Americans may suppose they have worries about Chinese products these days: killer pet food, antifreeze-laced toothpaste, lead-painted toy trains, unsafe tires, seafood contaminated with unapproved drugs and additives—the list keeps growing. Authorities in Panama announced recently that at least 93 people have died there since July 2006 from cough syrup containing Chinese-made diethylene glycol. But last week Chinese authorities pointed out that only 1 percent of foodstuff exported to the West failed to meet quality standards. By contrast, nearly 20 percent of domestically sold goods flunked. What the world should really be concerned about, says Asian Development Bank (ADB) economist Chris Spohr, “are the implications for food and product safety in [China] itself.” Until attitudes change in China—among regulators, manufacturers and consumers alike—goods produced there will continue to be suspect everywhere.
Activists like Wang are badly outnumbered. Entrepreneurs across China are cashing in on murky regulation, rampant corruption and consumer ignorance. “The regime is particularly weak at regulating a cutthroat market economy with millions of private enterprises,” says Wenran Jiang, a Sinologist at the University of Alberta. It’s not unlike America in the age of the robber barons, more than a century ago. In 1906, ordinary Americans’ outrage over unsafe medicines and foodstuffs—and books like Upton Sinclair’s “The Jungle,” with its horrific portrait of Chicago’s meatpacking industry—led to passage of the landmark Pure Food and Drug Act. Right now, though, most Chinese are busy earning a living.
And they’re paying the price. At least 300 million Chinese are affected by food-borne illness every year, according to a recent report by the ADB and the World Health Organization, and mass poisonings by adulterated and mislabeled products recur constantly. Unsafe infant formula killed at least 50 babies three years ago and left 200 others severely malnourished, according to local media. The ADB/WHO report adds: “Despite stepped-up measures, a string of similar infant formula problems emerged in February 2006, indicating that systemic issues remain unresolved.”
Chinese writer Zhou Qing has even produced a book that evokes “The Jungle.” His “What Kind of God,” a 2006 finalist for the Lettre Ulysses Award, tells of monstrous abuses: soy sauce bulked up with arsenic-tainted human hair; hormone-infused snack foods that grow facial hair on 6-year-old boys and breasts on 7-year-old girls; dangerous drugs fed to pigs to make their meat look better. Zhou’s book concludes: “While cracking down on the immediate perpetrators of food-safety incidents, it’s even more critical that we crack down on the officials who bear responsibility.”
Bad publicity has forced Beijing to make at least a show of getting tough. Zheng Xiaoyu, the first head of China’s State Food and Drug Administration, was sentenced to death in May for approving fake medicines in exchange for bribes. And at the factories whose chemical melamine was implicated in at least 16 U.S. pet deaths, two managers have been jailed. But Zhou remains skeptical. “Zheng Xiaoyu was [sentenced] because of America’s dogs and Panama’s cough syrup,” he says. His book, which finally reached stores early this year, was edited heavily by its state-owned publishers and released with minimal fanfare.
Product-safety jitters will probably bypass at least a few export sectors. The chip industry, for one, is likely to remain unscathed, predicts Dan Heyler, a Merrill Lynch tech analyst in Hong Kong, since it’s strictly supervised by the multinationals that dominate the field. But food, medicine and lower-end manufactured goods may need serious regulatory measures to win back the world’s confidence. When NEWSWEEK asked his thoughts on “The Jungle,” Zhou said he had never heard of the book. But, he added, it sounded like something he should read. The men who run China might also want to take a close look.
title: “Q A China S Top Consumer Advocate” ShowToc: true date: “2023-01-22” author: “Jack Bell”
Hazardous Stationery The ‘Cooky’ children’s stationery set, imported by Tri Star International, was recalled in March after it was discovered that the set came complete with pencil, markers, erasers and … a razor blade. Intended to cut paper, the razor—along with the whole product—was taken off shelves for fear it would unintentionally cut children.
