A fundamental fix for otherwise China’s fourth rise simply cannot be sustained.
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Dairy producers must reforge their identity
By Wang Xuefeng and Zhang Jixing
Source – Global Times, published April 27, 2013
On April 10, Zheng Yuesheng, spokesman for the General Administration of Customs of China, said that as the importing of milk powder keeps expanding, it has become necessary to restrict and punish the illegal carrying of baby formula into the Chinese mainland. He also stressed that the punishment would be heavier to smugglers who bring in baby formula for trade.
Baby formula smugglers, more often nicknamed “baby formula hand-carriers,” convey baby formula into Chinese mainland not for self-use, but for trade or to earn commissions. From a few tins to vessels or trucks, they have made enormous profits from this under-the-table business.
Partly owing to these carriers, the huge demand for baby formula has even threatened the regulators of international markets. The concern aroused by Chinese buyers has made the purchase restrictions their only choice.
The “hand-carrying” business disturbs the order of the domestic market and the foreign trade. It also puts the domestic dairy market at a higher risk, because the quality of baby formula without an identified source cannot be guaranteed.
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Although the anti-smuggling policy is proposed on a legal basis and for a good cause, it is still believed that the policy, while suppressing smuggled formula, will unfortunately help lift the price of legally imported baby formula in China, making it more costly for Chinese consumers.
The existence of the “baby formula hand-carriers” and the twisted phenomenon that sees Chinese consumers fork out more for smuggled formula without a quality guarantee than pay less for domestic formula, is to adopt vigorous and effective measures to reduce the long-lasting negative impact of the 2008 Sanlu scandal.
As for domestic dairy enterprises, they must realize that the smugglers who are creating chaos in the market feed on people’s fears about unqualified domestic dairy products.
What really matters to them is to take real actions to provide safe, reliable and high-quality products to Chinese customers. Only by doing so can they revive their badly ruined image.
Wang Xuefeng and Zhang Jixing are an assistant research fellow and a research assistant at the National Academy of Economic Strategy, Chinese Academy of Social Sciences. firstname.lastname@example.org