China: China Addresses the Problem of Fake Food

Originally published June 2004

A disturbing issue relating to the Hong Kong Government's public consultation on a nutrition labelling scheme for pre-packaged foods has emerged in Hong Kong and mainland China. Most people are familiar with the trade in counterfeit items all over the world such as watches, computer games, DVDs and clothing. Whilst this is a major concern for multi-national and local companies who wish to protect their intellectual property rights, the increasing problem of "fake foods" is obviously of a greater human concern. The range of fake foods and the "ingredients" is quite astonishing:

• in Fuyang, at least 12 babies have died of malnutrition after being fed with substandard milk powder made of starch, sugar, milk essence and other cheap ingredients but deficient in protein, fat and vitamins which are necessary for infants' growth. In addition, 229 malnourished babies that have survived are now suffering from swollen heads;

• in Chengdu, a brand of pickled vegetable was found to contain six times the national standard of the preservative sodium benzoate;

• in Guangzhou, rice wine has been found to contain industrial methanol causing blindness. At least 9 people died and more than 50 were hospitalized;

• in Foshan, concentrated sweetener, caramel colouring, organic ester and preservatives were bottled and marketed as "iced tea" which could cause damage to the kidneys and other organs;

• in Hong Kong, counterfeit soya sauce has been seized which was manufactured from human hair.

As is common with other counterfeit goods, fake foods are usually cheaper than the genuine articles and tend to have errors or differences on the labels. In fact, the problem is not just limited to counterfeit and substandard foods. There are also serious problems in mainland China with counterfeit pharmaceuticals and car-parts.

These incidents have again put into focus the need for the central government to tackle the wider problem of fake and unhygienic food produced by numerous counterfeiters. This problem has existed in mainland China for many years. In 2003, the National People's Congress - the top legislative body - set up the State Food and Drug Administration ("SFDA") in response to persistent complaints about substandard food products and numerous cases of mass food poisoning. The extent of the SFDA's mandate remains unclear and one year into its existence, the food safety problem remains and indeed seems to have become worse. Although the SFDA has the power to implement food safety regulations, it needs to rely on other government departments to enforce the regulations.

There are three major reasons for the recent worsening of the situation. First, mainland China does not have a complete food safety law system in place to regulate the production, processing and circulation of food. Second, there is a lack of a unified food examination and supervision system. Third, government departments have been lax in enforcing food safety regulations and carrying out inspections.

The Product Quality Law and the Food Hygiene Law are the basic laws governing the quality or hygiene of food in mainland China. These laws only lay down general principles and lack detailed rules to regulate the food processing chain from farm to table. Meanwhile, in recent years, many new technologies have been adopted in the food industry and new ingredients have been added in the production to make food attractive and increase consumer interest. However, legislation has not kept pace with these new developments which could pose further threats to public health.

Lack of a unified food examination and control system has affected the efficiency of food quality supervision. Currently, more than one government department is responsible for the supervision of food safety. The Administration of Industry and Commerce is responsible for overseeing the distribution of food to supermarkets, the Administration of Quality Supervision is responsible for examining food production and processing, the Ministry of Health is in charge of food hygiene in restaurants and the Agricultural and Forest Departments are responsible if agricultural products or wildlife are involved respectively. Co-operation between these government departments is not close and they do not share information.

Government officials have also been lax in taking measures to crack down on the counterfeiting. This is particularly a problem where the counterfeiters are companies owned by local government. According to some reports counterfeit manufacturers are common in parts of mainland China and are a source of income for local authorities with the counterfeiters being protected through corrupt officials and bribery. In addition, penalties under the current legislation are too lenient to deter the counterfeiters (except in cases where death or severe consequence is found and criminal liability will be imposed). For example, under the Food Hygiene Law, the fine for the producer of the substandard milk powder is between RMB 1,000 to 50,000 (approximately E 100 to 5,000).

It is hoped that now these stories have caused national and international publicity it will encourage enforcement of product liability and quality legislation in mainland China. Indeed in Berlin recently, Premier Wen Jiabao announced a crackdown on fake foods and pharmaceuticals (as well as other pirated goods) and said that he was to assign a vice-premier to the fight against fakes and was looking at other measures to curb the practice. Mainland China also has recently launched a seven month food safety campaign across the country to regulate the production, processing, circulation of food to ensure the nation's food safety. The central government has taken steps to build up a social credit system in the food sector by 2008, under which the public will play a supervisory role and food providers will be subject to a grading system.

In Hong Kong the Customs and Excise and Food and Environmental Hygiene Departments ("FEHD") recently have been active investigating substandard and counterfeit foods imported into Hong Kong from mainland China. The FEHD's investigation is ongoing with a particular emphasis on levels of additives such as preservatives, colourings and sweeteners and has indicated the results will be available in the next few weeks.

The problem may seem far away from Europe and elsewhere but it may only be a matter of time before this problem becomes an issue closer to European homes. Counterfeit goods may be imported into the grey market and obviously multi-national food manufacturers and suppliers who export goods to the mainland China and other regions where such counterfeiting is a problem may be affected just like those who manufacture computer games and clothing. However, the consequences are much more tragic.

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