The Chinese Tainted Milk Scandal

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Case Details:

Case Code : BECG092
Case Length : 15 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note : Available
Organization : Sanlu Group and other dairy products companies
Industry : Food and Beverage
Countries : China

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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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"This is very distressing for Chinese sales of food products of any kind. It may be milk here, but who knows what it could be later?"¹

- Gary Hufbauer, Senior Fellow, Peterson Institute for International Economics, in October 2008.

"It is important to know if information was withheld, where and why it was withheld. Was it ignorance by provincial authorities or was it that they neglected to report it? Because if it was a ignorance, there is a need to have much better training and education ... if it is neglect, then it is, of course, more serious."²

- Hans Troedsson, Representative of World Health Organization in China, in September 2008.

Introduction

On January 22, 2009, the Intermediate People's Court in Shijiazhuang, China sentenced two persons accused in the tainted milk scandal in China to death. The court held them and others responsible for producing and selling dairy products contaminated with melamine. Death sentence was given to Zhang Yujun, in whose workshop melamine was manufactured and Geng Jenping, who sold melamine contaminated milk to the dairy companies. Tian Wenhua (Wenhua), Chairwoman and General Manager of Sanlu Group (Sanlu)³ was given a life sentence. The melamine contamination in milk led to the death of six children and hospitalization of several newborns in China.

The tainted milk scandal became public in August 2008 with the disclosure that the baby formula produced by Sanlu was contaminated with melamine, which caused kidney failure among the babies who consumed it. However, until the Chinese Health Ministry officially confirmed on September 12, 2008, that the milk powder produced by Sanlu was contaminated by melamine, neither the government nor the company took any initiative to warn the public. Later, government inspections revealed that the products of 21 other Chinese dairy firms were also contaminated with melamine.

The Chinese Tainted Milk Scandal - Next Page>>

1] Michael Lelyveld, "China's Milk Scandal Shakes Investors,"http://www.rfa.org, October 07, 2008.
2] Simon Elegant, "China's Poisoned Milk Scandal: Is Sorry Enough?"http://www.time.com, September 23, 2008.
3] The Sanlu Group is a Chinese dairy products company based in Shijiazhuang of the Hebei Province. The state-owned company had one of the oldest and most popular brands of infant formula in China (Source: http://en.wikipedia.org).

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