Fonterra in China

Fonterra, a New Zealand dairy company, has just recently recalled batches of whey protein off the Chinese market. The company has found traces of bacteria that are responsible for causing botulism inside the recalled product. The recall has cost Fonterra dearly. The well-known reputation and market share of Fonterra in China have shrunk due to this incident. However, Fonterra has demonstrated their version of business ethic through their efforts of preventing further damage that will be caused by their problematic product. The concept of humanity is the main reason of why Fonterra is conducting this recall. Fonterra is focusing mainly on the well-being of their consumers rather than the revenue that will be generated from selling the problematic product. They have figured out that informing consumers first about problematic product and recalling them back with the risk of losing their well-known reputation is better than letting the consumers discover the flaw by themselves. The executives of Fonterra are not willing to risk the chance of getting the company sued by the people who have consumed the product. Although it is a common practice for the Western companies to recall problematic products, this business ethic is not a common sight among the Chinese companies. The consumers in China have completely lost their faith in their state owned enterprises due to the frequent reports of contaminated food products, and are now heavily relying on foreign imports. This meant that even though the incident has damaged Fonterra’s reputation and shrunken the market share in China, latter still have a much bigger portion of the market than all of the Chinese state owned dairy enterprises combined. Since Fonterra has automatically recalled the problematic product, the consumers in China will soon realized that Fonterra is not a company that is milking money off the general public. Consequently, the company will regain back the market share that it has lost and possibly gain more in the near future. It is not a bad trade-off for Fonterra when practicing such business ethic.

Lacey-Bordeaux. (2013, August 5). China halts import of new zealand milk powder because of botulism bacteria. . Retrieved from http://www.cnn.com/2013/08/04/world/asia/china-botulism-milk-powder/index.html

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