April 24th, 2013
So what to make of this? I see posts like this on Weibo reporting that a bar in Hamilton charged ethnic Chinese a NZ$10 cover charge, while charging white patrons only $5, with a link to Sky Kiwi’s full article here. A little poking around, and here’s the original Stuff article in English. The bar owner says that cover charges vary according to, among other things, state of dress – shabbily dressed punters are charged more, apparently. But, from the Stuff article:
The group of New Zealand-born Chinese are shown on Facebook that night wearing button-up collared shirts. But at the door, they were charged $10 to enter Bar101 while their white friend was charged $5.
“I’m not 100 per cent sure if it was [racial discrimination], but it feels like it,” Kingsley Sam said.
And he doesn’t look like a slob in the photo, either. Of course, the bar owner protests that it couldn’t possibly be racism:
“There’s certainly no desire to keep out one particular race. I mean, to be fair, if you did that in Hamilton with such a diverse culture as we have, you’d go out of business because we’ve got such a mixed-race society now.”
Well, I’d really like to believe that’s true…. But what he’s reported as saying about his bar’s policy seems so confusing, I really have to wonder how it is enforced, or could be fairly enforced, especially in light of the comments on denying undesirables entry and cover charges from a business rival.
I dunno, it might be a total non-story, but it doesn’t look good. Perhaps considering our Prime Minister has just toured China trying to drum up business and came back talking up the numbers of Chinese tourists NZ-bound, NZ business owners might do well to remember that whatever goes on in NZ is reported in China – sometimes, given how active the likes of Sky Kiwi are on Weibo, even quicker than it’s reported in NZ.
…and there’s an infant formula story bubbling away that I really need time to look into… hopefully I can get these exams marked and out of the way this afternoon…
March 28th, 2013
Perhaps I spoke too soon. I was in the Jenny Lou’s up by Chaoyang Park West Gate and, in light of yesterday’s rant about NZ wine in China, thought I’d have a wee look around their wine department. I found a few bottles of NZ wine mixed in with the Aussies and thought, typical, then looked a bit further and saw a section devoted to NZ wine. Not a huge section, a fraction of the size of the space dedicated to Australia and South Africa, either side of the NZ section. There was actually a selection of NZ wines. I would guesstimate a dozen-odd brands, some of which had 2 to 3 wines on the shelves, so not a huge selection, but more than the lonely 1 or 2 I’m used to seeing on the rare occasions I’ve found them in the past. And some of them were going for almost reasonable prices.
I still think NZ’s wine industry is doing far from enough to market their product in China. Compare with dairy – everybody claiming to source their milk powder from NZ plays that up loud in their advertising, and NZ cheese and butter is easy to find. Or kiwifruit – I’ve seen plenty of large, prominent displays of Zespri kiwifruit in the fruit sections of supermarkets. But still, what I saw in Jenny Lou’s today is a vast improvement on any previous sighting of NZ wine in China.
March 27th, 2013
There’ve been a few stories I’ve been following recently, but I’ve generally lacked either the time or the energy, or both. This one from Monday is one of them, but I can’t help but think it needs a new headline. “NZ wine: Late to the party” would seem more appropriate to me. Why? Check out the headline and especially the date on this article. Yep, zero tariff, 13 months and 4 days ago. And the very first clause:
From January 1 this year [2012, now last year], China will impose zero tariffs on imported New Zealand wine
Now, it’s entirely possible that I’m being unfair on NZ’s winemakers. After all, that qq article linked above does quote one Tim (the Tim Lightbourne pictured and quoted in the Herald?) of Invivo, the company that seems to be at the centre of Christopher Adams’ Herald article, as saying that where once the US and Europe were their big export markets, China is now their focus. But – well, I was going to upload a photo of what my students told me they thought of when the heard the word “New Zealand” (or, of course, “新西兰”), but it’s too big and I can’t figure out how to scale it down to an appropriate size. Let’s just say, the words that “New Zealand” brings to mind were:
milk, milk powder, grass, sheep, cows, clean air, water, blue sky, mountains, the Inner Mongolia of the South Pacific
Ok, “Inner Mongolia of the South Pacific” was my interpretation of something that was said in Chinese, words to the effect of, “Wow, it’s like we’re describing Inner Mongolia”, but the rest of the words were theirs. Notice which words don’t appear? That’s right,
wine, fruit (especially kiwifruit), tourism, education, films (especially anything by or involving Peter Jackson)
Now, I have ranted about the unavailability and expense of NZ wine in the past, only to be told it’s easily available in Shenzhen, but that was a long time ago and I’m not sure where I posted that rant. I’m also sure that, given the apparent Shanghai focus of NZ’s business community (judging by emails from KEA), that NZ wine is more easily available in Shanghai than in Beijing.
But here’s what I see: I see plenty of dairy companies sourcing their milk powder from New Zealand or wishing to create the impression that’s where they source their product playing up the 100% pure, clean, green, pollution-free NZ angle; I see Air New Zealand placing ads featuring photos of absolutely stunning scenery in local newspapers (bottom left quarter of the page, you may need to squint, but it definitely has the phrases ’100% Middle Earth’ and ’100% New Zealand’ in the top left of the ad and a koru and ‘新西兰航空’ (Air New Zealand) in the top right); I see Zespri (who’ve found themselves in their own spot of bother lately – and the only quibble I have with that article is that Fran O’Sullivan doesn’t elaborate on the lessons Zespri and NZ exporters to China gernerally have to learn from Zespri’s experience) getting their kiwifruit prominent displays in the fruit and veg sections of supermarkets, I see Anchor butter served up with the bread at banquets in the Great Hall of the People (only wangled that 3 times so far… ), I see NZ lamb on the menus of restaurants pitching at an affluent, sophisticated, or at least aspiring market (though information I have recently heard suggests that if that is genuine, it may well be grey market… no time to chase that up so far, but I’ll be looking into it) and I see the imported wine sections of supermarkets either big enough or specialised enough to bother with such things chock full of wine from all the major wine-producing countries, old world and new – France, Spain, Italy, Portugal, the US (California at least), Chile, Argentina, South Africa, Australia – everybody but New Zealand.
