Will Coke get blamed for endangering Chinese consumers?
With two large American companies being investigated for health emergencies in China, the business environment there could be worsening.
Investors may want to take note of a disturbing trend among Chinese officials, who lately seem more interested in blaming American parent companies for health emergencies. In September, Chinese authorities said American battery manufacturer Johnson Controls (JCI) was responsible for a number of lead poisoning cases in Shanghai.
Now they are investigating none other than Coca-Cola (KO) for selling milk products that allegedly caused the death of a young boy and sickened his mother in the city of Changchun, the capital of Jilin province.
According to China Daily, the father of the boy said that his wife and son fell sick shortly after drinking a bottle of Minute Maid strawberry-flavored milk. The boy died after being rushed to the hospital with his mother by ambulance. The mother fell into a coma before gaining consciousness.
Authorities reportedly said they found traces of pesticides in bottles of strawberry-flavored milk consumed by the boy, his mother and two other people sickened in a separate incident.
A Coca-Cola spokeswoman said the company tested samples from the same batch the boy and his mother drank from and found them safe for human consumption. However, the company has agreed to remove the product from store shelves as further investigations are carried out.
It's easy to target a famous American company. But if the milk product was contaminated, it's much more likely that one of Coca-Cola's Chinese suppliers is responsible. Chinese milk producers have a horrible safety record and have gone so far as to attempt to cover up unsafe milk products that sickened thousands of Chinese babies.
Chinese milk producers have added chemical additives intended to fool regulators into thinking the milk contains more protein than it actually does. Despite this, dairy producers have been successful in getting weaker safety regulations passed that are weaker than international standards and even lower than the previous Chinese standards that proved unsuccessful in protecting consumers.
Now, the same authorities that failed to protect consumers from Chinese dairy producers in the past seem to be targeting the world's most famous soft-drink maker, which also has a great safety record. It's still unclear whether or not Chinese authorities are even investigating Coca-Cola's Chinese suppliers.
Chinese regulators are also accusing American battery manufacturer Johnson Controls of business practices that have caused lead poisoning in a number of children near its battery manufacturing plant. Johnson Controls is still under investigation by regulators despite the fact that an investigation by the China Electric Equipment Industry Association found that a nearby waste recycling facility was the source of the high lead levels. The company's Shanghai manufacturing plant was also named a national model enterprise for occupational health and safety.
The accusations against Coca-Cola shouldn't be taken lightly. Cases like these can result in the death penalty in China. It must be disturbing for foreign businesses operating in China to watch as two well-regarded international companies fall under investigation for safety problems that are most likely caused by local companies. The business environment in China is often difficult for foreign companies, but now it could be getting worse.
Neither Benzinga nor its staff offer investment advice, nor do they recommend that you buy, sell, or hold any security.
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Does anyone remember the incidents in the past ten years of moldy, contaminaed dry wall coming from China? or...tainted dog food, coming from China? ...or melemine contaminated baby formula coming from China?...
and just for the record, it has been successive REPUBLICAN administrations who have repeatedly pulled out the China credit card - most notably Bush 41, and of coarse, his destroy the United States by whatever means available son W, who put the debt to China on steroids to avoid making the 1% pay for his illegally manufactured war in Iraq...
How about lead in toys and sulphur in Chinese drywall?
Guess that's ok?
No one can accuse the Chinese of not knowing how to conduct underhanded business techniques. They will go the last mile to make sure that no one know's it's their local suppliers that are tainted and not producing safe product.
This will eventually be a downturn for Chinese business, in that a communist country still has communist ideas on how to be capatilst. "Tell them anything, who cares, we're the government".
why would anyone buy milk products from coke-cola?
its like if we were to buy milk products from china.
it aint going to happen!
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