Coming Your Way: China’s Rotten Apples

Coming Your Way: China’s Rotten Apples

By Adam Minter  Sep 30, 2013

The juice of rotten Chinese apples isn’t something that most American parents would serve to their children. But if a recent report from the Chinese press is accurate, they may very well have been doing so for years without anyone — including U.S. government inspectors — knowing it. The news was broken by the independent-minded 21st Century Business Herald, which sent reporters to a region of the country known for its fruit groves and fruit-juice manufacturers. They found three of China’s leading juice manufacturers purchasing rotten apples and pears from farmers unable to sell them for direct human consumption. Chinese regulators shut down two of the plants, despite failing to find stocks of rotten fruit on the factory premises, and investigations are ongoing. Nonetheless, as Quartz reported last week, two of the plants in question receive significant government export subsidies (and one of the plants supplies 27 percent of the apple juice that China exports to the U.S. and Canada, annually). Under such circumstances, it’s highly unlikely that China’s regulators will move to harm any reputations.

Compared to dead pigs floating down Shanghai waterways and poisonous fake mutton in hot pot restaurants, this may seem like a relatively minor scandal. The primary health risk in rotten apples is the persistence of a toxic mold. The U.S. Food and Drug Administration is so unconcerned about this possibility that it allows domestic apple processors to establish voluntary controls to monitor the mold. China, with its comparatively lax food-safety standards, almost certainly pays even less attention to it. In 2011, for example, 51 percent of Chinese food processors and packagers failed food safety inspections, according to AsiaInspection, a China-based quality control firm.

This should worry Americans — especially those who drink apple juice. Approximately 85 percent of the apple juice consumed by Americans is imported, with the vast majority — 367.2 million tons in 2012 — imported from China. According to U.S. Department of Agriculture data collected by Food & Water Watch, a U.S.-based NGO focused on food-safety issues, Chinese apple juice enjoyed a 49.6 percent share of total U.S. consumption in 2011.

In other words: If rotten Chinese apples (and the toxic molds that sometimes grow with them) are making their way into Chinese fruit-juice factories (and past Chinese inspectors), then more likely than not they’re making their way into American refrigerators, pantries and bag lunches, too. What’s worse, chronically under-funded and under-staffed U.S. food inspectors lack the resources to capture many, if any, of these potentially tainted shipments.

Indeed, according to a May report in the New York Times, the U.S. FDA manages only to inspect 2.3 percent of food shipments imported into the U.S. and 1,000 of the more than 250,000 foreign food plants that export to the U.S. In that sense, statistically speaking, it’s almost certain that most Chinese apple juice is never inspected, either in China or the U.S.

For now this doesn’t seem to be much of a concern to most Americans. According to Food & Water Watch, between 2003 and 2012, U.S. food imports from China increased from 2.3 billion pounds to 4.1 billion pounds. So far, at least, this growth has occurred without a major scandal — in the U.S. But as the list of Chinese food-safety scandals lengthens, the potential for one of them to migrate to U.S. shores grows. It’s just a matter of time.

(Adam Minter is the Shanghai correspondent for Bloomberg’s World View blog and a contributor to the Ticker. Follow him on Twitter.)

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 (, 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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