China Probes Juice Makers into Allegations of Processing Rotten Fruits

China Probes Juice Makers into Allegations of Processing Rotten Fruits

09-24 11:24 Caijing

Reports said some juice factories based in central China’s Anhui of purchasing bad fruits for 0.4 yuan($0.07) per kilogram to make fortified juice as a part of their cost-saving measures.

China’s food regulator has launched an urgent investigation into allegations against several home juice makers that reportedly use cheap rotten fruits for production in the country’s latest food scandal, highlighting increasing concerns over food safety among the public.  Reports said some juice factories based in central China’s Anhui purchased bad fruits for 0.4 yuan($0.07) per kilogram to make fortified juice as part of their cost-saving measures.China Food and Drug Administration has visited the factories and urged immediate rectifications, according to the official Xinhua.

A factory of Huiyuan Juice Group, the largest juice producer in China and once the buying target, is among the three companies involved in the scandal blown off by Chinese media.

Shares of the other two, Haisheng and Andre, both listed on the Hong Kong Stock Exchange, were suspended trading Monday while Huiyuan plunged 5 percent.

Haisheng, which reported over 1billion yuan ($16million) in first-half revenue, represents 27 percent of China’s juice exports to the United States and Canada. Taiwan beverage giant Unit-President owns 16 percent stake in Andre.

Huiyuan, which gobbles up 60 percent share of China’s juice market, dismissed the reports later in a statement, saying it has controllable manufacturing chains and its products quality is guaranteed.

China’s ministry of commerce in March ruled against Coca Cola’s $2.4billion acquisition proposal on competition grounds, a move denounced as a protectionism move.

Huiyuan opened higher Tuesday and rose over 3 percent in morning trading.

China launches juice probe after rotten fruit report

Mon, Sep 23 2013

SHANGHAI (Reuters) – China’s food safety watchdog has launched an investigation into local juice makers after a media report said they used rotten fruit to make their products. The probe includes two branches of the country’s sector leader, China Huiyuan Juice Group Ltd.

Farmers in several Chinese provinces sold rotten fruit to distributors, which was then bought by canned fruit producers and juice manufacturers to cut costs, the 21st Century Business Herald said in the report on Monday.

“We take this very seriously and have urgently deployed food safety teams in Anhui, Jiangsu, Shandong and other provinces to immediately open an investigation,” the China Food and Drug Administration (CFDA) said in a statement on their website, seen by Reuters on Tuesday.

Food safety is a serious topic in China where scandals from milk laced with industrial chemicals to recycled “gutter oil” for cooking have left many consumers wary. A recent Pew Research report said almost four in 10 Chinese people felt that food safety was a “very big problem”.

Huiyuan, once an acquisition target for The Coca-Cola Co, said that after an initial probe there was no evidence that the company had used rotten fruit to make its juice, according to a statement on its website.

The CFDA added Huiyuan’s Shandong unit had not produced any juice since the end of last year, while it had not yet found any rotten fruit on site at the company’s Beijing branch. It added that there was as yet no evidence of rotten fruit at the Anhui unit of China Haisheng Juice Holdings Co Ltd or at the Jiangsu unit of Yantai North Andre Juice Co Ltd.

China’s poor food safety record has hurt global firms such as KFC parent Yum Brands Inc, while local milk powder makers have struggled to shrug off a deadly melamine scandal in 2008 which led to the deaths of at least six babies. Melamine, which is used in plastics production among other things, was added to milk formula to fraudulently boost protein levels.

To deal with food security, China has expanded a pilot system that tracks the movement of meat and vegetables to the supermarket shelf.

Shares in Huiyuan were up 3 percent at midday, rebounding after falling to a three-week low in trading on Monday.

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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