Another dairy scandal has raged across Chinese media over the last month, overshadowing the introduction of China’s much-touted new Food Safety Law and casting further doubts over the government’s ability to bring the country’s chaotic food supply chain under control.

Empty shelves in a Chinese supermarket during the 2008 milk scandal

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Food safety officials in Hebei Province, north China initially received widespread acclaim for their quick action in ordering a recall on dairy products from high-profile manufacturer Huishan Dairy on September 18 after a batch of its products had been found to contain illegally high levels of sodium sulfocyanate, a substance that is toxic to humans in high doses.

But what appeared to be a routine food safety scare quickly descended into a farce as it emerged that the Hebei officials had made a series of mistakes in their investigation and their findings were contradicted by separate tests by officials in Liaoning Province and the China National Food Quality and Safety Supervision and Inspection Center (CFQS).

The Hebei Food & Drug Administration (HBFDA) retracted its accusations against Huishan Dairy on September 29 but refused to reveal the results of its original tests, leaving a number of questions unanswered and fuelling further media and public outrage.

“Did HBFDA keep a sample?”, posted one commenter on Sina News. “Why not make a re-inspection?” said another. HBFDA is yet to respond to these calls.

The scandal has already done huge damage to a number of parties, not least Huishan Dairy itself, whose Hong Kong-listed shares fell 7% in just twelve days following HBFDA’s original statement.

Though its stock price has now recovered, the company sold only 56 cans of its flagship infant formula product, Huishan 5A (Stage 3, 900 g/can), during China’s Golden Week holiday (October 1-7) and in a September 30 poll conducted by Sina, 55% of the 2,480 respondents stated that they had put off buying Huishan Dairy’s products in future.

There are also fears inside China’s dairy industry that the scandal will trigger a wider backlash against domestic brands in favor of imported products:

“This incident will impact not only the company [Huishan Dairy], but also the industry”, said Song Liang, Special Economic Analyst at Xinhua News. “In consumers’ eyes, locally-made dairy products are full of problems. This farce will set a barrier for the development of the industry.”

And the government has also lost a huge amount of public confidence at just the moment when it hoped things would turn a corner thanks to the Food Safety Law coming into force on October 1.

“Consumers’ confidence in the government will also be hit. Whatever results the government departments release, consumers will be dubious”, said Wang Dingmian, Director of the Guangzhou Dairy Association. 

“There are no winners in this issue,” an article on Sohu.com concluded.

How the scandal developed

The scandal erupted on September 18 when HBFDA announced that a batch of dairy products produced by Huishan Dairy on July 10 containing the company’s hi-Ca milk had shown illegally high levels of sodium sulfocyanate during testing, and ordered Huishan Dairy to stop selling any products containing hi-Ca milk.

HBFDA followed this up with a further statement on September 24, which claimed that the “content of sodium sulfocyanate in Huishan Dairy’s hi-Ca milk reached 15.20 mg/kg [in their tests],” significantly above the legal limit of 10 mg/kg. It also added that “the government prohibits artificially adding sodium sulfocyanate into milk.” However, it did not publish the details of these tests.

A third announcement was made the next day, informing the public that HBFDA had already forced all products containing Huishan Dairy’s hi-Ca milk to be taken off the shelves, and reminding consumers to return any related products to the store from which they had purchased them.

However, the backlash against HBFDA started on September 27, when the Liaoning Food & Drug Administration, from Huishan Dairy’s home province, disputed Hebei’s findings, stating that it had investigated Huishan Dairy’s products at every stage of the production process and had at no point detected high levels of sodium sulfocyanate, and all tests of hi-Ca milk sold in Liaoning Province had shown safe levels of the chemical.

And the condemnation of HBFDA intensified the next day after Huishan Dairy held a press conference, during which its spokespeople offered a withering critique of Hebei’s conduct and that gained widespread support from both experts and the media.

 Huishan Dairy signed a joint venture agreement with Royal Friesland Campina in 2014

The reporting of the scandal on Chinese news platforms such as Sina.com, Sohu.com, Netease.com, iFeng.com and QQ.com turned sharply against HBFDA at this point, accusing the officials of endangering the future of China’s dairy industry with their actions.

HBFDA finally capitulated on September 29, revoking its warning against Huishan Dairy’s products and offering the following explanation:

- “Sodium sulfocyanate naturally exists in milk;

- “The upper limit is 14 mg/kg, according to the Codex Alimentarius Commission;

- “The sodium sulfocyanate content in Huishan Dairy’s hi-Ca milk does no harm to human beings”.

However, HBFDA did not admit that its initial test results showing sodium sulfocyanate levels of 15.20 mg/kg in Huishan Dairy’s hi-Ca milk were inaccurate.

The next day, the China Dairy Industry Association also released a statement supporting Huishan Dairy and condemning HBFDA.

Fresh concerns

As the details of this story have emerged, it has exposed a worrying lack of competence among food safety officials in Hebei, and the fears of consumers are being magnified by the thought that other provinces may be similarly mismanaged.

The most basic errors appear to have been made during the investigation. The inspection institute that wrote the original report - the Inspection and Quarantine Technical Centre of the Qinhuangdao Entry-Exit Inspection and Quarantine Bureau - was not qualified to inspect substances for sodium sulfocyanate, according to the China National Accreditation Service for Conformity Assessment.

HBFDA also did not follow basic inspection procedures, failing to give Huishan Dairy the mandatory seven days’ notice if a product receives a ‘substandard’ safety test result or the opportunity to apply for a re-test.

“We were ‘informed’ on 18 September when the products were forced to be taken off the shelves”, a company spokesman noted archly.

HBFDA also failed to pass the report to officials in Huishan Dairy’s home province - Liaoning - before releasing the results, as it is required to do under Chinese food safety regulations.

Worse, HBFDA released the results of its tests long after the product had passed its expiration date, making a re-inspection impossible.

“They were produced on 10 July, with a shelf life of 45 days”, stated Huishan Dairy:  “Now we cannot make re-inspection on this batch.”

HBFDA has still not explained why it released the test results after the expiration date, and insists that the discrepancy between the results of its original test and those of Liaoning and CFQS is due to the different batches used.

However, there appears to be a strong consensus among dairy experts that it is highly unlikely that Huishan Dairy deliberately added ‘man-made’ sodium sulfocyanate to its own products, as HBFDA first claimed.

“It seems that the dead cannot bear witness,” said Wang Dingmian: “But I believe that Huishan Dairy did not step in this no-go area and violate the laws and regulations”.

Lei Yongjun, Chairman of Beijing Prospertao Consulting, concurred with this assessment: “The addition of sodium sulfocyanate to milk would not make the company any extra profits. There is little possibility that Huishan Dairy did this”.

A lesson in crisis management

For government and dairy professionals, another concern is the way the crisis has been allowed to escalate due to the way it has been handled, which has caused even more damage than was necessary.

“Government departments should enhance cooperation with experts and invite more experts to interpret food safety incidents,” commented Chen Junshi, a researcher at the China National Centre for Food Safety Risk Assessment and member of the Chinese Academy of Engineering. “This will help consumers to understand the issues and ease their fears, and will also help government departments increase the precision of the information they release to the public.”

After a month in which the Chinese government hoped it had finally found the answers to the country’s food safety problems, it has been left with a whole new set of questions.

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