Mislabeled Monkfish One person in Chicago was hospitalized and another became ill in late May after eating a homemade soup supposedly containing monkfish. But the imported Chinese fish was mislabeled, and may have actually been deadly puffer fish. A delicacy in Japan, puffer fish contain the potent toxin tetrodotoxin, which is not destroyed in regular food preparation. Tetrodoxin can kill humans by first numbing the body and causing paralysis.
Recalled Railway Toys American-based toy company RC2 recalled a range of Thomas the Tank Engine wooden railroad toys in June, after the company found lead in the toy’s surface paint, which is toxic if ingested by children. RC2 ultimately recalled more than 20 different Chinese-made toys.
Particularly Fiery Candles Importer Royal Products of Brooklyn, N.Y., issued a recall for pine-cone-shaped candles in May, after determining that the candle’s exterior coating and decorations were flammable. The faulty candles, made in China, caused no known injuries, but did damage property in one case.
Falling Hammocks A free-standing hammock manufactured by China’s Danlong Industries foiled folks hoping for lazy Sunday afternoons. The hammock stand was recalled July 3 after reports of foot brackets cracking or tearing, causing hammock occupants to unexpectedly fall to the ground. One not-so-relaxed hammock owner complained of back pain and nerve damage, another suffered a cut lip, and at least six more had abrupt falls.
An Unstable Nursery Rock-a-bye baby became a bit less soothing after it was revealed that a Chinese-manufactured crib came with faulty instructions. In June, Pennsylvania-based nursery manufacturer Simplicity Inc. recalled its ‘Nursery-In-A-Box’ crib over the botched instructions, which the company feared could cause the crib’s drop side to disengage, leading to falls or entrapment.
Electric Palms Chinese-made fake palm trees, complete with coconuts, were recalled in April for faults in the rope lights used to illuminate the trees, which posed electric shock and fire risks. Customers who’d bought the ‘Pre-lit Palm Trees,’ which were imported by iObjectSolutions Inc. of Georgia, were offered free replacements for their dodgy palms.
Detachable Saws Handymen beware: the ‘Craftsmen’ label on a circular saw manufactured in China can detach, causing complications with the blade guard and exposing the saw blade. One power-tool owner received 12 stitches after being lacerated by his crafty saw.
Out of Control Bicycle Frames Triax PK7 and Vertical PK7 bike frames gave new meaning to ‘adventure sports’ in March, when it was determined that the frames, sold exclusively at Target, could crack—causing riders to lose control.
Toxic Toothpaste Savings from the 99-cent store might not always be worth your while. On June 1, the Food and Drug Administration issued a warning on several toothpaste brands manufactured in China, including Dr. Cool, Superdent and Everfresh Smile. The toothpastes, usually found in discount stores, contained an antifreeze agent called diethylene glycol, which doesn’t freshen breath or whiten teeth but does poison the liver and kidneys and depress the central nervous system. The same chemical, imported from China, was found in a cold medicine mixed in Panama last year; at least 100 deaths so far have been linked to the mislabeled ingredient.
title: “Q A China S Top Consumer Advocate” ShowToc: true date: “2023-01-09” author: “Ginger Richey”
Tainted Chinese food and drugs have become an issue of concern globally after a spate of illnesses and accidents. Pet foods that include melamine-spiked wheat gluten are now being blamed for the deaths of an unknown number of American pets. Cough syrup laced with mislabeled diethylene glycol has claimed the lives of at least 50 people in Panama. Many countries have blacklisted Chinese toothpastes containing the same ingredient. In recent years, Zhou notes, Russians popping Chinese pork out of the oven have discovered drops of mercury on the pan. Countries from Asia to Europe to North America have found traces of arsenic, illegal antibiotics and other potentially carcinogenic chemicals in Chinese seafood exports, leading the U.S. Food and Drug Administration to suspend the sale of five farm-raised varieties just last week.
