Abstract

Melamine incident in 2008 can be termed as Chinese milk industry’s tragedy that was resulted in causalities of a number of children and health issues of many others. This had bring a bad name to the country and the industry both that has resulted in slow down of economic process in food industry, including cancellation of international contract and attraction of bans on Chinese products. Internally, there was medical emergency and actual intervention of the government to control damage. This research has focused on the impacts of these efforts and the identification of emerging issues after eight years down the road. With the help of two surveys and one set of interviews, it has been indentified that there is an improvement in the situation, though it is not fully satisfied and hence gaps are identified and recommendations have been made, accordingly.

CHAPTER ONE: INTRODUCTION

1.0       Introduction:

Globalisation has offered a number of opportunities to the developing countries to sell their products in the international market and to reap the impact of price difference in the international markets. (Fujita and Thisse, 2013) In the recent years, Chinese economy has emerged as major contributory towards international trade in all the industries and its economic development has placed it among the leading exporting industries in the world. (Wei and Liefner, 2012) Internally, Chinese society is also developing with the economic prosperity and opportunities available for the population to raise their living standards. This change has affected the way of living as well as their consumption patterns to a considerable extent, both in food and non-food items. (Chan, 2012) The rise of non-Chinese foods and household items, including fashion is gaining space in the Chinese markets. (Zhang et al., 2014) This has created visible impacts on quality consciousness of the consumers within the country.

In the dairy products, too, Chinese market has expanded exponentially in the last three decades and was able to cover most of the dairy products available in the market meeting the industry to household consumers at the same time, showing diversity and compatibility at that time. The main exporters of Chinese dairy product are Japan, New Zealand and South Korea. (Fuller and Beghin, 2015) Its production is one the rise for last one decade with a rate of just over 20% a year that is exceptional, but the record of Chinese food products has been reported much below the international standards, especially in its dairy products. (Fuller and Beghin, 2015) On account of food safety and standards, the reservations are high and reported issues with the domestic food supplies have raised these concerns rather to another height. One of such events was ‘the melamine incident’ in 2008 which has raised concerns on the consumers have lost their faith in the domestic dairy products especially for infants and the young children. The nationwide contamination had raised certain serious issues related to this particular industry in the country. (Sun et al., 2014)

Reports have hinted over the role of Chinese government and regulatory regimes in the incidents and it has been reported that during 2008-2012, absence of legal provisions to control adultery in the food items has resulted in rejections of 20% of the orders worldwide.  There are also reports regarding numerous health related incidents within the country that irked consumers both in the domestic market as well as abroad. (Reisch et al., 2013)

This research has therefore targeted to review the dairy products in the food industry as a case to investigate and further into the powdered milk industry in the country. In this dissertation, the impacts of the melamine incident and role of Chinese rules and regulation before, during the incident and after the incident have been reviewed in this dissertation as a case study of SanLu Company.

1.1       Background of the Topic:

The melamine incident in 2008 has hit the food industry in the China and has affected its domestic and international market. Dairy and food industry in China was growing as a whole and there were certain companies performing well in the food industry. (Qiao et al., 2012) Researchers on the incidents have indicated that there were serious laps on the part of the managements in the dairy companies as well as in the supervisory control on the part of the government. (Zhang et al., 2014) It was seen that in 2008, the companies in order to improve their profit exponentially and to meet the demand of the market, the use of water in milk was prevalent, however, the situation was aggravated with the mixing of melamine, an industrial fat in the milk to meet the fat content criteria. (Kong, 2012)