Like many things in China, the scope of the food processing industry is huge and hard to measure. Citing experts, the China Daily recently put the number of food processors at 1 million, with 70 percent of those operations having less than 10 persons.
[ii] In the aftermath of the April 2007 pet food scandal in the U.S., the Chinese General Administration of Quality Supervision, Inspection and Quarantine stated that it would increase “enforcement” in the food processing sector, asserting that it includes 448,153 businesses, with 352,815 having fewer than 10 employees. They also pointed out that half of all business had improper licenses and 164,000 had no license at all.
[iii] By comparison, the U.S. FDA estimated that about 210,000 domestic firms were required to register in the U.S. in compliance with the “Public Health Security and Bioterrorism Preparedness and Response Act of 2002.”
[iv]
Regulating these small and mobile processors is difficult, particularly as the task generally falls on township and county-level officials, rather than better funded and trained provincial and municipal administrators. These micro-enterprises, often family businesses, are run out of homes or small rental spaces and have little access to technology, are often unknowledgeable about food safety science and international standards. Likewise, they have little capital investment, and do not have brand names or reputations to protect, negating any incentive to invest in quality. Small processors with little capital not only are quick to close and move locations when they face an adverse situation, but they are able to switch products rapidly, based on what they perceive to be the greatest profit opportunity. This mobility, flexibility and opportunism pose significant challenges to regulators seeking to educate or enforce standards.
Food safety enforcement is complicated by weak government capacity, particularly at local levels where many food processors operate. Often, new regulations and dictates from Beijing are unfunded mandates which are ignored by local officials who argue they lack resources to carry out directives. Where some local governments might have the will to enforce regulations and standards, they often lack the means.
Local level officials face contradictions in attempting to enforce standards among cottage processors. Rural food processing is encouraged by local authorities as a means to increase rural incomes, a policy strongly endorsed, but poorly supported, by central government authorities. Local officials are reluctant to close businesses that contribute to employment in rural areas, where other economic opportunities are limited. This reluctance to enforce standards or regulations set at the provincial or national level makes it unlikely that food safety can be ensured consistently across the country.
Corruption within the
Chinese government poses a further challenge. Local officials often collude with local companies, stymieing attempts by higher-level authorities to enforce safety regulations. Corruption in China extends from grass-roots cadres to the highest levels. The State Food and Drug Administration (SFDA) in China has been wracked by a corruption scandal involving its founding director which extends to provincial food and drug administrations.
[v] Unscrupulous food and drug producers were able to buy various licenses from the national agency and its provincial and local branches. The astonishing scope of the administration’s inability to effectively monitor industry was revealed when the government reported in 2005 that they had discovered 114,000 unlicensed drug manufacturers and demolished 461 offending factories.
[vi] Companies that had been issued “Good Manufacturing Practice” (GMP) certificates were later found to be shipping unsafe products. The Chinese government has promised to “clean house.” Premier Wen Jiabao and other senior leaders have publicly vilified corrupt SFDA officials, and the founding director of the SFDA was ultimately executed for corruption.
[vii]
Corruption at local levels poses a particular challenge to regulators attempting to enforce regulations at the local levels, where processors operate. Unscrupulous local officials can benefit from illegal or unlicensed manufacturers, creating a disincentive to shutting down violators. Local governments, particularly in poor regions are reliant on fines for income generation, particularly where legitimate tax revenues are inadequate to support government operations. Shutting down an illegal manufacturer effectively cuts off a valuable revenue stream, giving the local officials incentive to “tax” violators, while simultaneously allowing them to continue operating and generating sales revenues. Additionally, local officials are concerned that shutting down employers or denying farmers the ability to make a living can cause social unrest, a state all officials are under pressure to avoid.
Additionally, China lacks a robust and productive civil society that collectively represents the interests of consumers as well as manufacturers. Manufacturer associations in the US, which represent the interests of member companies and work closely with regulators to develop policies, perform a very different role than their Chinese counterparts. In China, industry associations are directly controlled by the government and are managed by a communist party committee, whose primary responsibility is to channel information from the authorities to the relevant constituents. The top-down structure does little to build corporate support amongst Chinese organizations who have little invested in the associations created to “represent” them. In the US, industry associations are a valuable mechanism which promote best practices and disseminate technology amongst members, and provide individual enterprises a greater voice in policymaking processes. This is reflected in the high fees that multinational companies pay to be members of associations in the US, indicating the value that corporations place on their associations. Likewise, the nexus of consumer advocates, an independent court system and the network of checks and balances in western systems do not exist in China. While China’s reliance on government oversight and top-down campaigns to disseminate information and enforce regulations can be effective in many instances, it is a very difficult and costly system to sustain, raising the likelihood that once a rectification campaign is ended, business will “return to normal,” rather than raising the standard to a consistently higher level.
Without the underlying systems that play a critical role western economies, including a strong legal system, insurance companies, industry associations and “consumer watchdogs” in place to support and augment the government’s efforts, the Chinese system lacks many tools that ensure food and drug processors adhere to good manufacturing practices.ghgj.org/Thompson_Food%20Safety%20in%20China.doc
