Food for Thought: The 2008 China Milk Scandal

In 2008, a scandal in China involving milk products tainted with melamine (a chemical used in plastic production) brought regional and global attention to the country. More than 290,000 infants were affected and several died. At a time when international trade was important for China’s economic development, the tainted milk scandal raised concerns about the safety of products and food made in China. The case illustrates how the pressure of rapid economic development resulted in measures to cut costs at the expense of consumer safety and health, bringing into question the ethics underlying business practices in the country. The lack of quality control and corporate governance processes on the part of the company and government facilitated the ease with which the milk was tampered. The case also documents remedial efforts that followed the scandal, including recall of the tainted milk products, putting new government policies and regulations in place, arrest of top executives and the companies’ public apology in the unique form of a New Year text message.

This case is suitable for class discussion, group presentation, or inter-group debate at the undergraduate, MBA and executive levels. It can be used for instruction on topics related to ethics, management in Asia or emerging economies, corporate social responsibility and organizational or employee misconduct. The case will introduce students to the broad range of factors (individual, organizational, cultural and political) that facilitate corruption and misconduct. It provides a clear understanding that corruption is a complex phenomenon, as it often involves different groups of people at various levels of the organization and the government. Students should also be made aware of the role of the different constituents (e.g., customers, manufacturers, government, international business partners and audience, watchdog bodies) in perpetrating or controlling questionable practices. They should be able to reflect on how their ethical values affect their own business or work-related decisions. They should also be asked to reflect on how they would behave if faced with similar pressures to perform.

• Ethics
• management in Asia
• China