What I very rarely see is New Zealand wine on supermarket shelves, and when I see it it is absurdly expensive – though I must admit I haven’t seen any since the tariff was cut to zero.
What I never see is any attempt to promote New Zealand wine. Alright, fine, that may be because I’m in Beijing and not Shanghai or Shenzhen or wherever. But for crying out loud, free trade agreement, zero tariffs, and a reputation for clean, green, pollution-free produce still miraculously intact despite the missteps of our major producers and an ever-growing market for wine. Why isn’t the NZ wine industry challenging “Chateau Changyu”‘s ads playing up faux-European sophistication with a “Yeah, right, but we’re guaranteed quality and clean“?
To be fair, I am working off pure anecdata here, nothing to pass peer review, and it certainly seems from the evidence I have to hand that Invivo, at least, “gets it” and is working at building up its market here. But “Brand New Zealand” or “New Zealand Inc” wine division? MIA so far as I can tell.
March 10th, 2013
I came across this rather worrying article about an ethnic Chinese Malaysian man having been subjected to racist abuse in central Dunedin, and thought I’d try and find the equivalent article in the Otago Daily Times. I found it, and thought, wow, that People’s Daily article is really just a direct translation. What’s missing, though, apart from the names of their mother and the police officer as well as the job title of the police officer (Southern District Maori Pacific ethnic response adviser – quite relevant to the story, I think. Could they just not parse it well enough in time for publication?), is this:
He said high-profile cases such as the Crafar farm sales, and even the proposed Dunedin hotel, appeared to have resulted in a recent backlash against Chinese in New Zealand.
Which is an interesting ommission. Surely its inclusion in People’s Daily’s translation would’ve made for a juicier story? So why leave it out? Why not pursue this further or link it to other more high profile cases of Chinese companies and people being excluded or subjected to extra scrutiny because of their Chinese origins? Why not seek comment from more members of the diaspora on how China’s economic expansion is impacting their lives – negatively or positively?
February 3rd, 2013
No, DCD milk is not out of the news yet, but it may be calming down – certainly didn’t see anything new about it today, just a few more rehashes of old stuff. Maybe Fonterra’s really lucky. We’ll see.
But it’s not all bad news. This article is so short I might as well just translate the whole thing:
New Zealand exports of dairy cows to China account for over 80% of exports
据新华社讯 2012年中国对新西兰进口奶牛需求大幅增长。据新西兰统计局日前公布的数据，2012年前11个 月，新西兰共出口38232头奶牛至中国，出口额高达1亿新西兰元（约合5.2亿元人民币），而2011年同期，新西兰出口至中国24924头奶牛，出口 额6320万新西兰元（约合3.3亿元人民币）。
Xinhua reports that in 2012 Chinese demand for imported New Zealand cows increased dramatically. According to statistics released by Statistics New Zealand the day before yesterday [note: January 31; the article is dated February 2], in the first 11 months of 2012 New Zealand exported a total of 3823 dairy cows to China with an export value of 100 million New Zealand dollars (around 520 million RMB), while in the same period in 2011, New Zealand exported 24934 dairy cows to China, with a value of 63.2 million New Zealand dollars (around 330 million RMB).
The statistics show that in the first 11 months of last year, New Zealand exported a total of 43517 dairy cows with a total export value of 112 million New Zealand dollars (around 587 million RMB), and China is New Zealand’s biggest dairy cow export market, taking 88% of its exports.
And that’s it. Ok, so that’s bad news from an animal welfare point of view if you’re the Green Party. I’m not sure it’s good news for China’s environment, given how much water dairy cows need and how much waste they produce. But China’s obviously very keen to improve the quality of its dairy herd, and that’s a lot of money finding its way to New Zealand.
But exporting live cows does seem a rather short term strategy to me. Surely at some point China will have enough to both boost the quality and amount of milk production and breed its own top quality dairy cows, and if China is producing its own top quality milk, surely demand for New Zealand-produced infant formula will gradually drop – assuming China’s dairy companies manage to regain the trust of Chinese parents, of course. Still, Fonterra mishandling food safety scares could help with that.
And then I found this odd little article headlined:
And I thought, huh? Some New Zealand products successfully built in China for the first time? Which products? And how would this make sense even if I knew which products?
But reading the article, it became clear that this 新西兰部分产品/”some New Zealand products” is actually the name of a company or organisation. A strange name for a company or organisation, but it must be a name, because a proportion of products from any country doesn’t generally announce things – companies, organisations and people do. So a bit of googling, and it took a while, but I suspect this 新西兰部分产品 might be Fonterra. Why?
恒天然 is the usual Chinese name for Fonterra. It’s got that 部分产品, but the context suggests that’s part of the company name rather than “some of Fonterra’s products”. 魏柯文, greater China director of this mysterious company, is the same name as given in the first article (although the first article doesn’t give a title or job description), and a little more poking around found me this Caijing article from December in which “恒天然大中华区和印度区总裁” – Fonterra Greater China Region and India Region director 魏柯文(Kelvin Wickham) is interviewed.
