Overeager Regulators Spring On Nongfu
A new “scandal” involving a popular brand of bottled water is casting an embarrassing spotlight on China’s tendency to over-regulate many consumer goods and services, creating confusion among the very people such oversight was meant to protect. China should see this case as a wake-up call and take steps to unify and streamline its complex and sometimes contradictory regulatory system. Otherwise it risks a continuing stream of similar “scandals” that will bruise the country’s reputation as a good place to do business, and needlessly worry consumers.This latest scandal involving the Nongfu brand of spring water follows a steady stream of other food safety scares in the last few years, even though Nongfu may have done nothing wrong this time. Media last week cited a top government official implying that Nongfu products may contain more arsenic and cadmium than allowed under national standards. (English article)
Those same reports also pointed out that Nongfu produces its bottled water in accordance with standards set by Zhejiang Province where the company is based. Thus the official was simply pointing out that China’s national standards for arsenic and cadmium were more strict than Zhejiang’s, meaning Nongfu water could contain higher amounts of those substances that allowed under national rules.
The Nongfu incident came just days after another “scandal” involving software giant Microsoft (Nasdaq: MSFT), which was also caught up in a case of similarly confusing government guidelines. In that instance, China National Radio accused the software giant of failing to comply with government standards for warranties on its Surface Pro tablet PCs. (English article)
The broadcaster said Microsoft was offering a one-year warranty for both parts and the entire product for Surface Pros sold in China. But that warranty fell short of China’s own national standards, which said companies must offer at least two year warranties for parts. Microsoft later said the Surface Pro and all of its other products either met or exceeded Chinese warranty laws.
Even tech giant Apple (Nasdaq: AAPL) was subject to China’s contradictory regulations in its own recent scandal after CCTV uncovered substandard after-sales service by the company. In that instance, Apple took the highly unusual step of revamping its entire after-sales policy for China as part of its efforts to address the controversy. But while the new policy gave nearly all Chinese consumers a two year warranty for its Mac computers, the company was forced to give consumers in Zhejiang a three year warranty due to stricter local requirements. (English article)
In these cases of product warranties, the fact that both the central and local governments are regulating such policies is largely unnecessary since consumer safety is not at risk and market forces can often control the situation. In the Nongfu case where some government oversight is needed to protect consumer health, central officials should at least step in and create one unified set of national standards and eliminate regional ones to avoid confusion.
The general trend should be simplification that would see some standards unified and others eliminated completely when safety isn’t at risk. By taking such an approach, the central government can make sure that public safety is protected while avoiding confusion that needlessly worries consumers and creates difficulty for businesses.
