Asia Weekly

China Dairies to Pay Tainted-Milk Victims

Week Ended: January 2, 2009

A group of 22 Chinese dairy companies blamed for selling melamine-tainted milk that sickened nearly 300,000 children and caused six others to die earlier this year agreed this week to pay compensation to victims. The total $160 million out-of-court settlement, under the supervision of the China Dairy Industry Association, reportedly amounts to about $550 per victim.

Melamine is commonly used for such things as coatings, laminates and flame retardants, and is the same industrial contaminant that sickened thousands of dogs and cats in the U.S. last year. In small amounts, the chemical poses little danger. However, bigger doses can lead to kidney stones and renal failure. Melamine artificially inflates protein levels, and some dairy producers have admitted to using it as a cheap substitute to real milk powder.

The issue of victim compensation has been a sensitive one, with Chinese courts so far not accepting any lawsuits filed by families. However, China’s top leaders have vowed to crack down on food safety issues after the crisis earlier this year led to one of the country’s most widespread food recalls in decades. Recently, more than a dozen middlemen at some China dairies have been put on trial and charged with endangering public security.

The effects for Chinese consumers, however, are ambiguous. At the turn of the century, China announced that it was going to pay more attention to consumers’ rights by perfecting its legal system: improving supervision of the market with a consumer complaints system and by mobilizing trade associations.

China’s media, meanwhile, has not been entirely silent: it has widely reported lawyers' complaints that compensation awards were inadequate. But the media has been less vocal about claims by lawyers that they have been pressured not to accept cases relating to the scandal. This is perhaps not surprising, particularly as the Chinese government was actively pushing people to drink more milk. (“Drink Milk for Life” was the Chinese version of the U.S. “Got Milk?” campaign) Some lawyers suspect that the government’s role in the current scandal may be an effort at limiting political damage—several local government officers have already been removed from their posts. Nevertheless, the dairies have not gone unpunished, and China’s efforts to improve consumer protection have certainly advanced over the past decade. Consumers have won lawsuits against manufacturers for faulty products in cases that are less politically sensitive. Further changes to consumer protection statutes are slated, including a five-year legislative plan for Shanghai, which incorporates food safety laws.

The tainted-milk scandal shows that the influence of politics is pervasive in Chinese society. But, at the same time, the country has made some progress toward tackling the issues of consumer protection that arise and are crucial for the development of a mass consumption society.

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