Food Giants Scrutinize Chinese Suppliers
(Wall Street Journal)
The Chinese milk-safety scandal exposes one of the pitfalls of a key strategy of the world's big multinational food companies: relying on local suppliers in emerging markets.
On Monday, H.J. Heinz Co. said it will stop using milk from
British candy maker Cadbury said tests it did on products
made at its
The announcements came as candy maker Cadbury
The problem shows how big food companies can struggle to impose food-safety standards on suppliers in the developing markets they increasingly rely on for sales growth. The companies can test their own factories and then later find problems with ingredients introduced earlier in their supply chains. Some, like Kraft Foods Inc., are seeking to address that challenge by conducting quality checks on local suppliers. Mars Inc., meanwhile, says it safeguards its products by using Chinese suppliers who own their entire production chains.
Chinese milk tainted with melamine, a chemical used in
making furniture and other goods, has killed several children and made more
than 54,000 sick in recent weeks. The
Chinese authorities continue to detain people involved with
dairy distribution, according to the official Xinhua news agency. Police in
The move by Pittsburgh-based Heinz to drop its Chinese
suppliers comes just days after the company began to recall 270 cases of baby
London-based Cadbury said it is recalling all 11 products
made at its chocolate factory in
Cadbury's experience shows that a company can test its own operations, and still run into problems with its suppliers. Cadbury has employees or external experts in all its factories to test chocolates for dangerous microbes and contaminants, a spokesman says. The employees aren't responsible to the local factory manager, and instead report to the compliance division, which includes Cadbury's auditors.
But for its ingredients, Cadbury relies on suppliers to have
their own tests, a spokesman in
Nestlé says it does 70 different quality tests on its milk
products, but only began looking for melamine on Sept. 14, soon after the milk
scandal became public. The Swiss food giant recalled one product in
Part of the confusion appears to be that different tests produce different results. Over the weekend, Indonesia's Ministry of Health said its tests had found melamine in 12 types of products sold there, including M&M's and Snickers candy bars made by Mars. Mars questioned the findings, saying the Indonesian results don't match tests by other Asian governments that have cleared its products. Indonesian officials didn't respond to requests for comment Monday.
"We understand that melamine has been introduced into the dairy supply by unscrupulous traders that would buy it from farmers, dilute it with water and add melamine to increase the apparent protein level. One way to mitigate that risk is to have no middlemen or traders involved in your supply chain," said Khaled Rabbani, Mars's director of corporate and regulatory affairs for Asia Pacific.
Mr. Rabbani says Mars uses
Not all Western food companies operating in
"Other governments --
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