Petty Protectionism

[rffrydr]

This is either a petty form of competition or a strange newfound expression of chinese hubris, "for the Chinese Century" to come:


One horsepower

Foreign brands encounter a new form of protectionism

THIS week's target, on China's Consumer Rights Day, was PSA Peugeot Citroen, a French carmaker. Newspapers across the country published pictures of one of its cars being towed to a dealer by four bedraggled horses. The car's owner, a Mr Chen, claimed it was defective, despite damage that looked suspiciously like the result of a head-on collision. The car had "exploded for no reason", Mr Chen told reporters, who dutifully relayed his story unquestioned.

The rights of 44% of Chinese consumers, says the official Consumers' Association, have been "seriously violated" in the past year. It has recommended a ten-point action plan to tackle the problem. The uninitiated would be forgiven for thinking that its campaign was aimed at local firms, which are notorious for churning out shoddy or dangerous goods. But much of the venom in the press, at any rate, is directed at big multinationals.

One company to have suffered from a safety scare is Procter & Gamble. Last September the authorities banned its SK-II beauty products after they found traces of chromium and neodymium. Never mind that these substances are tolerated throughout the world, are in locally made cosmetics and that the quantities were less than 1% of the level the World Health Organisation considers acceptable in foods. Newspapers reported that the creams could cause skin irritation and damage to the liver and lungs. Thousands of consumers stormed stores to demand refunds (often for counterfeit products). An angry mob smashed the glass doors of P&G's offices in Shanghai. A month later the Ministry of Health declared SK-II products safe. Yet even now, six months on, P&G has been able to restart SK-II sales in only 19 out of 98 former outlets.

Eating can be a risky business in China: 87 people died in one recent outbreak of food poisoning. Yet the authorities and the media seem oddly fixated on the supposed transgressions of foreign firms. Earlier this month health inspectors began looking into KFC's practice of adding a preservative called magnesium trisilicate to cooking oil and then reusing it for up to ten days. The press pounced on the story, drumming up experts who claimed that eating food cooked this way could cause cancer. Inevitably, the papers devoted much less coverage to the investigation's eventual findings: that KFC complied fully with local safety standards. Other foreign food-makers, including Haagen-Dazs, Heinz, Kraft and Nestle, have suffered similar bad publicity.

Such stories are commonplace. Upon discovering that Johnson & Johnson's baby-care products were under scrutiny in India, newspapers in Chengdu advised consumers to stop buying them. Yet, after investigating, the Ministry of Health concluded that they met local regulations. Likewise, the media claimed that Unilever's Lipton instant tea contained fluorides which "would cause cancer if taken in excess", according to one report. Yet the Ministry of Agriculture cleared the company after it provided samples for testing. Colgate-Palmolive's toothpaste was said to contain a carcinogen. In response, supermarkets in Shandong Province removed it from their shelves. Yet again, after an investigation, Colgate was cleared of any wrongdoing.

In January inspectors from the Shanghai Industrial and Commercial Administrative Bureau began an investigation of foreign designer clothing. It found that 17 of 40 brands tested were selling "substandard" goods. But the faults it uncovered were hardly the stuff of lawsuits. MaxMara and Burberry were both pulled up for selling trousers that "fade easily" while Armani's Collezioni jackets were singled out for lacking "fibre content". Other big brands were accused of using poor dyes or having bad colour quality. Makers of designer goods, of course, are no more infallible than other firms, but the companies concerned cannot help wondering whether they are victims of a new form of protectionism--bad publicity.

Source Citation: "An inspector calls; Doing business in China.(Safety scares in China)." The Economist (US) 382.8521 (March 24, 2007)
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Hardly petty, former Regan trade advisor say we're operating on a two-tiered system and the sooner we realize it the better: