avatar
Tabitha Speelman

From One Hub, a View of China’s Worldwide Underground Milk Powder Network

(via iStock photo)

China’s milk powder supply is once again making headlines around the world. On March 1, a Hong Kong emergency export limit restricting travelers to mainland China to a maximum of two cans per purchaser became law. The measure is a response to the non-stop stream of suitcases jam-packed with milk powder passing through the Sheung Shui and Luohu border crossings between Shenzhen and Hong Kong, a practice that was previously quietly condoned. China’s demand for foreign milk powder surged after a 2008 milk powder scandal, in which at least six children died and more than 300,000 got sick from milk laced with melamine. Hong Kong’s wide range of foreign milk powder brands is considered more trustworthy than even the foreign imports available in Chinese supermarkets.

From the Chinese mainland, deep anxiety

The measure has caused widespread debate, both on HK-mainland relations at large and mainland food safety in specific. Even with the export restriction and a severe maximum penalty of 500,000 RMB (about US$80,000) or two years in prison in place, some Chinese mainlanders still consider raising their child on Hong Kong milk powder. As a widely-discussed widely-discussed post on Sina Weibo, China’s Twitter put it:

Comprehensive response strategy to the HK milk powder purchasing restriction: when you get pregnant, go to Hong Kong and buy three cans of milk powder. When you get caught at the border and are unable to pay the 500,000, you will get sentenced to two years in jail. There, you are safe from gutter oil [a cheap recycled oil illicitly used in some Chinese foods]. When you give birth, your child automatically receives Hong Kong citizenship and the HK government will provide you with milk powder. After two years you return to the mainland, and when your child turns 18 you all move to HK to lead a happy middle-class life.

For Chinese citizens, and especially young parents, milk powder safety—and food safety in general—has been an incessant worry, with new small-scale scandals erupting every few months, including a recent finding of some baby formula tainted with mercury and aflaxotonin, a highly carcinogenic substance. A new food safety law and central government statements claiming that 99% of Chinese dairy products are safe have been unable to restore consumer trust. Middle-class parents choosing to feed their child foreign milk powder might spend anywhere from 25-40% of their monthly salary (at an average price of 200.7 RMB per kilogram in 2012).

A supply chain that straddles the globe

According to official figures, pricey foreign brands currently account for 60% of the Chinese market, but these numbers exclude products smuggled from Hong Kong, and the increasing amounts of milk powder sent through global informal networks. Even including transportation costs, such milk powder tends to be 20-40% cheaper than the sticker price. The grassroots system is fueled by the increasingly diverse and widespread migratory paths of Chinese students and young professionals, who send milk powder to friends and relatives or set up small trading businesses.

Comprehensive statistics are impossible to gauge, but it is but it is very common to encounter Chinese people overseas who have been asked to send back milk powder to a friend or relative, or who know others that engage in this activity to make money. This is especially true in countries that are well known for their dairy products, such as New Zealand, Australia and European countries like Germany and Holland. No systematic research of these worldwide milk powder flows exists, but a map circulating on Hong Kong anti-mainland forums showing screenshots from media coverage of empty shelves around the world indicates the scale.

On a major online hub of the Chinese community in the Netherlands called, the BBS forums are filled with suggestions on how to get started, from where to mail large boxes—mailing through Belgium and Germany is cheaper—to the cheapest stores. Although advertisements are prohibited on the website, the webmaster has a difficult time deleting all the messages offering to buy or sell milk powder, particularly because the site’s users will swap in homophonic characters to evade censorship.

“Asian customers,” please observe the limits 

In Holland, as in Hong Kong, tensions surrounding milk powder shortage in local supermarkets have resulted in similar –albeit less rigorous—restrictions. In the past months, many supermarket chains and pharmacies have started to limit infant milk powder sales. They place signs by the shelves explaining that this is due to growing demand from “Asian customers” or because “export to China is rapidly increasing.” The signs tell a story of an increasing Chinese demand: whereas stores started with a limit of four cans per consumer, most supermarkets restrict customers to two or three, while a March 5 local newspaper article shows a picture of a sign stating only one box per customer is allowed.

While in theory the restriction applies to all customers, when this Dutch reporter and Chinese researcher Ma Xiao repeatedly attempted to buy four cans, results at the counter sharply diverged. When this reporter was stopped, she was met with questions like, “You are not the problem, but we have to be consistent. Why don’t you come back for more tomorrow?” Ms. Ma, on the other hand, was directly asked whether she planned on exporting her purchase or was simply denied the purchase.

A Dutch supermarket manager in a large urban supermarket, who gave his last name as Bakker, knows all about Chinese food scandals. “Yes, of course we closely follow these developments,” he said. So far he decided against any signs. “That would be too discriminating. But we do want to protect our local customers. This is not about profit—our milk powder is subsidized by the Dutch government. It is about societal responsibility.” He understands the motivations of Chinese traders, but says Dutch sellers have been forced to these measures by “professional networks of Chinese extended families that systematically buy up supplies within a 10 km range.” While his store has noticed increased milk powder sales for years, the situation has become very noticeable in the second half of 2012, “possibly because the traders are becoming more organizationally sophisticated.”

Those who are just buying milk powder for personal use feel the stares too. They are concerned about how the signs, as well as negative coverage in local media, are affecting the image of Chinese immigrants in the Netherlands.  “Those milk traders make us all lose face.” Online, Chinese-language users of the BBS forum Gogodutch.com—who appears to be citizens of the Netherlands–complain about “locusts buying 8 or 10 cans at a time.” Or: “I see them get their milk powder without paying attention to the sign and being stopped by the counter. They don’t understand Dutch or English and just stand there, insisting on the purchase. It is so f*cking embarrassing.” Others point out that trading subsidized milk powder (average price of 90 yuan/tin) bought from Dutch supermarkets is equivalent to tax evasion at the cost of Dutch babies. The webmaster repeatedly tries to bring down the temperature of the discussion: “I understand that those who are not selling milk powder feel frustrated to meet with underserved discrimination. … Complaining is ok, but please don’t personally attack people. I don’t have the time to go through every message. Thanks for your cooperation!”

Traders as helpers?

The milk powder traders defend themselves too. Many see themselves as helping out Chinese parents and are undaunted by the new restrictions. As part-time seller Zhang Lijing puts it: “This just means I have to go to a few more stores—selling milk powder is physical labor.” A PhD student who goes by the English name Lance sees his milk powder trading business (registered with the Dutch Chamber of Commerce) as a way to simultaneously learn about Dutch society, experiment with doing business and expand his personal and professional network in China. His company sells milk powder through Chinese e-commerce site Taobao as well as to smaller stores in middle- and small-sized Chinese cities in which there is still much unmet demand.

Lance explains why the Dutch especially felt the shortage in 2012: “It is the Dragon year baby boom”—and predicts that global trading volume will drop as China’s food safety situation improves and European milk production regulations tighten supply by 2015. Lance notes that Chinese traders turn to supermarket supplies because buying directly from dairy producers, as he does through the help of a local partner, is made very difficult by Dutch bureaucratic obstacles.

Winning back public trust in China’s food safety system will take time. Chinese customers who have turned to personal ties and the global market have gotten used to paying high prices for basic needs. Lance continued, “If my milk powder is too cheap, people do not trust it. … As a small trader, too, it is hard and risky work with a very uncertain profit margin. In the end, it is foreign large-scale dairy corporations like Nutrilon and Friso that profit.”

In this way, the Chinese milk powder crisis is a case study of larger trends. Within China, it is a marker of social status and the growing rich-poor gap. When asked what happens to the kids of parents who cannot afford foreign goods or who do not have personal connections abroad, Lance’s answer was brief: “They get sick.”