So how did Fonterra become 新西兰部分产品? Sure, their New Zealand products count as some New Zealand products. But 新西兰部分产品 is a really strange and misleading name for a company. But they seem to be sticking with their old Chinese name 恒天然 on their website, so I doubt this is some weird and ill-advised attempt to dodge the DCD flak. So if that article and that post are reporting Fonterra’s deeds in Hebei, then it would seem we have quite a spectacular case of ‘lost in translation’. Either that or a company in the same line of work with a boss with the same Chinese name as Fonterra’s China and India boss is also building massive dairy farms in Hebei, but made a spectacularly poor choice of Chinese name. Nah, I think lost in translation is more likely.
I wonder if somewhere out there there’s an article headlined “新西兰恒天然公司部分产品首个在华牧场顺利建成” and through a process of careless copying and pasting, the all-important 恒天然公司, the actual name of the company, got dropped out and Fonterra was renamed. Google doesn’t seem to think so. Maybe it’s a copyediting problem. Either way, it leaves me wondering how trustworthy the figures reporting what strikes me as being pretty huge scale dairy farm construction in Hebei’s Yutian county. It’s not the first article I’ve seen reporting farm construction on such a scale, but if they can make such a glaring error in the name of the company, who knows what else they’ve done.
Still, Caijing did report in December last year that Fonterra plans to have 30 farms in China by 2020, and that China is now Fonterra’s largest export market, taking 16-17% of Fonterra’s New Zealand-made products and accounting for 12-15% of its sales. So maybe there is some truth to the huge numbers reported for their farms in Hebei. Who knows.
February 2nd, 2013
Hey, MPI, Fonterra, what are you doing? Whatever it is, it certainly does not seem to be enough.
Why? Take this as an example. The headline reads:
DCD discovered in New Zealand milk powder. Expert says amount small, no danger to health
Seems alright, right? Yeah, until you read the article. The opening sentence is a brief recap of the situation, but ends by stating Fonterra “kept it secret” for more than three months – and yes, with scare quotes. Why scare quotes? I’m not sure, but it does seem to draw attention to the “kept it secret”. But I suppose there is a difference between an active hush-up and simply neglecting to inform anybody. But which was it? I don’t know, but I’d agree that the length of time between the discovery of DCD in some dairy products and the revelation of that discovery to the public certainly looks suspicious.
The next paragraph interests me because of a certain choice of word:
According to reports, the DCD in New Zealand milk powder came from soil pollution. Some farms in New Zealand sprayed their pastures with fertiliser containing DCD, and after cows ate the grass, the milk they produced was polluted. Although the New Zealand government has responded, saying that only a few milk powders were contaminated with DCD, and it poses absolutely no threat to food safety, because New Zealand is the world’s biggest dairy exporting country, this issue has caused many countries to be worried.
See that word ‘污染’ – pollution or to pollute – used in each of the first two sentences, first as a noun – soil pollution – and then as a verb – milk they produced was polluted. And what really big issue plagued China through the first month of 2013? A severe air pollution crisis. What has been a major theme in the marketing of New Zealand dairy products in China? That’s right, clean, green, 100% pure, pollution free. Uh oh, New Zealand is no longer pollution free. There’s pollution in the soil and milk.
I also find the last sentence interesting in how it ends with “world’s biggest dairy exporting country” and “many countries worried”. It certainly seems to me to emphasise that MPI’s assurances that only a few products were contaminated with amounts of DCD so tiny that nobody’s health was ever at risk are simply not good enough. You’ve told us this, but hey, this is a big deal and we’re still worried.
The next paragraph is mostly the same statistics that have been endlessly repeated in every article on the subject, except that it starts by claiming that 95% of New Zealand’s dairy produce is exported. Really? My impression was it was closer to 80%, but whatever, either way it’s a huge amount.
The reporter then talks to a professor at China Agricultural University and member of the China Dairy Industry Association Nan Qingxian, who looks at the claims of how much DCD-contaminated milk or milk powder a 60kg adult would have to consume to put their health at risk (and I’m sure I’m not the first to think, fine, but we’re talking about products for infants here), and says:
At present the biggest problem is that there is absolutely no international standard for the testing of DCD, there’s only a few countries like the USA who have put DCD on the list of things that must be tested for in food products, which means it’s already treated as a dangerous product, and China should do the same as soon as possible.
So – so what? It’s still a toxin. Nan also points out that the raw material of DCD is… wait for it…
Ah, melamine. The grandmother of all dairy product safety scandals.
And when asked if a similar problem could occur in China, Nan says there’s no need to worry, because most Chinese pasture is still in its original state and fertiliser is not generally used, and in any case, not all fertiliser contains DCD.
So, to sum up, a nice looking headline, but New Zealand milk – polluted. Chinese milk – safe.
And that’s not all I’ve found in the news today. I wonder what Fonterra thinks of this headline:
Babymill: Not all top quality milk powder comes from New Zealand
I hope Fonterra finds that reassuring – don’t worry, New Zealand has competition, there are other sources of milk out there.
And, oh boy, does this reek of puff piece, but it’s highlighting another source of quality milk for those worried about the safety of New Zealand produce. The Netherlands. It starts off trying to explain how the fact a quarter of its land is below sea level and so much of its pasture has been reclaimed from the sea makes the Netherlands’ pasture extremely good. I don’t get it, but whatever, there might be some truth to that. Then it explains that infant formula production is done under the regulations for producing medicine, and so formula is tested much more often through the production process than formula in other countries, and it meets the EU’s tough quality standards. It then says that electricity is the main power source, and wind the main source of Dutch electricity, so the Netherlands’ air quality is good. Of course, it doesn’t mention that the Netherlands is downstream of neighbouring Germany, and not terribly far from the heavy industrial Ruhr, but nevermind. It goes on to point out that the Netherlands is one of the few countries to be free of all common communicable cattle diseases.
