The Chinese Tainted Milk Scandal
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Abstract:
The case discusses the tainted milk scandal that was
unearthed in China in 2008. The milk scandal became public in August 2008, after
it was disclosed that the baby formula produced by the Chinese dairy products
company, Sanlu Group was contaminated with melamine, which caused kidney failure
of many children, resulting in death in some cases. Later, the investigation by
the government revealed that the products of 21 other Chinese dairy firms were
also contaminated with melamine.
As soon the crisis became public, the Chinese Health Ministry ordered the dairy
firms to recall the contaminated products and to destroy the unsold and recalled
products. The Chinese Health Ministry started testing dairy products across the
country.
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Top executives of Sanlu were arrested. Government offficials
who were found guilty were also sacked. China's dairy industry association
announced that the affected children and their families would get compensation
from the responsible dairy firms. To support the affected dairy farmers, the
government also announced a subsidy.
As a result of this scandal, many countries like Hong Kong, Taiwan, Singapore,
South Korea, Australia, and Indonesia banned Chinese dairy products. Several
foreign companies which sold China made products or products which used Chinese
ingredients recalled their products. The scandal severely affected the
reputation of China as one of the leading food products exporting country.
The case details the actions taken by the Chinese Government in response to the
milk scandal. It also attempts to analyze the impact of the crisis on the
Chinese dairy industry. The case ends with a discussion on the repercussions of
the milk scandal on Chinese exports of food products.
Issues:
» To gain insight into food safety issues in China.
» To understand the Chinese milk scandal and its impact on the Chinese dairy
industry.
» To critically analyze the damage control measures taken by the Chinese
government.
» To discuss the role of regulation and enforcement to prevent reoccurrence of
such incidents.
Contents:
Keywords:
Milk Scandal, Contaminated milk, Melamine, Baby formula, Sanlu Group, Chinese Health Ministry, Dairy firms, Dairy Industry Association, Food export, Fonterra, Dairy industry, Mengniu, Yili, Bright Dairy, Ethics in Business, Food Safety
The Chinese Tainted Milk Scandal
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