Food or Faux? The Case of Food Safety in Asia
By Koh Juan Zhen and Assistant Professor Elison Lim
Imagine that you are at the supermarket. You pick up a bottle of ‘High Quality Extra-Virgin Olive Oil’. Without hesitation, you put it into your shopping basket. Has it ever occurred to you that this product may not be exactly what it claims to be?
For many people, what comes to mind quickly when thinking about food fraud and food safety is the Chinese milk scandal in 2008. Milk products – including infant formula milk – were found to be contaminated with melamine, a toxic industrial chemical used in plastics and fertilizers, and which affected an estimated 300,000 babies in total.
And if you think that food fraud is an exceptional occurrence, you would be sorely mistaken. There is now considerable evidence that the problem may be more common than most people realise. Everyday grocery items such as extra virgin olive oil, spices, and honey are among the top food products that are at risk of food fraud.
Food fraud is a serious global issue that costs the food industry some US$40 billion in damages each year. With huge profits at stake, it is perhaps no surprise that there has been an uptrend in the number of food crimes in this region. Unethical food producers motivated by economic gains intentionally deceive consumers into believing the food items are made from certain ingredients or produced using permitted processes when they are not (e.g., counterfeits and adulterations) or that they are of a higher quality than they actually are (e.g., misleading product claims). The situation is most alarming when the fraud involves ingredients or processes that are harmful to the human body (e.g., melamine in milk). The risk of such fraudulent activities is higher for premium and complex products with long supply chains as claims are hard to verify at the point of purchase.
Unfortunately, even trusted brands have been found guilty of food fraud. In 2013, Taiwan was rocked by a scandal involving one of its largest food manufacturers, the Tin Hsin International Group (THIG) . Copper chlorophyllin was found in the olive oil they carried and their cooking oil was also allegedly diluted with cheaper cottonseed oil. One year later in 2014, THIG was hit with two other fraud charges: one involved selling cooking oil contaminated with gutter oil, and another involving using feed grade oil to replace lard in some of its products. These adulterations to their products posed serious risks to health. For instance, several doctors identified the potential association between long-term consumption of cottonseed oil to infertility. The news sparked fear among the public and crushed consumer confidence in the reliability and safety of Taiwan’s food supply. Public boycott of the affected brands under THIG ensued, and eventually spread to other brands under the THIG umbrella. The popular local instant noodles brand Master Kong was not spared despite the company’s efforts to dissociate it from the scandals. By March 2015, the total revenue of Master Kong had dropped by 75% within a period of 6 months. Eventually, Master Kong was withdrawn from the Taiwan market.
Food Fraud: Challenges and Opportunities in Asia
The high profile food crimes reported in the media are just the tip of the iceberg. Many such cases remain undisclosed and fall under the public’s radar. This problem may be especially serious in developing markets – many of which exist in Asia – where food regulation policies are still in their infancy. In many developing countries in Asia, the laws on counterfeiting are less well developed or rigidly enforced than in Western developed countries. Furthermore, Asian markets are also generally more tolerant of counterfeiting activities than their Western counterparts. These factors may explain why food frauds may be more common in Asia.
With each food scandal coming to light, new revelations of the deficiencies in Asia’s food safety systems become more apparent. Many consumers feel betrayed by the brands they used to trust, and blame government bodies for vulnerabilities in the food safety systems, causing public uproar. Consumer confidence has been shaken to the core. Fears about the safety of food products are driving consumers to become hyper-sensitive to food news on the internet. According to Sun Yat-sen University’s Big Data and Communication Laboratory, rumours of food safety scares are one of the most widespread new topics on WeChat in China.
The increasingly affluent middle class consumers in Asia are checking food and nutrition labels in search for food products that are free from undesirable and harmful ingredients. Many are also turning to organic and imported food products from specialty food outlets over traditional wet markets, where it is easier to trace the products back to their origin. This phenomenon is creating a lucrative market for food producers who can give consumers the power to verify product authenticity at purchase and rebuild consumer confidence. In 2015, Ferngrove Wine Group adopted the near field communication (NFC) technology by attaching an NFC OpenSense tag to its ‘smart’ wine bottles in China. Consumers with NFC-enabled phones can check if the wines they bought are securely sealed from the moment they were bottled, to ensure that they have not been tampered with while in transit. Business operators are also looking at technologies, such as radio-frequency identification (RFID), to trace their products through the supply chain securely. According to Allied Market Research (AMR), Asia-Pacific has the fastest growing demand for anti-counterfeiting packaging at an estimated CAGR of 18.1%, with China and India driving the growth.
Taking a major step forward, Alibaba announced in March 2017 that it is working with Australia Post, Blackmores and PWC to explore using blockchain technology to map food products along their supply chain. The idea is to attach a digital copy of the DNA in the food sample on the packaging so that businesses can trace the origin of the product at every stage of the supply chain. There may come a day where consumers are able to scan the QR code on the food packaging and know exactly where the food is grown and how the food is packaged and delivered. At the rate that technology is developing, that day may be closer than we think.
Raising to the Call for Transparency and Traceability
Government bodies in Asia are also responding to the call for better food safety, with steeper fines and tougher prison sentences for offenders. For instance, Taiwanese President Tsai Ing-wen announced plans at the 2016 Taiwan Summit for Food Safety to set up an independent committee for food safety risk assessment and to increase the budget for 2017 in food safety by 50%, compared to 2015. In the South-East Asia region, an ASEAN Food Safety Policy was developed and endorsed by ASEAN leaders in 2015, to harmonize regional food safety and food control based on international standards and create an integrated ASEAN market.
The road to better food security requires a collaborative ecosystem comprising the government, businesses, and consumers, guided by international food safety standards and a regulated system of checks and balances. Besides imposing stricter laws, government bodies will benefit from a closer engagement with independent food regulatory agencies and businesses to identify and monitor food fraud vulnerabilities. Businesses too must step up to take ownership of their food safety management, to devise a robust traceability system and scale up on their anti-counterfeit technologies. Consumers can help themselves by becoming educated with food safety matters and to call out the fraudsters when they misbehave. They should also continue to advocate for greater transparency in the supply chain so as to keep businesses in check. If every stakeholder works hand-in-hand to maintain this delicate ecosystem, we will be many steps closer to preventing and eliminating food fraud altogether.
 A case on “Food Scandals in Taiwan: The Case of Tin Hsin International Group” by Mingmin Yeh and Elison Lim will appear in Philip Kotler, Kevin Lane Keller, Swee Hoon Ang, Siew Meng Leong, and Chin Tiong Tan (2017), Marketing Management: An Asian Perspective, Pearson Education, Harlow, England.
Author: Koh Juan Zhen and Assistant Professor Elision Lim
Date: 11 Aug 2017
About the Authors
Koh Juan Zhen is a Research Assistant at ACI. Prior to joining ACI, she was an Assistant Marketing and Business Development Manager in the tourism industry and led various integrated marketing campaigns and partnership initiatives to drive reach and sales. Her research interests lie in the area of consumer behaviour and how emotions and subconscious mental processing influence decision-making.
Dr. Elison Lim is an ACI Fellow & Assistant Professor at Nanyang Business School. Her research interests include affective display and emotions in consumer-marketer interactions, beauty and attractiveness, and culture. Her works have appeared in Journal of Marketing Research, Journal of the Academy of Marketing Science, Journal of Advertising, and Journal of Business Research. Aside to scholarly research, she writes business cases centered on consumer-driven phenomena and contributes regularly to media reports and discussions.