So, if we trust People’s Daily, next time we hear clean and green or 100% pure, we’re supposed to think of windmills, tulips, polders and canals, it seems. I wonder if Fonterra has any plans to fly Chinese journalists to New Zealand, take them on tours of the dairy farms and factories of the Waikato talking about how clean and safe the milk powder production process is, then stand them on the beach at Raglan and politely suggest that while the Netherlands has heavy industry very close to its dairy farms, it’s a hell of a long way from New Zealand to anywhere else. Just don’t let them see the state of New Zealand’s lowland waterways.
On my way to lunch I bought a copy of Beijing Youth Daily, and on the front page was this rather short article.
If imported dairy products have safety problems importers should voluntarily recall products
AQSIQ has issued a new regulation, to come into effect on May 1 this year, stating that the importer should voluntarily recall imported dairy products with safety issues, whether they’ve already harmed people’s health or could pose a risk to their health. Also, it bans dairy farmers exporting to China from using feed, feed additives, veterinary medicines and other chemicals harmful to animal or human health banned in either China or the exporting country or territory. Also, AQSIQ will be able to issue warnings and notices of threats to dairy product safety and take conditional measures, such as increasing the strictness of testing and ordering recalls.
Which looks good, but I still can’t see what Fonterra is doing to persuade China that the DCD contamination really was so minor and is all fixed and its products really are safe. Instead, I search the New Zealand Herald and find an article from Wednesday reporting that Westland Milk Products found traces of DCD in some of its products produced before November 1.
The tests revealed minute traces of DCD in samples of Westland products produced before November 1 last year. The evidence indicated products made after that date are free from DCD, the company said.
Westland is conducting further testing in line with customer and government requirements and said it would announce the results as soon as possible.
Fine, but I would like to know when the testing was done and how soon after DCD was found in Fonterra products Westland found out. Westland’s website looks pretty, but doesn’t seem to work too well, and searching it for “DCD” didn’t turn up much of anything.
And news from yesterday that DCD runoff may be damaging aquatic environments:
A University of Otago study has found dicyandiamide (DCD) residues in streams in Otago’s lower Taieri Plain in concentrations that cause natural nitrogen transformation processes to be disrupted in aquatic ecosystems.
Department of zoology researcher Marc Schallenberg conducted laboratory experiments showing that in a wetland system, the presence of DCD inhibits the processes of nitrification and denitrification – two natural processes that help to purify and detoxify waters.
“While DCD’s inhibition of nitrification on land is desirable as it reduces the amount of nitrate entering streams, its similar inhibitory effects within aquatic environments is undesirable, as this could lead to ammonia toxicity in fish and other species, or increased incidences of algal blooms,” Dr Schallenberg said.
And that, sadly, is about all the detail the article gives. The rest is either introduction or more mindless repitition of what we already know.
I guess its good for New Zealand’s river systems that DCD has been withdrawn, even though it was used to prevent nitrate leaching into the rivers, but I wonder how long the contamination will persist. I guess rivers, being flowing things, will gradually flush the DCD out, but how long will it take all of the DCD to leach out of the soil and be washed out into the sea?
But here, at least, is some common sense from the Tourism NZ chief executive:
Tourism NZ chief executive Kevin Bowler said New Zealand had to be very careful about its reputation.
“We need to follow up really good practices around protecting our environment because it’s such an important part of why visitors choose to come here. Obviously none of those stories are particularly helpful to us,” he said while commenting on figures which showed a dip in the number of overseas tourists during the past year.
Yes, absolutely. Because people are let down by the difference between the hype and the reality. I’ve probably told this story a gazillion times, but whatever, years ago I met two Belgian friends of a friend and showed them around Wellington for a couple of days. They told me, “You know, the way you Kiwis treat the environment, if you had the population density of Belgium, your country would be a toxic waste dump”. And they were right. And so was Fred Dagg – we don’t know how lucky we are. It really is the lack of people that keeps New Zealand as clean and green as it is, and as New Zealand’s population continues to grow, if we want our kids and grandkids to run around on beaches and in parks barefoot like we used to do (probably still do, many of us – when she got back from her first trip to New Zealand my wife told all her friends and family about me wandering around with no shoes on) then we really need to improve the way we treat our environment. And if we want to keep our tourism industry and our food exports, we need to treat our environment better, because tourists going home and telling their friends and family that that 1oo% pure thing is a load of nonsense and food safety scandals really does make people think twice about visiting New Zealand or buying our produce.
So, Fonterra, where are you? What are you doing to persuade your formerly devoted Chinese customers that your products are pure and safe? Why am I not seeing any evidence that these efforts of yours are working?
January 31st, 2013
Nope, this scandal isn’t just going away, and I really hope Fonterra and MPI are paying attention, because so far they don’t seem to have handled things terribly well.
What do I find on Hexun today? A suggestion that perhaps Chinese dairy companies might be rethinking their plans to build milk powder plants in New Zealand, and more on the drop in sales, especially online, of New Zealand made infant formula. Although I also note that both articles also have an ad for imported infant formula, including New Zealand’s Karicare, at the bottom.
