Christopher Adams

Christopher Adams is the Markets and Banking reporter for the New Zealand Herald

NZ formula draws bad news in China

State TV puts heat on New Zealand in series of stories over food for infants

Chinese state-run television has put the heat on New Zealand's lucrative infant formula manufacturing industry in a series of news stories, raising concerns that this country's reputation for high-quality food products - the driving force behind more than $2 billion in annual dairy exports to China - may have taken a hit.

In one of the news items, broadcast this month to a potential audience in the hundreds of millions, a journalist from the CCTV 13 channel visited the Auckland address provided on the cans of a New Zealand-made baby milk brand sold in Chinese supermarkets.

The address turned out to be a panelbeater's yard in Great South Rd and staff at the business had no knowledge of the infant formula firm.

In another story a CCTV reporter drew up a list of around 30 New Zealand-made baby formula brands sold in China and visited Pak 'n Save and Countdown supermarkets looking for those brands.

All the journalist found were brands that would be familiar to many Kiwi consumers, such as Karicare.

From a translation provided to the Business Herald, it's understood that CCTV suggested that the brands' absence from New Zealand supermarkets was a concern, despite the fact that most infant formula products made in New Zealand are produced solely for export.

A third story raised questions about the process in which a large number of brands - many of them with Chinese links - have their products made at contract manufacturing facilities in this country.

The news item suggested the process made it difficult for Chinese import authorities to ensure that the formula brands were safe, according to a translation.

One infant formula exporter, who didn't want to be named, said the reputation of Kiwi dairy exports was yet to recover from the dicyandiamide (DCD) issue this year, when traces of the nitrate inhibitor were found in New Zealand milk, and the CCTV news coverage just compounded the problem.

"Chinese [consumers] are being given a very clear and strong message from the top that New Zealand milk is unsafe," the exporter said. "Our [Chinese] supermarket distributor has already advised us that if it gets any worse, then he will pull out of New Zealand milk altogether."

China watcher Richard Phillips, chairman of the World Civilisation Forum think tank and an honorary research fellow at the University of Auckland, said CCTV received directives from the Chinese Government on what issues would be covered in depth. "This [media coverage of New Zealand infant formula] is a policy decision from a country that doesn't want to be seen to be slighted by foreign countries and doesn't want to be seen to be failing its public on an issue where the public has expressed a great deal of concern," Phillips said.

Infant formula is a highly sensitive issue in China and demand for imported products has surged since the country's 2008 melamine scandal, in which six babies died and thousands more became sick after consuming dairy products tainted with the industrial chemical.

That demand means New Zealand-made formula can fetch prices of up to $70 a can in China, resulting in an explosion of brands.

A Ministry for Primary Industries spokesman said there were a number of inaccuracies in the CCTV stories that the Government was addressing through the New Zealand Embassy in Beijing and contact with major Chinese news organisations, including an interview with the People's Daily newspaper.

Guy Wills, general manager of infant formula manufacturer New Image, which has no links to the formula brand found by CCTV to have the false Auckland address, said Chinese consumers should be assured that products made in this country were of high quality.

"Problems arise when unscrupulous people try to take advantage of that demand from consumers and do unethical things that threaten to spoil the reputation for all," Wills said.

"The New Zealand dairy industry is trying to be vigilant, with the help of the Ministry of Primary Industries and New Zealand Trade and Enterprise, to stop that happening."

Booming trade

• China's infant formula retail trade was estimated to be worth US$6 billion in 2011 and projected to reach US$12 billion by 2016.

• Figures on this country's infant formula exports to China are hard to come by, but the NZ Infant Formula Exporters Association, which represents around 14 firms, says its members' Chinese retail sales are worth $724 million.

- NZ Herald

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