Bright Food Taints China Name 光明食品玷污中国品牌
Another food safety scandal made headlines in China last week, this time when the dairy unit of Shanghai’s Bright Food was fined after its products were found swirling at the center of a recent string of controversies. But unlike previous scandals, this one involved a company with major global aspirations, as reflected by Bright’s recent string of overseas acquisitions. The fact that China’s first global food conglomerate may be a food safety laggard is hardly a message that Beijing should want to send the world, and will only make skeptical Westerners wary of Chinese food products. To prevent that from happening, which would hurt not only Bright but also future Chinese global aspirants, Beijing should seriously consider taking stronger actions against this globally minded company.
Bright has made headlines over the last two years for its Western acquisitions, but it was in the news last week for far less glamorous reasons as the Shanghai government fined it an undisclosed amount for a series of safety violations. The fact that Shanghai took action was all the more unusual since Bright’s strong presence in the city means many believe the company can often use its connections to squash negative news and local government investigations into the company.
The recent list of scandals surrounding Bright includes the discovery of blue particles, banned additives and other harmful substances in some of its milk products, and the delivery of sour milk to homes. These incidents collectively painted a picture of a company with lax standards that is more interested in profits than consumer safety.
The muted coverage of these scandals in the Chinese media contrasts sharply with Bright’s much higher-profile moves on the global stage. The company made headlines in 2010 when it bought New Zealand’s Synlait Milk for $58 million, and it landed another big deal in the region last year when it purchased 75 percent of Australia’s Manassen Foods for $382 million. This year it announced its biggest deal to date with an agreement to buy 60 percent of British breakfast cereal giant Weetabix for more than $1 billion. The acquisitive company has indicated it intends to make more global acquisitions, saying at the time of the Weetabix deal it was also in talks to buy a French wine maker.
This recent spate of food safety scandals will no doubt alarm consumers in Australia, New Zealand and Britain – and the government’s public punishment of Bright last week is perhaps meant to be a sign that it won’t tolerate corner-cutting when it comes to this kind of misbehavior.
But this kind of punishment is probably just a slap on the wrist for a company like Bright, which will likely have to pay a minor fine and make a few gestures to show it is cleaning up its act. Instead, Beijing should take the more drastic action of banning this company from any additional foreign acquisitions and force it to spend its money to clean up its home operations instead. Such a move would send a powerful signal to all Chinese firms with global ambitions that they must show they can operate responsibly at home before being allowed to make acquisitions overseas.
Bottom line: Beijing should prohibit Bright Food and other companies that behave irresponsibly from overseas M&A until they fix their problems.
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