Let’s start with the second one first. It’s a repost of a Beijing Daily article. The reporter went to several large supermarkets around Beijing and saw that New Zealand made infant formula was on the shelves in its usual prominent space and apparently selling as normal. Online, however, it’s a different story, with New Zealand infant formula purchasing agents on Taobao having lost half their business and many parents saying they were not giving their children New Zealand infant formula for the time being. The figures given for the drop in sales on Taobao are 50.9% over the last 7 days and 61% compared to the same period last year. A purchasing agent specialising in imported infant formula said that sales had dropped by half and many buyers were now buying North American, Japanese or Dutch made infant formula.
The reporter visited large supermarkets like Carrefour, Walmart and Hualian and saw New Zealand made infant formula on sale as per usual. When asked, the person in charge at one Carrefour told the reporter:
Up till now the supermarket still hasn’t received any notice to take it off the shelves.
The reporter then visited high-end supermarkets like Cuiwei and Modern Plaza and found the same situation. A sales assistant told the reporter:
Lately fewer people have come to buy, but we haven’t received any notice to take products off the shelves or recall them.
To me it’s almost as if the reporter was expecting to find New Zealand infant formula off the shelves or hidden away or supermarkets ordered to stop selling it, and is surprised to see it still there as per normal. I was just in one of my local supermarkets, and I saw nothing unusual about the infant formula display, but I didn’t see any prominent mentions of New Zealand, either.
And now the first one second. This one comes from The Beijing News, and in the paper edition is a full page with an interesting image at the top – two Friesian dairy cows with targets on them and “二聚氰胺” (DCD) repeated in various sizes in the background.
I’m not sure about this word “躺枪” in the headline and later in the text, but Baidu Baike seems to think it comes from a line in a Stephen Chow film and means to be attacked even though one is innocent or just a bystander. “Collateral damage”, then? I’ll run with “collateral damage”. That would make the headline:
Domestic enterprises building plants in New Zealand “collateral damage”
Seems to work.
Anyway, a fair bit of it is repetition of stuff reported elsewhere over the last few days, as has become frustratingly common in modern journalism. But there’s some interesting stuff, too. For example:
Right when domestic consumers were seeing New Zealand as the “Pure Land” of milk production, the crisis broke out.
Tempted to write “Land of Milk and Honey” for “Pure Land”, as that would seem to be pretty close to the intended meaning (especially when look at the prices manuka honey is going for on Taobao and the likes….. no, don’t jinx NZ, we don’t need a contaminated honey crisis, too).
This news unexpectedly made Yili and Yashili, who had only recently announced they would build plants in New Zealand, “collateral damage”. On the day [the day the news broke], Yashili’s share price plummeted. And industry insiders said the DCD incident could well influence domestic enterprises plans to build plants in New Zealand.
On this, Yili chose silence. Yashili said that its plans to build a plant in New Zealand would not be affected by this incident.
Although I think New Zealand has far too many of its economic eggs in the dairy export basket, it would be disappointing to see Yashili and Yili choose to build their plants elsewhere. Why? They were each planning to invest 1.1 billion yuan in these plants, with Yashili building in Waikato and Yili in South Canterbury. That’s money, jobs, and not helping further concentrate all of New Zealand into Auckland. Not that there’s anything wrong with Auckland (apart from its woefully inadequate public transport, of course), but the rest of the country needs some love, too. And I don’t see the sense, given New Zealand’s geological wobbles, of concentrating everything in one city – in Auckland’s case, in one city built on a volcanic field that will one day erupt again. Spreading things out so that one natural disaster (well, one smaller than a possible future eruption of Lake Taupo, at least) doesn’t wipe the entire country out seems to make much more sense than me. So, sure, Yili and Yashili’s investments, if they win the necessary approvals and aren’t scared off by the DCD and go ahead, will help cement New Zealand’s reliance on dairy exports, but at least they’re giving the provinces some much needed love.
There were media reports on January 28 that Mengniu recently spent a large sum of money buying in 3000 head of pure Holstein dairy cows in the hope of improving the quality of its milk.
Cos we can’t trust those Kiwis to not go spraying chemicals on their grass, but we can buy their cows. Right? Fair enough, under the circumstances.
Apart from public perception and cost, building a plant in New Zealand has tax benefits. Yili says that China and New Zealand have already signed a Free Trade Agreement, and in 2020 import tariffs on dairy products will be cut to zero, increasing the company’s profitability and having a positive effect on strengthing the company’s competitiveness.
So let’s settle this DCD issue and get things back on an even keel, because if Chinese dairy companies have such strong reasons to invest in New Zealand, and by doing so they can create jobs and break Fonterra’s stranglehold, then surely everybody but Fonterra wins? And, personally, I’d be quite happy to see Fonterra taken down a peg or two, so bring it on.
Oh, and here’s a statement that caught my eye as I was reading the dead tree version over lunch. MPI can keep reassuring Chinese consumers that New Zealand milk is safe, but:
But after the melamine, Mengniu milk testing positive for excessive levels of the carcinogen aflatoxin M1, and abnormal mercury levels in Yili milk powder scandals of recent years, domestic consumers, when faced with dairy product safety problems, are already as skittish as sheep.
Yup, that’s a fair summary, I think. And they give a couple of examples, of how some Chinese parents are responding to this issue, such as a Weibo post by “依依MM琼”, who has been feeding her baby New Zealand infant formula for a long time, now:
So worried! Exactly which milk powders have tested positive for DCD?
Precisely. Because neither MPI nor Fonterra has bothered to tell anybody which batches of which products tested positive, all New Zealand milk powder is under suspicion. If they’d tell us which batches were relaxed, then people could check, then either dump any dodgy stuff they have or relax.