The products sold inside China are even more dangerous. An eight-year-old ban on clenbuterol did not stop the poisoning of more than 300 people who ate contaminated pork in Shanghai last year. Zhou’s book, “What Kind of God,” reels off many other disconcerting examples. He writes of farmed fish and seafood farm-fattened on birth-control pills, which experts say have decimated the sperm counts of Chinese men. There are kids’ snacks that are laced with hormones, leading 7-year-old girls to grow breasts and 6-year-old boys to grow beards. Then there are the cheap brands of soy sauce flavored with fermented—and arsenic and lead-contaminated—hair swept directly off barber-shop floors.
In one notorious case in 2001, officials in the southeastern port of Zhoushan blamed toxic frozen shrimp exports sent to Europe on peasant women who use antiseptics to wash cuts on their hands. In fact, Zhou says, seafood raisers regularly dump bottles full of potentially cancer-causing chemicals like malachite green into their tanks to prevent fungal infections. Zhou’s book shows a picture of a scribbled page from a shrimp farmer’s accounts. “Malachite green, 15 bottles,” it reads. Five years on, he writes, this culture of deceit lingers even as the stakes get bigger. As Zhou’s updated manuscript went to press in late 2006, fish pickled with antibiotics and illegal chemicals were traced from abroad back to fish markets up and down the eastern seaboard—a major blow to an industry now worth an estimated $35 billion a year.
Zhou intended his study to be a wake-up call to the nation. Its title is a subversive twist on an imperial Chinese proverb, “Food is the people’s heaven,” which conveys the age-old ideal that a ruler’s mandate is only as good as his ability to feed his people. In recent decades China’s Communist Party mandarins have fed them pretty well. But Zhou’s title poses the taunting question: “What kind of food? " He portrays a fast-growing country suffering from something of a food safety coma, overindulged with good eats but underprotected from the dangers. “Chinese people today are fed like pigs,” Zhou tells NEWSWEEK, “so that all they’ll want to do is keep on eating.”
Indeed, Zhou’s timely book has had curiously little impact inside China. Expanded from a report first published in a Beijing-based journal in September 2004, it became a 2006 finalist for a prestigious reporting award, the Lettre Ulysses. According to Zhou, Politburo officials endorsed his initial study as an important account of China’s food safety problem. NEWSWEEK has reviewed copies of what appeared to be official documentation confirming this. The acclaim, however, seems to have had scant effect. When an updated version of the book was released at the beginning of this year, its text was heavily edited and the print run small and little publicized. Zhou, 42, says he’s been told that state security authorities warned the Beijing-based publishers against promoting the work.
Zhou believes his dissident status may have made the authorities especially sensitive: as the publisher of an independent political journal at the time of the 1989 Tiananmen Square pro-democracy protests, he spent nearly three years in jail afterward. (When NEWSWEEK contacted the office of the editor in charge of the book at the China Workers Publishing House, a man answering the phone said the circulation of the book was “not large.” The man, who refused to give his name, said editors had cut and modified the study on finding that “some of the figures and contents were incorrect,” but that the volume had been distributed as planned.)
China’s central government has begun to confront the problem. In May, a court sentenced to death Zheng Xiaoyu, the first chief of China’s State Food and Drug Administration, for approving fake medicines and pocketing bribes in exchange for waiving approval procedures. In June, Beijing unveiled its first five-year plan for food safety, prescribing new mechanisms to trace and recall food, respond rapidly to scares and blacklist offending companies. But critics say that government’s latest spurt of action was prompted by embarrassment at having its quality problems made public internationally rather than domestic scandals and concerns about quality. “Zheng Xiaoyu was sentenced to death because of America’s dogs and Panama’s cough syrup,” says Zhou.
