China 2.0: The Transformation of an Emerging Superpower ... and the New Opportunities

Chapter 3

One Billion Consumers Are Waking Up

On the last day of 2008, Tian Wenhua, the former chairwoman of the Sanlu Dairy Group, pleaded guilty in court to knowing of problems with her company's dairy products—specifically, that they were contaminated with melamine—for months before taking responsible actions internally and informing the authorities and consumers. She was subsequently sentenced to life imprisonment. Melamine, which is a fake protein rich in nitrogen, was added to watered-down milk to fool quality tests for protein content. Melamine is a chemical used primarily to make plastics and fertilizer and is banned in food in China (and everywhere else).

This was the same woman who was proclaimed the most respected entrepreneur in China's dairy industry by the Chinese Dairy Industry Association in 2005. Ironically, under the leadership of this “most-respected” entrepreneur in the industry, the largest dairy producer in China, Sanlu Group, became the most irresponsible enterprise, directly culpable for the death of six infants and the serious illness of thousands of others who had been fed melamine-contaminated baby formula produced by Sanlu. After these cases became known, Tian was ignominiously removed from the top position in the group; this most-respected entrepreneur fell a very long way. In the following months, Sanlu's scandal caused a cascade effect, as several senior government officials, including two senior officials of the city of Shijiazhuang, where Sanlu ...