Song Liang believes that if you want to know whether a dairy product is safe or not, you need to look at how mature the country’s production supervision system is, and in this respect, New Zealand is certainly trustworthy. At the same time he said this incident gave Chinese consumers a warning that one can’t blindly worship western brands, no country’s milk powder is absolutely safe.
Well, true, but MPI seems to have dropped the ball on this one, at least on the PR front. How different would things have been if back in September last year they’d announced precisely which batches of infant formula had tested positive for DCD?
So, I dunno, I can’t see from this article that there is an imminent risk of Yili or Yashili pulling out of their planned investments in New Zealand, and there are clear positives to Chinese investment in New Zealand dairy, but I do see a definite risk of, if MPI and Fonterra don’t get their acts together and start handling this situation properly, serious damage to New Zealand’s dairy exports being done.
January 30th, 2013
Ah, good, evidence, finally, that people in New Zealand are getting it. In today’s NZ Herald are this piece by Christopher Adams entitled Swift Backlash over Dairy DCD and this piece by Fran O’Sullivan pointing out the glaring lack of a battle plan for handling the risk to New Zealand’s dairy exports. And it’s about time somebody pointed out the enormity of the situation, because the headline of this article is by no means the most extreme I’ve seen over the last few days:
Milk powder consumption trends of the “Post-New Zealand age”
Notice the “finance.qq.com” part of the address? QQ is far from a minor player in the Chinese internet. If it’s on qq, a hell of a lot of people are going to be reading it.
The word I translated as “trends” also means “wind direction”. You know what Bob Dylan sang about not needing a weatherman to figure that out. Apparently the MPI and Fonterra do need help from the met service.
From Adams’ article:
Biopure Health had seen its turnover doubling every week since the firm opened its network of New Zealand Milk Bar retail stores in China’s Sichuan province last year, Page said.
But he said sales promptly went “to zero” when customers found out about the presence of small amounts in DCD in New Zealand dairy products after the publication of a Wall Street Journal article that questioned the safety of this country’s milk.
Customers had even been returning formula to stores and asking for refunds, Page said.
Well, yes, Chinese parents do tend to be hypersensitive about the safety of their children, and not just because they’re generally allowed only one. As O’Sullivan writes:
The problem with this developing fiasco is that the major players have been addressing the issue from their narrow perspectives rather than that of Chinese consumers who have been the major driver of the New Zealand dairy industry’s rapidly increasing milk powder sales post the 2008 Sanlu melamine disaster, to the point where it provides 80 per cent of China’s foreign dairy imports.
Yes, exactly. Nobody has forgotten the melamine scandal, and as I discovered the other day, some are quite actively remembering Fonterra’s involvement in that. And it’s not just melamine, that was only the biggest of several scandals involving infant formula, and it emerged that some of the melamine milk had been hidden away, only to be put back on the market a year or so later when the dust had settled. Add to that the near constant food safety scandals, from illegal, toxic additives to last year’s unsold mooncakes on sale again this year, and I think you can imagine how stressful being a parent in China can get. Chinese parents turned to Western brands of infant formula because they perceive Western companies as safer and less likely to cut corners or play fast and loose with safety and quality standards, and the turned particularly to New Zealand formula partly because many big European and American brands source their milk from New Zealand, but also because they’ve bought into the perception of New Zealand as being clean, green and pollution-free – a perception strongly encouraged in the dairy industry’s marketing here in China.
When you’re living in a heavily polluted city surrounded by constant food safety scandals and never quite knowing whether what you’re buying is genuine or fake, just knowing there’s an awful lot of fake stuff out there (including food, drink and medicine), the concept of a place with no pollution, pure and natural, whose food products are guaranteed to be free of any contamination, is powerfully attractive, to say the least. I’m looking out my window at smog so severe the media is openly discussing just how bad things have got and what needs to be done to fix the situation, then looking at photos of a New Zealand summer, and I know where I’d rather be raising my wee one. It’s simply not right to have to look a healthy, active toddler inside for fear of what the air outside will do to her lungs. Similarly, Chinese parents lost all faith in China’s dairy companies after the melamine scandal. They perhaps rather naively bought into New Zealand’s clean, green reputation. Now it turns out that Fonterra knew back in September of the DCD contamination, but said nothing – learnt a bit too much PR management from its Chinese partners, perhaps? But the country they trusted to supply pure, uncotaminated formula for their children now turns out to have contaminated milk, too? And they knew in September? And we, the consumers and parents, don’t find out until now? And MPI’s and Fonterra’s answers to our questions just somehow don’t seem entirely trustworthy… That’s one hell of a kick in the guts.
There was always going to be a major perception gap but there are no obvious signs that the industry and authorities had formed a battle plan to counter the trade risk.
Trouble is by the time Worker – together with Fonterra China boss Kelvin Wickham – fronted the Chinese media he was already fighting a perception issue.
The vice-minister of China’s General Administration of Quality Supervision, Inspection and Quarantine, Wei Chuanzhong, had issued a “Please Explain” earlier that day asking for a “detailed risk assessment report” on New Zealand dairy products after the “potentially harmful” chemical residue was found in them.
AQSIQ was not satisfied with the New Zealand Ministry of Primary Industries’ rather cursory press statements.
They wanted to know exactly where the contamination occurred: which products, which batches and which companies were involved.