Zhou began investigating China’s food supply after a dinner he shared with a friend in Guangdong, the carnivorously uninhibited southern province where it’s said people will “eat anything with wings—except an airplane.” The local Cantonese swear by their belief in the curative value of what they eat, right down to the individual body part. This restaurant’s specialty: placenta soup, believed to be a boost for fertility, among other things. The placentas come from the aborted fetuses of migrant women workers who are unmarried or out of line with the government’s one-child policy. During dinner, Zhou peeked into the back kitchen and saw the cooks scooping out fetuses. He makes a karmic link between gastronomical excesses and the maladies that have afflicted Guangdong, breeding ground of diseases from avian flu to SARS: “Perhaps heaven was exacting his revenge on all those people who dared eat human dumplings.”
“What Kind of God” is not exactly an epic on the order of “The Jungle,” Upton Sinclair’s 1906 novel of life in the rancid bowels of Chicago’s meatpacking district. That fictional account was enough to provoke a flood of letters to Teddy Roosevelt’s White House and help pave the way to the landmark Pure Food and Drug Act. Zhou’s work is more a stitch-job of Chinese news bites, pop trivia and Zhou’s own brushes with officials, experts and peasants. Until now, he confesses, he’d never even heard of “The Jungle.” Still, Zhou has no doubt about where the brunt of the blame lies. “We must get to the crux of the problem with the system,” he writes. “While cracking down on the immediate perpetrators of food-safety incidents, it’s even more critical that we crack down on the officials who bear the responsibility.” With the world’s attention now focused on the quality of Chinese goods, his damning indictment may yet prove a first step along that road.
title: “Q A China S Top Consumer Advocate” ShowToc: true date: “2022-12-15” author: “Brad Moreta”
Not all those toes are Chinese, either. Over the past three years the list of sovereign funds has grown, and now includes Russia, South Korea, Australia and many others. Already such funds control an estimated $2.5 trillion in assets, some $1 trillion more than all hedge funds combined, and Morgan Stanley recently estimated that they could balloon to $12 trillion within a decade to become the dominant force in global finance.
The money comes mainly from oil-exporting nations flush with petrodollars, and East Asian governments struggling to cope with massive trade surpluses. A third driver—national pension funds—is gaining power. Most funds have the same goal: “higher returns earned by taking greater risk,” says Kim Young, head of planning for the Korea Investment Corp. (KIC) in Seoul, which launched its sovereign-wealth fund in 2005.
Sovereign wealth represents a powerful new player. In the past, governments were satisfied with the nominal returns that their central banks delivered, which left hedge and mutual funds to battle among themselves in emerging markets, new technology sectors or whatever else looked hot. With sovereign money now in the fray, many analysts expect further asset inflation in stocks, commodities and real estate. And because these funds fly flags and serve strategic national interests, every move they make will attract scrutiny, much as China’s state enterprises do whenever they acquire a foreign rival. “Political risk is one challenge,” says Grace Ng, a Hong Kong-based Greater China economist at JPMorgan, in reference to China’s new fund.
The lack of transparency at virtually every sovereign-wealth fund (Norway’s being the lone exception) only heightens suspicions. Last week investment guru Nicholas Vardy called them “secret societies that make hedge funds yesterday’s news” and warned that tracking their activities is “nearly impossible.” IMF chief economist Simon Johnson recently described sovereign funds as “black boxes,” adding: “We don’t know what happens [inside them], and we should worry about that.” His concerns include the possibility of rogue trading, currency speculation and excessive lending leading to a sovereign default.
Singapore is the model for sovereign-wealth management. Its Government of Singapore Investment Corp. (GIC), which oversees the city-state’s reserves, and the Finance Ministry’s investment arm, Temasek, together control more than $180 billion in assets. By comparison, Goldman Sachs Asset Management is valued at $33 billion and Blackstone, the largest private equity fund, has $80 billion in assets under management. The GIC acts as a national pension fund, but has earned roughly double the 4 percent that central banks traditionally do when managing foreign reserves. Temasek, which began an aggressive acquisition drive in Asia four years ago, has earned average annual returns of 18 percent since its inception in 1974. But it has also ruffled nationalist feathers abroad, most notably in Thailand, where its purchase of the media conglomerate Shin Corp. from the country’s then prime minister precipitated a political crisis that led to Thaksin Shinawatra’s ouster in a bloodless coup last September.
