprise
  43. 43. • Ministry of Agriculture (MOA) Agri-Products & Livestock •Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) • Quality and Technical Supervision Bureau (TSB) • Entry-Exit Inspection and Quarantine Bureau (CIQ) Production/ processing • State Administration of Industry and Commerce (SAIC) Circulation • State Food and Drug Administration (SFDA) Consumption Ministry of Health
  44. 44. Involvement of Other Parties Recommendations from United Nations to improve China’s food safety with international norms Setup a unified regulatory agency Enforce modern food safety law Educate and train employees in the food industry and Establish standards Setting up a new food testing centre with experts from the United Sates China-US Peace Food Inspection Centre Tripartite food safety pact with Japan and South Korea
  45. 45. Measures Taken by Other Countries Increase their control on food products imported from China especially dairy products Examine China’s products for any melamine and melamine related compounds Stringent requirements for food products imported from China They need to ensure the quality and safety of food product before selling
  46. 46. Views on China’s Food Products More domestic consumers switch to food produced by other countries Increase awareness of food safety Series of food safety incidents related to Chinese food Poor reputation among consumers around the world I don’t feel safe eating these Chinese bamboos Better don’t eat these China’s foods
  47. 47. Estimated Global Food Production 0 50 100 150 200 250 300 350 400 450 MillionTonesin2008/9 China India European Union USA Source: FAO’s Food Outlook Global Market Analysis, 2009
  48. 48. But … Alternate Global Food Producer
  49. 49. Source: Food and Drug Administration; U.S. International Trade Commission
  50. 50. of China’s Food Scandals on Singapore Impact
  51. 51. Impact of China’s Food Scandals on SG 1. Singapore’s imports from China 2. Measures taken by AVA on China’s products 3. Effect on local companies 4. Recall of food products in supermarkets 5. Singaporeans’ attitude towards China’s Food Scandals 6. Effect on imports from China (do we have more tests carried out on their products?) 7. Overall impact on Singapore’s exports
  52. 52. Singapore’s Imports from China Main imports consist of vegetables, fruits, seafood and live poultry China is one of Singapore’s top sources for vegetables ~ 120,000 tonnes in 2006
  53. 53. Measures Taken by AVA Measures taken by AVA on China’s products: Completed surveillance tests on > 3,500 milk products; 500 of them were made in China. Suspended the import and sale of all milk and milk products from China. Anyone found selling them can be sentenced to three months' jail and fined S$10,000.
  54. 54. Effect on Local Companies Effect on local companies • Search for other milk sources from other countries • Production line is affected • Local companies suffered losses Affected Companies are: 1) Condensed milk: Black and White Diamond 2) Liquid milk: Blancanube, Hotkid, Monmilk, Yili 3) Dairy cream: Gold Label, Topping Pride, Value Pride 4) Butter and ghee: Huo Guo Ye, Mu Ge, Phoon Huat 5) Milk candy: Milky Boy, Rabbit, The New Zealand Milk 6) Ice cream: Magnum, Meiji, Walls, Youcan
  55. 55. Recall of Food Products in Supermarkets Famous ones include Magnum, Meiji, Walls ice cream, Rabbit milk candy, Monmilk and Yili Milk. Impact on Singaporeans Consumers are changing their diet, while others refrain from drinking milk Ban all China products
  56. 56. New Import Regulations After the China Milk Scandal, import conditions must be complied as follows: 1. Products must be produced by establishments approved for export by the Chinese authorities, 2. Manufacturers are required to test each batch of their raw materials and end products  No Melamine 3. Health certificates with results of melamine tests are to accompany consignments exported to Singapore.
  57. 57. Overall Impact on Singapore’s Trade  Must first understand what are Singapore’s export How much does the food industry contribute to Singapore’s trade activities? Is it significant?  How has China’s scandals come to affect Singapore’s exports, when they should have been independent events?
  58. 58. Singapore’s Export Market
  59. 59. Introduction of Singapore’s export market Dependence on export Types of exports Countries that Singapore trade with Singapore’s Export
  60. 60. Singapore’s Export Smallest and densely populated nation Lack of natural resources Absence of agriculture, livestock farming 90% of total food consumption is imported from other countries Import of raw materials is highly sought after from neighboring countries.
  61. 61. Singapore’s Export Activities One of SEA’s major trading and business hub A direct source/distribution centre for many food products Re-exporting & Processing for value-added products. Global trade partners like India, Australia, Japan, China, Indonesia, Malaysia, New Zealand, etc.
  62. 62. Dependence on Export Location adds as an advantage in trading business. Heavily dependent on international food trade like re-exports activities. Average growth of 10% from 1965 to 1979. Contributed $268.9 billion to nation’s net earnings in 2009.
  63. 63. Type of Exports Key export commodities include: Consumer electronics Information technology products Petroleum products Pharmaceuticals Chemicals Processed Food
  64. 64. Statistics of Exports Food exports have been rising in the past 5 years 63% of the food exports in 2003 went to the Asian markets 700 food manufacturing companies >50% of them caters mainly for the export markets
  65. 65. Export Markets The top five export markets were Japan, Malaysia, Indonesia, China and Australia. Within the European Union, the United Kingdom was the largest export market for Singapore food manufacturers, followed by Finland, Belgium, Netherlands and Germany. Exports include food, beverages and tobacco, crude materials, animal and vegetable oils, manufactured goods, etc.
  66. 66. Regulations on Import and Exports Allows free import of food supplies and products  Highly regarded in food safety and hygiene Two major government bodies of Food trade: Agri – Food and Veterinary Authority of Singapore (AVA) Food Control Department
  67. 67. Singapore has always enjoyed good reputation and high standards of quality and safety but….
  68. 68. Major Problem! ?
  69. 69. Singapore China
  70. 70. USA Europe United Arab Emirates Exports to USA: From $176 to $338 million Asia No problems in differentiating Common Export Destinations
  71. 71. Differentiating SG from China Singapore’s Food and Beverage Exports stand firm in the world’s food trade Statistics show exports jumped from $176 million to $338 million from Singapore to US Increase in total domestic exports (5.78%  9%) Competitive edge lies in ‘Made in Singapore’
  72. 72. Differentiating SG from China Hold and/or join more trade exhibitions e.g. the Shanghai Expo Diplomatic visits Sustainable manufacturing Reassuring labels: E.g. ‘Under the licence and the strictest quality control of Pokka Corp., Japan’
  73. 73. Conclusion  Problem lies with the deep-rooted mindset the Chinese; need years to reform  China’s food industry is improving, but sustainability is questionable
  74. 74. Conclusion Help provided to China’s food industry can only be till a certain extent; much is needed from China’s own government and food manufacturers  India may take over China in food production  Singapore’s food industry is also vulnerable to what happens in China
  75. 75. END Thank you! Questions? 演讲完毕 再见了同志们! 还有问题吗?
  76. 76. Want some White Rabbit candies or luncheon meat

×