And again, exactly. We don’t have any information, really, we only know that some milk powder was contaminated. It’s one thing telling me that only a few products were affected and that the contamination levels were less than 1% of the EU standard – but hang on, the first reports I saw said there was no standard for DCD contamination, and you either can’t or won’t tell me which products were affected and what you did with them, and you apparently don’t have even the common courtesy to inform AQSIQ, who, if properly informed, would be able to confirm to the Chinese media that what MPI and Fonterra said was true (assuming it is true). So long as MPI and Fonterra behave this way and until we, parents trying to raise kids in China, have solid information confirmed by a third party (i.e. AQSIQ) to process, how the hell are we supposed to trust MPI and Fonterra?
Now, back to that qq article with a headline that should have Fonterra and the New Zealand government squirming. Here’s how it opens:
The domestic brands melamine incident of several years ago instantly made Western milk powder the symbol of quality. But with last week’s revelation that New Zealand Fonterra’s products contained tiny amounts of DCD, Chinese consumers have fallen into a dillema of choice. As many consumers maintain an attitude of “wait and see”, signs of a shrinking of internet buying agents have appeared, and at the same time, milk powder from the Netherlands, the UK and other European producers have rapidly become the new favourites.
So, if we can’t trust those Kiwis, we’ll turn to Europe? I hope Fonterra’s paying attention.
In the next paragraph the reporter writes of shoppers in large supermarkets like Carrefour’s Fangyuan store and Walmart’s Xuanwumen store still largely buying by habit, but many more looking closely at the labels. And if you look closely, an awful lot of the imported infant formula is made in New Zealand. There’s not a lot of options for parents looking to avoid potentially contaminated New Zealand milk. And there’s these suspicious labels claiming their formula is imported, but not naming a country of origin, so the reporter asked a store assistant, who said that the main source countries of imported formula were New Zealand, Singapore and Ireland, among others.
Singapore? Really? Anyway, moving on…
The next two paragraphs present an interesting contrast. First, there is a shopper who had been feeding her baby formula from New Zealand. She’s worried and wants to swap to a non-New Zealand formula. The reporter says:
The consumers worries are not uncalled for.
Why? Because 80% of dairy products imported into China come from New Zealand.
And on the other hand are the store assistants, some of whom said they hadn’t heard of the DCD problem, others of whom said the authorities had issued an official notice that New Zealand dairy products were safe.
And then there are some interesting stats about the online trade in New Zealand-made infant formula. In the last 7 days, sales of imported New Zealand milk powder have dropped 50%, and are 50% lower than at the same time last year. On January 26, the sales figure for New Zealand milk powder purchase agents was “2″, on January 27 it was “0″. Many sellers have posted MPI’s notice assuring consumers that New Zealand dairy products are safe on their front pages.
That’s followed with the rather curious statement that the DCD contaminated milk discovered in September has been sold out, so everything on the market now is safe. Well, great, but how’s about MPI or Fonterra tell us which products and which batches were contaminated, just in case somebody’s got contaminated formula stored up somewhere?
So how does this article actually get to the trends of the “post-New Zealand age”? Well, apparently a large chain of German supermarkets are limiting customers to four cans of infant formula per purchase, and Dutch supermarkets are limiting customers to one can per purchase, while online sellers are struggling to fill orders for European infant formula thanks to the combination of high demand and restricted supply. And, of course, prices for European formula are going the way prices naturally go in times of high demand and tight supply.
And all of this has me wondering: Have MPI and Fonterra just gone and blown New Zealand’s ability to cash in on the China market? Or will they manage to somehow get their act together and repair the damage they’ve done? I guess they can consider themselves lucky that the severe pollution across much of China this month is taking up so many column inches and pixels, because what I’m seeing strongly suggests this is not by any means a minor bump in the road which will be easily crossed. Nope, this is going to require lots of hard work on their part.
January 28th, 2013
As is my habit, I picked up a copy of 新京报/The Beijing News on the way to lunch. I was wanting to look at the report on the 4th big smog warning this month, which was the top headline on the front page, but the first thing I saw as I opened the paper was this. Yup, the top half of the front page of the business section was a big graphic on the New Zealand DCD milk incident. Page B03 was a full page of reporting on the incident, with the same reports getting a link reasonably high up on The Beijing News’ front page to an easier-on-the-internet-eye format here.
What in that page’s main article that grabbed my attention was, first of all, just how many times MPI CEO Wayne McNee was reported as saying that the DCD was not directly injected into the milk, but spread on pastures, thereby finding its way indirectly into the milk supply as cows ate grass that had been sprayed with DCD, and that the amount of DCD was tiny and only in a few milk powder products and not in other dairy products, and how many times Fonterra CEO Theo Spierings is reported emphasising that Fonterra’s products are safe. A quote from Spierings as an example:
We know that some consumers and supervision agencies have their suspicions. We must dispel their doubts. At present, we are maintaining close communications with them, providing relevant explanations. We have strong scientific proof of the safety of Fonterra’s products, and will prove again the safety of our products.
But more importantly, at the bottom right of page B03 was a short piece quoting two women, one Ms Ma, who already has a lot of New Zealand infant formula, sent by friends in New Zealand, stored up, and the other, one Ms Liu, seven months pregnant, who has already stored up some New Zealand infant formula. Ms Ma is quoted as saying:
Whether its a big issue or a small problem, I still don’t dare give this formula to my child to drink
even New Zealand milk powder has problems, now I really don’t know where I should go to buy reassuring milk.
I feel it safe to assume the 放心奶/reassuring milk is infant formula one knows to be safe.