Still, matching Singapore’s performance won’t be easy. “The bottom line,” says Donghyun Park, a senior economist at the Asian Development Bank, “is the would-be Temaseks and GICs are still very much in the learning stages.” At the KIC in Seoul, caution is the watchword. It has invested just $8 billion of the $20 billion pledged, all of that into fixed-income investments in the United States, Euroland and Japan, as required by the government.
Most sovereign funds have objectives beyond profit maximization. For years oil exporters the United Arab Emirates, Saudi Arabia, Norway, Kuwait and the State of Alaska have used them to weather periods of low energy prices, for example. The KIC aims in part to promote Seoul as a regional financial hub by luring in outside fund managers, investment banks and financial talent, while training Koreans with similar skills. Korean officials have also indicated that in the future, KIC might be allowed to tap the nation’s $200 billion state pension fund, which in “exceptional situations” plans to assist major domestic companies fend off hostile takeovers. The rub: if KIC is linked to protectionism at home, it is likely to encounter retaliation when it shops for assets abroad.
If recent history is any indication, China’s new fund is in for intense scrutiny. Analysts expect China will shop for energy, industrial resources and emerging-market stocks to shares in American blue chips like Microsoft and GE. Already, a backlash is brewing. When U.S. private-equity fund Blackstone announced last month that China had purchased a $3 billion stake ahead of the fund’s planned IPO, Washington pundits and politicians quickly denounced the linkup. Virginia Sen. Jim Webb called on the U.S. Treasury Department to review a deal that grants China “opportunity for undue influence,” as he put it.
Other sovereign-wealth-fund managers are watching the China-Blackstone deal as a test of whether risk-averse state money and high-flying hedge funds can partner successfully. Already the bloom is off. Blackstone has faltered since its IPO in June. Its share price has dropped below what China paid, and on paper the deal has cost Beijing a loss of $3 million. That’s one toe that got a little burned.
title: “Q A China S Top Consumer Advocate” ShowToc: true date: “2023-01-23” author: “Billy Costa”
All of that ensures Wang is extremely busy these days. Over the past few months, a number of dramatic product-safety scandals have rocked China—and horrified the world. The U.S. media have exposed one badly made Chinese export after another, from poisonous pet food to toxic toothpaste to tires so poorly made they litter American highways with shredded treads. These revelations have raised serious questions about China’s rise as factory to the world. It may seem hard to remember now, but just a few years ago, pundits and the global press were marveling at how quickly China had come on as a major manufacturing export power able, or so the thinking went, to build just about anything fast, cheap and well.
Now the true picture is emerging, and it isn’t pretty. Far from the disciplined and tightly controlled economy China was thought to have, the ongoing scandals have revealed an often chaotic system with lax standards, where the government’s economic authority has been weakened by rapid reforms. This sorry state is not unprecedented—other economies, such as South Korea’s and Japan’s, experienced similar growing pains decades ago. The difference, and the danger, is one of scale, since Chinese goods now dominate the world in so many sectors. Unless Beijing can improve its image fast and turn “Made in China” into a prestigious—or at least reliable—brand, consumers will remain at risk and the country’s export-driven economic miracle could face serious trouble.
China today resembles nothing so much as the United States a century ago, when robber barons, gangsterism and raw capitalism held sway. Now as then, powerful vested interests are profiting from murky regulations, shoddy enforcement, rampant corruption and a lack of consumer awareness. In the United States during the early 20th century, public outrage over bogus drugs and contaminated foodstuffs, fueled by graphic accounts such as Upton Sinclair’s “The Jungle,” finally prompted passage of the landmark Pure Food and Drug Act. China needs a similar revolution today if it is to protect its competitiveness and its consumers.
