60-70% of honey in China’s Jinan is fake

60-70% of honey in Jinan is fake

by Neil Thomas on July 29, 2013

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The front cover of today’s Jinan Times is dominated by an exposé of the Shandong honey industry, with a headline proclaiming “60-70% of honey on the market is adulterated,” leading into a detailedfeature article on pages two and three. The report claims that the production of counterfeit honey in China is an open secret to industry insiders, and so journalists from the Jinan Times went undercover to investigate. If you enjoy eating honey, as the Chinese have since ancient times, then you will not like what these reporters found.In conversations with merchants at a Jinan farmers market, stall owners freely admitted that numerous beekeeping merchants buy sugar syrup from them to mix into their honey. Buying syrup is much cheaper than producing bee honey and thus it is more profitable to sell honey that has been adulterated.

Large Chinese supermarkets generally stock dozens of honey products from 7-8 different brands, and prices for a 500g jar range from 21 to 38 yuan. Tests conducted by an experienced honey industry expert on four brands of honey purchased from a Jinan supermarket revealed that two brands’ honey products were frauds – one was diluted with beetroot syrup and the other with rice syrup.

Song Xinfang, Chairman of the Shandong Apiculture Association, claims, “Presently up to 60 or 70% of honey on the market is fake.” Consumers without professional knowledge can easily be fooled by counterfeit honey because sham honey looks more like what honey is supposed to than real honey itself; it is clear, free from impurities, and does not crystallize. Thus, with its attractive appearance, enticing packaging and cheap price, phony honey has been a hit with unwitting consumers and the practice has spread.

According to another Jinan industry insider, there are two main tricks for producing counterfeit honey. The first is to mix chemical substances or liquids with honey, a process usually carried out in small workshops that create the product sold by roadside peddlers. The second is to blend honey with fructose syrup, a technique that tends to be perpetrated by merchants who rent beekeeping areas in the Jinan suburbs and erect a few beehives to give the impression they are running an honest business. The latter is the more common method as it produces a liquid hard to distinguish from genuine honey, and this is the counterfeit honey often found in supermarkets.

Wang Yizeng, General Manager of the Jinan-based Jiquan Huangshi Bee Produce Company and Vice Chairman of the Shandong Apiculture Association, states that not only is fake honey a threat to the health of consumers, it also infringes upon the rights and interests of beekeepers. In 2006, a national food quality and safe market access system was implemented for honey and related products, meaning that only companies that obtain a QS authentication mark are allowed to sell honey for human consumption.

Only two companies in Jinan (including Jiquan Huangshi) have obtained the QS mark, but many more companies still sell honey because honey is not exclusively classified as a foodstuff – it can also be sold as an agricultural by-product or medicine. If this is the case then relevant departments lack the legal basis to investigate honey companies without a QS mark.

A further hurdle is that the cost of fighting fake honey is very high, with definitive proof of counterfeit honey requiring 40-50 separate tests each costing around 550 yuan, meaning few consumers or even government departments have been willing to pursue this issue.

Furthermore, the supervision of the honey industry falls through an administrative gap, because the production of counterfeit honey in small workshops means that it lands outside the scope of responsibility for both the local Quality Control Office and Industry and Commerce Office.

Song Xinfang outlines the following key challenges facing apiculture in Shandong (aside from counterfeit honey):

Heavy pesticide use killing off large honey bee populations

Land clearance

Diseases that threaten plant species important for honey production, and

The need to import non-native Western bee species suitable for large-scale collective beekeeping.

Links and sources
Jinan Times (济南时报): 市场上蜂蜜六七成掺假

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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