Ms Liu wonders whether she should buy infant formula from Europe. Trouble with that is that several reports state that enormous percentages of China’s imported dairy products, including many big European and North American brands of infant formula, source their milk from New Zealand. Percentages that hit 80. For example:
Because 80% of imported milk powder in China is sourced from New Zealand, industry insiders believe that New Zealand milk sources are relatively trusted,
…and it goes on:
the relevant authorities will calm this storm as quickly as possible
And let’s hope so, and let’s hope that they do it properly, because going back to TBN:
As of January 26, after the revelation that some New Zealand milk powder contained residues of DCD, AQSIQ had already urgently requested the New Zealand authorities provide as soon as possible detailed information on the amounts of DCD detected in milk powder and the batches affected. But the relevant authorities have still not stated whether they will test milk powder for DCD.
And I have yet to come across a report stating that MPI has provided AQSIQ with the necessary information. Let’s hope that they have already done so, or at least will do so very soon, because the comments of Ms Ma and Ms Liu above illustrate what New Zealand’s biggest export earner is up against here – if people in the market for stuff, especially essential stuff like food, for their children, don’t trust your products, they ain’t gonna buy. And if you get a reputation for producing poisonous products for their kids, then your even more screwed.
Three straight days of my inbox being full of poisoned New Zealand milk. I’m quite impressed by New Zealand government and industry efforts to get their message out, but I’m still curious to see how this story plays out.
January 28th, 2013
This does not look good. On Saturday I got home from a day of exams, and my inbox is full of reports of New Zealand milk powder containing toxic dicyandiamide (DCD). Some examples are here, here, here and here. Sunday’s news was the same, all DCD all the time. They all seem to refer to a Wall Street Journal report of DCD being found in New Zealand milk – this report? If so, it says Fonterra knew of the contamination before it launched its new shareholder fund last year, but didn’t report it. Somehow it’s not “material information”:
A Fonterra spokesman said Friday the company received advice from the government at the time that the low levels of DCD it found weren’t a food safety concern
It also reports that Ravensdown and Ballance Agri-Nutrients have suspended sales of DCD.
This Otago Daily Times report is interesting.
On the one hand, there are the optimists:
ANZ senior trader Alex Sinton said New Zealand officials had ”probably done everything behind the scenes” and ”smoothed things with the regulators”.
”It’s probably not such a big story even though people are arguing about whether it led the kiwi lower.”
Ha! Yeah, right! But I’ll get to that later…
There are also those with a more realistic view:
As no internationally set standard existed for DCD residues in food, because it had not been considered to have any impact on food safety, the detectable presence could be unacceptable to consumers and international markets, even in the small amounts found in recent testing, ministry deputy director, general standards, Carol Barnao said.
”Food regulators around the world are reflecting market demands with increasingly rigorous testing and, in some countries, there is zero tolerance to detected residues outside agreed standards,” she said.
And there are also lots of interesting details, like that DCD was developed to help control nitrate leaching into waterways, that there’s no known food safety risk (doesn’t mean there’s no risk, but… ), and that:
Federated Farmers food safety spokesman Dr William Rolleston said the issue needed to be kept in perspective, as DCD-based nitrification inhibitors had been applied on about 500 dairy farms, out of about 12,000.
Ah ha. But then there’s the headline on that Hexun article:
80% of milk powder imported into China is problematic? Because it’s all from New Zealand
Ah, yes, now that’s the kind of publicity New Zealand needs.
Apparently, 80% of China’s imported milk and 40% of its imported infant formula comes from New Zealand. But it’s really interesting to compare it with the ODT report. Compare the ODT’s calm, rational tone with the Hexun report. Not only does Hexun give a big, scary headline, it contains this statement:
DCD can be used to make melamine.
I’d be willing to bet that the final word of that sentence would appear to an awful lot of people in China like this:
It then claims that DCD is commonly used by New Zealand farmers to prevent nitrates, which are harmful to humans, from leaching into waterways. Well, the ODT agrees with the use of DCD, but reports that of New Zealand’s 12,000 dairy farms, only 500 use DCD. And those figures come from Federated Farmers food safety spokesman Dr William Rolleston, so should be authoritative. What’s curious and confusing, though, is that a couple of paragraphs later Hexun says that only 5% of New Zealand dairy farmers use DCD, and then only 2 or 3 times a year, attributing that information to the Ministry for Primary Industries’ Carol Barnao, who is deputy director, general standards – again, what would seem to be an authoritative source. How you leap from “commonly used” to “5%”, I don’t know.
And Hexun then revisits the melamine issue by stating that DCD contains a tiny amount of melamine, but so little that the MPI couldn’t detect any in its tests. But the final paragraph takes us back to 2008′s melamine milk crisis, only this time with no mention of Sanlu. Nope. Fonterrra is the company named and shamed, with the reminder that the melamine milk caused the deaths of at least 6 babies and sickened 300,000 people. Yep, Hexun specifically writes “New Zealand’s largest company, Fonterra…” and Sanlu, its joint venture, is left anonymous. I find that most curious, because I remember back in 2008 everybody talking about Sanlu, but very few people picking up on the Kiwi connection. This strikes me as quite a drastic change in emphasis.
The second to last paragraph also contains an interesting sentence, especially in light of several instances of fake New Zealand infant formula or New Zealand-produced formula failing AQSIQ inspections last year:
The New Zealand government’s revelation could lead the Chinese government to carry out compulsory, complete and thorough inspections of all imported dairy products.
And now 新西兰时空 has a very well-timed post on Weibo under the #新西兰奶粉# (#New Zealand milk powder) hashtag, including images of MPI’s announcement, translated into Chinese, assuring consumers that New Zealand dairy products are safe. Scroll down for the English version if you need to. I wonder what effect that will have. I will be interested to see how this story plays out.