China Food-Safety Woes Soar

October 9, 2013, 2:13 PM

China Food-Safety Woes Soar

Chinese leader Xi Jinping chided New Zealand about food safety over the weekend in a move many Internet users found laughable. Maybe he should have addressed his comments to China’s national airline instead. Air China601111.SH 0.00% is in the public cross-hairs this week after more than 30 passengers on board on Oct. 6 flight suffered a mix of stomach cramps, nausea and diarrhea after consuming beef-filled pastries that passengers allege were past their consume-by dates.

According to state-run media reports, a woman surnamed Zhang was traveling with her husband and children on flight CA 1268 from the northwestern region of Xinjiang to Beijing when they were served beef-filled shaobing, a kind of Chinese biscuit. On closer inspection of the packaging, Ms. Zhang noticed two sets of dates printed on the wrapper, one read “130929” while the other read “131002,” suggesting that, at the very least, the snack was four days out of date.

Since she had already scarfed the scone, it was too late to spare herself or her family from the allegedly spoiled snack. But as any upright citizen might do, she alerted cabin crew and urged the chief flight attendant not to distribute the food item to other passengers.

Once again, too late. Since other fliers were busy munching their shaobing, the flight attendant refused to ask for them back.

Thirty minutes passed. Experiencing discomfort, passengers began to head for the restrooms. Some, including the Zhang family, felt queasy. Others vomited and still others suffered the runs.

The incident occurred during one of China’s busiest travel periods, the weeklong National Day holiday, when millions of Chinese took to domestic and international skies. It also came on the same day that Mr. Xi unleashed guffaws from Chinese social media users after he appeared to scold New Zealand Prime Minister John Key over the island nation’s food-safety issues.

Fans of Leslie Nielsen know that food poisoning at 30,000 feet is neither new nor particularly rare. But in a country with a stubbornly persist food-safety problem – andnotoriously unreliable air service — the notion that the national carrier might have knowingly exposed its passengers to expired food has led a spewing of indignation among consumers.

After the plane had reached Beijing, Ms. Zhang and other irate passengers telephone the airline’s customer hotline to complain but received no immediate remedy, according the state media reports. It was only as word of the food malfunction went viral on social media that China Air began to stir.

On Tuesday morning, the airline released at statement through its official account on Sina Corp.’s Weibo microblogging service blaming the problem on a packaging mix up (in Chinese) – a response that only fueled the criticism. Later in the day, the airline issued a second statement apologizing for the incident but still stopped short of admitting the food was spoiled (in Chinese).

Air China said it and its catering company had sent samples of the biscuits to authorities for further testing. The airline also said it had asked related departments within the company to beef up food security.

In addition, Air China said it had tried to reach out to most of the passengers on the flight to explain the situation and apologize for the upset. It said it would offer compensation, but did not specify kind the compensation would entail.

“Air China has no shame,” wrote one Weibo user in a sentiment widely repeated across the site.

Wrote another: “The quality of Air China’s food is terrible, even by domestic standards.”

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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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