The problem is especially pressing at home. Bad as the export scandals have been, conditions are even worse inside China. Factories that produce domestic goods often have far lower standards than those that produce and export clothes, consumer electronics or microchips. Zhou Qing is the author of “What Kind of God,” an exposé whose sense of social mission could easily be compared to Sinclair’s epic. In it, Zhou spins one hair-raising tale after another. There’s seafood laced with additives that lower men’s sperm counts, soy sauce bulked up with arsenic-tainted human hair swept up from the barbershop floor and hormone-infused fast food that prompts 6-year-old boys to sprout facial hair and 7-year-old girls to grow breasts.
In writing his book, Zhou had plenty of material to choose from. While the export scandals are new, Chinese consumers have had it so bad for so long that their casualty count is staggering. Bogus antibiotics produced in Anhui were blamed for six deaths and 80 people falling ill in 2006. In 2004, unsafe infant formula killed at least 50 babies and left another 200 severely malnourished, according to media reports. Virtually every product category is affected, from candy that has choked children to killer fireworks to toxic face cream. At least 300 million Chinese citizens—roughly the same number as the entire U.S. population—suffer from food-borne diseases annually, according to a recent report by the Asian Development Bank and World Health Organization.
To be fair, Beijing has made some attempts to limit the damage. Officials implicated in consumer-product scandals are starting to face severe punishment. In May, a court sentenced to death Zheng Xiaoyu, first leader of China’s State Food and Drug Administration, for approving fake medicines in exchange for bribes. Officials from the factory that produced the melamine linked to at least 16 U.S. pet deaths have been detained. Last week, as U.S. media reported on pesticide runoff and drugs affecting farm-raised catfish bound for U.S. markets, Chinese authorities released a survey taken earlier this year that showed that less than 1 percent of food sold for export—and 20 percent of the products made for the domestic market—was substandard or tainted.
Yet it’s far too soon to conclude that China is starting to clean up its act the way the United States once did. In part that’s because politics here remains a different and dangerous game. When “What Kind of God” was released in China at the beginning of this year, its state-owned publisher edited the text heavily and distributed few copies with scant publicity, ensuring that the public reaction would be minor compared with that which greeted Sinclair’s book. Although Politburo members initially praised Zhou’s work, Zhou contends his status as an ’80s dissident led to subsequent efforts to downplay its importance. Zhou spent almost three years in prison following the 1989 Tiananmen democracy protests.
Indeed, in China, muckrakers like Zhou must still tread carefully, especially if their work negatively affects the bottom line of provincial czars. That’s a lesson Zheng Qi, a whistle-blower in Jiangsu and one of Wang Hai’s clients, learned the hard way. Trained as a quality-control technician at a military hospital, he reported to authorities in 2004 that the Peng Yao Pharmaceutical Factory near Wuxi was exporting bogus pills to Africa. (Zheng had once worked at the plant, but was fired after trying to expose a similar case in the ’90s; he asked to use a pseudonym because he fears for his safety.) According to Zheng, the factory claimed the pills would fight insect-borne diseases such as malaria. But he says this wasn’t true, and that Africans may have died as a result.
No sooner had he made his claim than Zheng began to suffer harassment, and in a recent unsolved accident, he was hit by a car with fake license plates. “I believe I’m followed and monitored everywhere. The traffic accident was done on purpose,” he says. Zheng blames factory head Zhang Guoqing for his persecution, alleging Zhang’s connections to local party and government officials have shielded his plant, which continues to operate. (Zhang declined to respond to allegations.)
Fortunately, Beijing will find it harder to resist international economic pressure than it has domestic critics. The embarrassment and controversy over shoddy exports—including diethylene glycol added to cough syrup, which has killed at least 93 Panamanians since July 2006—are being used by some Beijing authorities to prod other bureaucrats into action. “Just as the Chinese leadership used WTO entry as leverage to push domestic reform agendas, it will use [this] international pressure to improve public-health and food-safety issues,” says Wenran Jiang, a Sinologist at the University of Alberta. Zhou, the author, notes that China’s former FDA head Zheng Xiaoyu was sentenced to death in May “because of America’s dogs and Panama’s cough syrup.”
