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    China Business
     Jun 7, 2011

Taiwan food scare 'dates back decades'
By Jens Kastner

TAIPEI - A range of Taiwanese-made food products have been banned in mainland China and South Korea, and recalled in the Philippines, after the discovery that one of Taiwan's leading chemicals company used a food additive on a dangerous scale over two decades, threatening the health of innumerable children. Products involved are also shipped to the United States.

The scandal, involving the use of industrial plasticizer bis(2-ethylhexyl)phthalate (DEHP) in beverages, jams, syrups, jellies, calcium supplements, multivitamin tablets and other products, recalls the 2008 Chinese melamine scandal in terms of corporate greed and the risk posed to children's health.

Plasticizers such as DEHP are additives that increase a material's plasticity and are used in production of all sorts of useful things, such as leather goods, rainwear, flooring, wiring and

cable, food packaging materials and children's toys. Last month, Taiwanese inspectors discovered that Yu Shen Chemical Co, the island's largest emulsifier supplier added DEHP to its clouding agent on a large scale.

Clouding agents, formulated with palm oil or gum arabic, are used to make processed foods look more appealing. When formulated with plasticizers such as DEHP, instead of with expensive palm oil, what's eaten and drunk looks even more tempting, and the chemical furthermore comes with the handy feature that it significantly extends shelf life. The downside to the scam, however, could hardly be any steeper: carcinogen in each contaminated unit inspected by the Taiwanese authorities topped 600 parts per million, exceeding by far the allowable daily intake of the chemical.

And, closely resembling the 2008 scandal in which mainland Chinese company Sanlu added melamine, banned for use in foodstuffs, to baby powder to indicate higher levels of protein, the main victims in the Taiwan case are young children.

Children who consume beverages contaminated with DEHP on a long-term basis are eight times more at risk of developing problems with their reproductive system. The males are more likely to suffer from feminization and shrinking of the penis and testicles when they become adults, girls are facing the prospect of premature development of their sexual organs. Thyroid dysfunction and fertility problems threaten these children later in life.

Another shocking aspect of the worldwide unprecedented DEHP scam is its duration: insiders told investigators that similar practices have been going on for as long as two decades.

Unsurprisingly, the revelations have led to panic among Taiwan's public and government. After an army of inspectors descended on the island's businesses that produce or sell food stuffs, including clinics and pharmacies, the scale of the scandal has become ever more shocking.
  • Prosecutors allege that Yu Shen purchased as much as five tonnes of DEHP every month to make flavor and food coloring agents, selling the products to chemical and food processing factories, as well as to bakeries and pastry shops.
  • A total of 130 food products were confirmed by the Food and Drug Administration to contain DEHP, while 95 manufacturers were found to have used the banned ingredient.
  • A total of 244 ingredient-manufacturing companies, including several renowned brands, were found to have sourced clouding agents from Yu Sheng and Pin Han Perfumery Co, another emulsifier supplier alleged to have carried out a similar scam.
  • A total of 40,000 kilograms of juice and jam, 980,000 bottles of tea drinks and more than 2,000 boxes of powdered probiotic products have been recalled. 
  • 127.5 barrels of emulsifiers have been confiscated. 
  • In Taipei, the sale of 3,448 products for which businesses could not produce certificates was suspended by inspectors.
  • The island's four major convenience store operators - President Chain Store Corp, FamilyMart, OK-Mart and Hi-Life - have pulled all sports drinks from their shelves.

    The problem is not limited to Taiwan. The island's DEHP-tainted stuff had been shipped to the United States, mainland China, Hong Kong, the Philippines and Vietnam. After the Department of Health informed health authorities in these countries, Presidential Office spokesman Fang Chiang Tai-chi stated: "The incident has not only caused great public concern, but will also affect the economy and have a negative impact on Taiwan's international reputation."

    In terms of direct outfall, his statement at first glance appears to be no exaggeration. Companies are claiming their business has shrunk by 20% due to the scandal. Investors are turning away from food stocks and popular night markets, important for the tourism sector, have also seen sales decline significantly.

    Taiwanese beverages, jams, syrups, jellies and other products suspected of DEHP contamination have been banned by South Korea and mainland China, and Manila has ordered an extensive recall of Taiwanese-made food and drink products.

    Even so, while desperate Taiwanese parents line up at laboratories, carrying with them the products their children have been sipping for years, Taiwan's food and beverage industry accounts for a mere 4% of the island's domestic manufacturing output, which in turn contributes to about 25% of gross domestic product. In terms of exports, prepared food brought in only US$1.07 billion in 2010, and cosmetics and supplements are not even listed among Taiwan's 16 major export goods.

    "The most damage will be done to the catering industry, manufacturers of food and beverages, convenience stores and, for a smaller part, also the pharmaceutical and cosmetics industry," Hu Sheng-Cheng, an academic at Academia Sinica's Institute of Economics, told Asia Times Online. Hu likened the DEHP scandal to a small-to-medium-sized typhoon in terms of economic impact.

    "Those sectors' combined annual turnover accounts for NT$900 billion (US$30 billion), and only 10% of them is affected by the DEHP issue. If the scare lasts no longer than a month, the loss will be NT$8 billion to NT$10 billion."

    Next to children's health, it is the public's trust in the government and in the "Made in Taiwan" brand that will be most negatively affected, he said.

    And while some companies are being hit by the scandal, others can profit, according Huang Li-hsuan, professor at Taiwan's National Central University's Department of Economics.

    "Because most of the products involved in the DEHP scandal are essentials and part of the Taiwanese public's daily lives, consumers' flexibility isn't high," Huang said. "So if we say DEHP decreases sales of this and that product, such as soft drinks, the public will use other related products like fresh juice, mineral water, and so on, as a substitute. In other words, in the short term, DEHP will make some businesses do worse but others better."

    The danger of the DEHP scandal denting Taiwan's international reputation, as suggested by the Presidential Office spokesman, is also slim, according to Gary Rawnsley, a professor of Asian International Communications at the University of Leeds.

    Rawnsley, an expert on public diplomacy and soft power, dismissed the notion that Taiwan's image abroad could suffer anywhere as much as China's in 2008 due to the melamine scandal.

    "China's scandals have certainly been more prominent because they are Chinese and China garners far more media attention across the world than Taiwan", he said. The DEHP scandal "will have an effect on the manufacturers but not on Taiwan's image among the public around the world. The reason for that is it is not news here [in the UK] or elsewhere as far as I can see."

    Jens Kastner is a Taipei-based journalist.

    (Copyright 2011 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

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