Will Fonterra’s dairy scare bolster China’s dairy industry?

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Milk scandals over the years have rocked Chinese consumer confidence in its domestic dairy producers, but the scarred industry may have a second shot at redemption after Fonterra’s recent bacteria scare.

Last week, New Zealand-based Fonterra, the world’s largest dairy export, reported that it had found botulism-causing bacteria in some of its dairy products. Chinese officials reacted and issued a recall of the affected products.

It also calls into question the belief that foreign products are always safer.

"Some Chinese consumers hope that foreign brands are absolutely safe, but recurring problems prove that famous foreign brands are not always safe," an editorial published on Tuesday by the People's Daily said.

Zhu Yi, associate professor of China Agricultural University, also told the People’s Daily that Chinese consumers “should drop the blind trust in foreign dairy brands.”

“...At the same time, it is necessary for China’s dairy enterprises to regain consumer trust and improve quality to offset the challenge of imported milk powder,” the article concluded.

According to The Wall Street Journal, consumers aren’t as easily swayed.

"It would be very difficult for them to switch back to domestic brands," said Robin Kerawala, partner of SmithStreetSolutions, a Shanghai-based consulting firm.

Consumers still haven’t forgotten the 2008 milk scandal that killed six infants and sickened 300,000 more. The country recently wrapped up a dairy standard overhaul to strengthen standards on food contaminants, fungal toxins, food additives and food labels. Read more here.



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