Yet Beijing is finding it harder to wield the kind of power over the provinces that it once did, making the cleanup that much more difficult. “There are clear indications that Beijing cannot effectively control the rest of the country,” says Jiang. “The regime is particularly weak at regulating a cutthroat market economy with millions of private enterprises.” Three decades ago, all of China’s big manufacturers were state-owned enterprises, and the government could guarantee quality control. Now, however, many manufacturing companies, including formerly state-owned enterprises, have slipped into the loosely regulated private sector. These big businesses often get preferential treatment from local officials who are supposed to monitor them. And companies commonly bribe local police forces, even paying cops’ individual salaries. Then there’s the problem of regulations themselves. Experts say China should adopt an EU-style Basic Food Law and streamline its overlapping rules and jurisdictions. For the time being, different agencies still issue and follow different guidelines.
China also lacks a system for properly recording quality complaints, which makes it easy for authorities to later deny knowledge of a transgression. And according to Zhang Bing of the consulting firm AT Kearney, China has little means for tracking defective goods back to the source after they are distributed.
As a result of such gaps, China’s many lapses are undermining the country’s reputation as a juggernaut that will soon compete head-to-head with the likes of Germany and Japan in the most sophisticated sectors of industrial manufacturing. China’s high-end exports are more comparable with those of South Korea and Taiwan, says Oded Shenkar, a professor at Ohio State University’s Fisher College of Business. In other words, they rank somewhere between Mexico’s and Japan’s. And the Chinese government must figure out how to improve quality if it hopes to keep the economy humming. The recent U.S. recall of defective Chinese-made car tires suggests more such discoveries may be forthcoming, which would further tarnish mainland brands and dent their overseas ambitions. For example, the Chinese manufacturer Chery Automobile, in cooperation with Chrysler, plans to start exporting small and subcompact vehicles to the United States in less than a year. But a scandal there could prove crippling. Other Chinese automakers, such as Geely, have already postponed plans to export to the West because ensuring safety and performance standards has proved so difficult. The Chinese-made Landwind SUV recently received the worst crash rating a German auto club had awarded in two decades.
The real problem may be that some parts of the Chinese bureaucracy have become so used to quality problems at home that they are waking up too slowly to the damage these lapses do to their reputation in Europe, the United States and Japan. The mind-set of the demanding consumer society has not yet taken hold. When U.S. officials tried to raise the product-safety issue during a recent session of the Sino-U.S. strategic dialogue, held in Washington, D.C., in late June, Chinese delegates seemed caught flat-footed and asked to defer discussion until the next round.
Fortunately, history suggests that once Beijing gets serious it will make rapid progress. Many other Asian economies experienced similar teething problems at parallel stages in their development. Tech analyst Dan Heyler of Merrill Lynch in Hong Kong recalls that Taiwan used to have a reputation for slipshod products, before figuring out how to turn things around. “The learning curve begins with reverse engineering to kick-start a lucrative export trade,” Heyler explains. The next stage is, “Let’s cut corners so we can make more money,” he says. “But that doesn’t work. China is in the next part of the learning curve, which is [guaranteeing] quality.” Like other Asian forerunners, Chinese firms will face a powerful imperative: raise safety and quality standards or get shut out of foreign markets. Still, it may take them longer to adapt than did companies in countries with stronger laws and regulations.
This is worrisome, since China is already so big and globalized. The mainland’s mushrooming road system, for example, makes it easier for Chinese eels and wheels to travel from East to West. “All of those farmers at the end of all those brand-new highways are suddenly connected to the rest of China—which is now connected to all of us,” says Drew Thompson, China studies director at the Nixon Center in Washington, D.C. “But getting all those farmers up to international standards is a Herculean task.” To accomplish it will require a clear-eyed recognition of the problem, not a stifling of Chinese critics following in the footsteps of Upton Sinclair.
