Paul Midler: Why China Keeps Poisoning the Milk

An opinion piece in the Wall Street Journal looks at quality control in China and the lessons regulators there could learn from Japan’s experience:

China’s quality challenge has at times been compared to Japan’s efforts in the 1950s and 1960s to transcend a bad reputation for manufacturing low-quality goods. At that time Japan also suffered tragic industrial disasters, like the mercury poisoning in Minamata that left 1,000 people dead. But Japan’s leading companies have since been able to establish strong reputations for quality. Although the automotive recalls currently underway are extensive, design errors and electronic malfunctions are in a different league from China’s instances of willful product manipulation, especially when that manipulation has involved artful efforts at circumventing third-party controls.

In China, operators display an incredible willingness to place public safety at risk in exchange for only the smallest gains in profit. The dairy industry’s 2008 scandal is instructive. The trouble started when dairy farmers began adulterating milk with water, prompting dairy companies to test protein levels. Milk suppliers next discovered they could trick laboratory equipment into believing protein concentrations were higher by adding a toxic, chemical compound—melamine. Over time, more of the chemical was added, along with more water, and no one knows how little real milk was in the final product by the time scandal broke. We only know the end result: six babies died, 300,000 were sickened and over 50,000 were hospitalized, causing untold grief to Chinese families.

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