Globally, the milk powder issue illustrates China’s prominence in an increasingly interconnected world. When New Zealand issued temporary trade restrictions in 2012, Zhang’s business selling Dutch milk powder increased. Whether in Hong Kong or the Netherlands, Chinese milk powder trade results in tensions at a macro level between an open market, local business interests and protection of local citizen rights. On an individual consumer level, too, issues of discrimination and identity conflict arise and are waiting to be addressed. The tensions result in different visions for the future. A Hong Kong microblogger suggested that the city “set up baby formula as a pillar industry.” In Holland, however, a Chinese commenter “look[s] forward to the day when we will put up export restriction signs in mainland supermarkets.”

Ma Xiao contributed research to this article. All names have been changed at the request of the interviewees.

23 Comments
Jump To Comments
avatar

Tabitha Speelman

Tabitha is a graduate student in Chinese Studies at Leiden University.
  • Rachel_W

    Such a sincere and informative article!

  • cantokaraoke

    “A Hong Kong microblogger suggested that the city “set up baby formula as a pillar industry.”
    iFeng is NOT a Hong Kong microblogger. It’s a Mainland Chinese news site. And Hongkonger don’t want Hong Kong to be the tax-free supermarket of China. That’s it.

  • hotandbothered

    Why don’t people just breastfeed? Or am I being stupid here?

    • Archie

      Vanity!

    • IamChinese

      The chinese ladies are too skinny, and eat so small, how can the body produce right quantity milk? I am chinese woman too, but i am not small.

  • Ed

    Good article. I’m about to migrate back to Holland with my Chinese wife and everybody’s putting pressure on her to send back milk powder from Holland. It took a lot of discussions to convince her that it was not a socially acceptable thing to do.

    • BobbyWong

      Since when is buying stuff for friends not socially acceptable for Chinese? Imagine your wife could have been the Avon of infant formula. #BizOp #CulturalHegemony

      • bb

        not socially acceptable because the Dutch subsidize the price of milk powder with Dutch citizens’ taxes…

        • BobbyWong

          Dude Dutch tax loopholes has nothing to do with Chinese culture of sense of community and doing favors. Surely the Dutch have no problem with bringing stuff back from China for friends.
          Impose VAT for milk powder that’s taken out of the country. Holland is a tiny place, how much milk powder can be taken out of the country anyways?

          • OF

            This is a serious issue here… I’m lucky my little girl has passed the age where she needs to drink formula milk, but when I go to the supermarket here in The Netherlands now I see empty shelves where the milk powder used to be. I wouldn’t want to be a father of a small baby in Holland now, because I would be seriously pissed off…. As it is I’m just pissed off.

  • http://twitter.com/hkandcantonese Hong Kong&Cantonese

    I agree with cantokaraoke. Up until the sentence, “A Hong Kong microblogger suggested that the city ‘set up baby formula as a pillar industry,’” I enjoyed reading this article and felt that it was informative. Unfortunately, with that last sentence, you have only further misrepresented, like many English news sources, Hong Kong people.

    Unless the comment is of a recent mainland Chinese immigrant to Hong Kong or a sarcastic Hong Kong person, I find no reason to believe that it came from a Hong Kong person. What more, it uses simplified Chinese characters, even as many Hong Kong people vehemently oppose using simplified Chinese characters.

    If you would like to accurately represent Hong Kong people’s perspectives, I would advise you look for websites that specifically do not have Mandarin pinyin like “ifeng” and “zhuanti” in their name, do not use simplified Chinese characters, and perhaps end with the domain, “.hk.”

    I am saddened to see that Hong Kong people will only be ever-represented
    by the voices of the mainland Chinese across the border who so often have
    differing views.

  • Z3t3tic

    I find it a bit sad that this article does not mention breastfeeding at all. I would have hoped that a fall in confidence in formula would have led to an increase in breastfeeding rather than an expensive search for a safer but still artificial replacement for mother’s milk. I admit that I am totally ignorant of the social mores in China around breastfeeding or the availability of maternity leave etc. However I would have thought this would have been prime material for this article and its absence is telling.

    • http://twitter.com/tongxiyan Tong Xiyan

      As I know, women in China have a three months’ maternity leave, if the child was ” the only child” of the family, the mother would have one month more. You see, after they return to work, breastfeeding is not realistic because most of them can only go back home after a whole day’s work, so their families have to turn to formula during workdays. And it’s said that–which I am not sure about– once infants get usted to the formula, it’s really hard to breastfeeding them again.

