The Chinese Tainted Milk Scandal|Business Ethics|Case Study|Case Studies

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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Background Note

There was considerable concern over the safety of Chinese food products as many incidents regarding food safety were unearthed in 2000s. In 2003, the Chinese government created the State Food and Drug Administration of China. The department was in charge of supervising food product safety standards. However, in spite of the department being created, there were several reports of contamination of food products in China.

In April 2004, there were reports that hundreds of babies in China, mostly from poor families, were suffering from malnutrition as they had been fed on fake or inferior quality baby formula...

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The Milk Scandal

In December 2007, the customer service department of Sanlu received complaints from consumers that some babies had fallen ill after being fed with the baby formula made by the company. However, until May 2008, the customer service department did not report these complaints to their top executives. On June 30, 2008, Sanlu received complaints that children from the Hebei province had developed kidney stones after being fed with its baby formula...

The Government Steps In

On September 12, 2008, the Hebei provincial government ordered Sanlu to stop production after preliminary investigation confirmed that melamine contaminated baby formula was the reason for kidney stones among children. The company was also ordered to stop sales of all brands of its baby formula, recall its products, and destroy all the products that were unsold and recalled.

The Health Ministry informed the World Health Organization, Hong Kong, and Macao's health departments, the New Zealand Embassy in China, and the press about the melamine contamination in baby formula.

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