Chinese Milk Scandal
Summary
During summer 2008, San Lu, a local Chinese dairy company, was exposed by all kinds of media around the world for its unethical action. A series of illnesses among babies started to concern Chinese doctors and parents. The story begins with San Lu’s farmers, whom were seeking for a maximized profit to go after petty advantages: adding melamine, toxic chemical, in result increases the protein concentration in the milk product in order to pass the protein test. In result, 300,000 Chinese babies were affected and six died after developing kidney problems. After all the systematic tests, San Lu was found guilty by containing high level of melamine in their milk products and recalling over 10,000 tones of infant milk powder; hence the company not only was fined with a large amount of money but also its position in the worldwide diary market.
Analysis
San Lu’s unethical behavior resulted a significant damage to the society. Businesses nowadays seek for efficiency and productivity, thus morality is masked. In the short run, firms may still earn profit, but in the long run more and more consumers will leave the market which reduces the demand for milk and firms will lose its income. This may also
lower the public’s confidence towards both the firms and government. So there will be less investments. But most importantly, since consumers will be worried about the safety of food products, the competitors of San Lu will be affected as well. Thus, firms such as Fonterra should take crisis managements in order to minimize the damage it may cause to the firm. After the incident, Fonterra took all its quality tests again while providing the latest results of them to the government and, especially, to the public. Meanwhile, another team of the group organized several events with different charities around China to support those who were affected by the scandal. Some hospitals, heath centers, and even educational organizations were invested and taken care of by Fonterra to show its concerns towards the situation.
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