  • mikeygow

    I’m about to become a father for the first time. The milk powder issues are worrying and I can tell you there is no way I will buy local product for my child. But imported is extremely expensive. I recently brought a lot back from the UK, but will no doubt need more very soon after the baby is born.

    Quite simply, the Chinese authorities need to do more to reassure parents in China that locally produced milk powder is perfectly safe. It is no use having strong sentences for criminals who contaminate milk powder, until the govt can demonstrate to the public that local products are safe, through a major regulatory operation, this panic buying of HK or foreign milk powder will continue.

    But unfortunately, I don’t know if total trust is possible. There are some callously avaricious people in this country who would happily poison a few thousand babies to make themselves a fortune.

    • Elli

      But why not nurse (breastfeed)? I still don’t get it. I live in Germany (where milk powder is abundant, or at least was until Chinese tourists started buying it), and never thought I will feed my children with formula. Breastfeeding until they are old enough to drink regular cow-milk is the best way in my opinion (or until they are old enough to drink vegan mik subsitute, say my vegan friends)

      • mikeygow

        My wife will breastfeed. But there is a socio-economic aspect here. As most parents work and the traditional family set-up is that grandparents stay at home with the child, the need for formula is much greater. While there is paid maternity leave, many migrant workers cannot afford to not work, so women often go back to work after a month or so, often in cities far from their hometown.

        We’ve bought milk-powder back from the UK which is breast-milk substitute, primarily as this is our first child and we don’t know what to expect. Better to have it and not need it. But we’re also worried about follow-on milk for weaning and to ensure the baby gets good nutrition.

        Either way, the point is that after the Sanlu milk scandal where thousands of babies suffered illness, kidney damage and several deaths, people don’t trust domestic milk-powder. Obviously this is less of a problem for wealthy middle-classes, but its a massive concern for those who must work away from home and leave their children with grandparents.

        • Elli

          I am sorry to hear that and I hope I didn’t sound too insensitive. I wish you all the best with the new baby. First baby is a wonderful adventure!

          • mikeygow

            Not insensitive at all. Its just unfortunate that many young Chinese women and their children find themselves relying on expensive, imported milk powder as they are unable to breastfeed until weaning. You were right to ask why it wasn’t mentioned in the article. I think understanding the social, cultural and economic conditions is half the story here and highlights why milk-powder safety is a major issue for a lot of Chinese families.
            There is actually a movement to raise awareness of the benefits of breastfeeding. Mothers were holding breast-feeding flashmobs, partly to raise awareness, but also to campaign for better rights for women with regards to maternity leave (women get maternity leave, but at a state payout which is vastly lower than salary in most cases). http://www.telegraph.co.uk/women/mother-tongue/9595603/Breastfeeding-flashmobs-Chinese-mothers-are-abandoning-formula.html

  • China Shouts

    Cow’s milk is for cows. Breastfeed!

  • Gueriño

    This article has totally misses the point. Importers are heroes, not villains, and the world response to the milk powder issue is a missed opportunity.

    The world should flood the countries around China with high quality milk powder – it saves lives, forces China to improve its regulatory system, embarasses a secretive government, and moves tons of money from China to the rest of the world.

    • Jahar

      yeah I’ve been trying to figure out why this isn’t happening.

    • Sabine

      I couldn’t agree more! Not to mention that increased supply of foreign mild powder would lower its price in mainland China, making it more competitive with local Chinese brands and enabling even poorer Chinese mothers to buy it – once local producers see their sales drop, I’m sure they’ll think long and hard about ways to make better products and regain public trust. If not, let them go bankrupt and foreign brands reap the benefits, that’s how markets are supposed to work.

  • sarah

    Why can not Chinese make some good quality milk powder???? Why can not Foreign countries sell milk powders to Chinese? That would be good for EU’s economy. That is a chance to sell something to Chinese, since most things are made from China. Am I too naive?