Traveling abroad has become a common trend for Chinese younger generation and the impact of their purchasing power to visiting countries is immense. It is understandable that people would prefer to purchase goods in specific countries wherein they were invented or pioneered. However, Chinese tourists gobble up everyday items and even Chinese-manufactured goods. This phenomenon reflects Chinese consumers’ strong disbelief in domestic goods and retailers. Although increasing Chinese consumers who can afford the best demand better quality goods, the majority of Chinese manufacturers still focus more on producing less costly goods with inferior quality. One of the most famous example of this manufacturing system is milk powder production. Due to its notoriously poisonous ingredients including industrial chemical, China’s milk powder has been drastically decreased since 2008. Consequently, Chinese parents prefer to pay extra money and effort on purchasing foreign milk powder.
This phenomenon signifies that Chinese manufacturing has yet to advance as far and quickly as it should. Moreover, the problem does not remain in domestic scale but it also creates “parallel traders” which can hamper other countries’ market flow.
http://www.forbes.com/sites/gordonchang/2015/03/01/why-chinas-consumers-are-flying-to-japan-to-buy-toilet-seats/
Does this problem signal a need to change output strategies moving forward? If China is focused on a growing consumer culture, they will surely need to produce higher quality goods and focus on domestic sales, rather than exports.
This is a negative externality — the behavior of one bad producer can harm all other producers (and the unfortunate consumers of the bad firm’s products). It’s not that firms don’t know how to produce good products. In the case of milk, firms had to go out of their way to “water down” their milk, adding melamine so that it would pass a simple test for protein content thus better hide their watering down. While small quantities of melamine don’t hurt an adult, that was not the case for babies who drink only milk. Goodbye kidneys…
Now in the US we also had milk scandals, particularly in late 19th century NYC where flour or plaster was used, and the water wasn’t necessarily clean. That continued for at least 2 decades, and ultimately required a strengthening of government inspection systems, or to rephrase in ideological terms, bigger government. In all societies (plenty of scandals in the US, including this century) food producers can avoid getting inspected, particularly if they provide encouragement to lowly government employees to look elsewhere, or lobby their congressman to lessen intrusive government. All too many congressman are happy to oblige without asking hard questions, as long as their campaign gets help, and while food inspectors tend to end up in those jobs because they care about the issues (they aren’t hired on a random basis), and so have a really impressive track record of not being “on the take,” it’s easier to spend time making the rounds of cooperative compliant firms than to spend hours and hours in sketchy ones who push back.
Now overall the evidence suggests that our food in the US is safer, because there are more large producers (Tysons and their peers) and large consumers (McDonalds) who have a strong interest in avoiding scandal, and who simply are easier to inspect with a small staff. The world of family farms and local slaughterhouses and family-run restaurants in days of yore was impossible to police simply in terms of manpower, and outbreaks were too small to show up on the radars screens of public health officials even if a local hospital saw a spate of cases, as small numbers (think our stats sequence, with thousands of hospitals there will always be clusters of food poisoning cases) make diagnosing whether there really is a problem more difficult, and tracing the root cause requires lots of manpower, which is hard to justify when it may be a random lapse at a small producer. Instead they want to focus on the random lapse at large producers.
As we know from other issues, China’s government is not very powerful, and so local government officials can ignore dictates from Beijing, underfunding inspection systems or ignoring problems when reported. (Ultimately a couple government officials were charged with murder in the melamine case, because it was well known among in the dairy industry that this was going on — farmers were told that melamine was harmless.) China remains a big country, with huge numbers of producers of varying levels of technical skills and honesty. It will take a fair amount of money and determination to set up inspection systems, it will take time and money to educate farmers on best practice — if you’ve every been around a restaurant, there are lots of little rules and practices from washing standards to where to store what at which temperature, and these rules didn’t develop overnight. It will take time for consumers to gain confidence that things are safer.
What I don’t know is the extent to which such systems are being funded and being backed by local government officials. My hunch is that things are better, but because data are better more problems surface: good news and bad news, but clearly problems remain too widespread. This is not just a media sensation, as we should know if we study our own history.