BEIJING - A shipment
of poisoned Chinese-made pork dumplings -
bite-sized, meat-filled snacks known as
gyoza in Japan - has dished up one of the
most far-reaching culinary quandaries of recent
times, with a US$500 million corporate merger
between Nissin Food Products Co and Japan Tobacco
among the victims.
The dumpling disaster,
which set off a health panic among Japanese
consumers, has also taken a bite out of bilateral
business, refocused concerns about China's
food-safety standards and upset the historically
fragile China-Japan trade dynamic.
To
date, local media have reported several thousands
of people visiting Japanese hospitals with stomach
complaints, including a
10-year-old girl in a serious
condition. Ten victims of dumpling-induced illness
were confirmed by Thursday. Japanese police are
investigating allegations of a link between the
dumplings, imported from China by Japan Tobacco,
and the illnesses.
The dumplings
originated from Tianyang Food Plant, located in
Shijiazhuang city, southwest of Beijing. Tianyang
is a unit of state-owned Hebei Food Import &
Export Group, an exporter of frozen and processed
meats and freeze-dried vegetables.
In
response to the spate of illnesses, Japan's
Foreign Minister Masahiko Komura said on February
1 that the food scare could damage Japan-China
ties. Japanese corporations Maruha, Ajinomoto and
Japan Tobacco recalled products supplied by
Tianyang last week.
Exacerbating the
dumpling "disaster" are swirling allegations about
China's sub-standard hygiene practices,
specifically related to two Chinese businesses
charged in recent days by a US federal grand jury
in connection with imported pet food ingredients
that may have killed thousands of cats and dogs
last year.
Tensions simmered further when
Japan's Health Minister Yoichi Masuzoe told media
on February 6 that the dumplings had been
deliberately contaminated with pesticide and that
police are treating it as attempted murder.
Subsequent tests revealed that two toxic
pesticides - dichlorvos and methamidophos - were
found in the dumplings' dough and fillings.
Later, the public admission from Wei
Chuanzhong, Chinese vice minister of the General
Administration of Quality Supervision, Inspection
and Quarantine, that "a small group that does not
wish for the development of Sino-Japanese
friendship may have taken extreme measures", set
off allegations of conspiracy from netizens and
columnists in both countries.
Even so, a
joint inspection team has now called the
likelihood of the pesticides being added at the
Tianynag factory "extremely small", describing the
factory as "clean and well-managed" and adding
that it is not clear whether the pesticides were
added in China or after they were imported to
Japan.
So, with Tokyo and Beijing calling
for calm and promising increased cooperation in
the ongoing inquiry, economic analysts are
discussing the scare in terms of corporate finance
rather than food safety.
On the sidelines
of the dumpling crisis, Nissin Food dropped its
plan to merge with Japan Tobacco, citing concerns
about the cigarette makers' ties to the
contaminated Chinese products.
Japan
Tobacco, the world's third-largest cigarette
maker, missed out on a chance to sell 49% of its
subsidiary Katokichi Co to instant-noodle maker
Nissin Food in exchange for combining their
frozen-food units, acccording to statements from
the three companies released to the Tokyo Stock
Exchange on February 6.
"The retreat from
the merger is a blow to Japan Tobacco's plan to
expand food sales and reduce its reliance on
revenue from cigarettes in Japan, where the
percentage of men that smoke has fallen by half
during the past 40 years," according to Bloomberg
news service.
Nissin Food president Koki
Ando told reporters that the company wanted a
controlling stake in Katokichi but disagreed with
Japan Tobacco on the food safety issue. Ando went
on to say that the entire food industry has been
affected by the "scandal" and had led to
apprehension among consumers.
"The
dissolution of the food units' merger is
disappointing news for both Nissin and Japan
Tobacco,'' Yasuhiro Matsumoto, an analyst at
Shinsei Securities Co in Tokyo, told Bloomberg.
"The merger would have been a win-win proposition
for both.''
Industry reports said that
Tokyo-based Japan Tobacco, the maker of Camel
cigarettes, agreed to buy frozen-food maker
Katokichi for 109 billion yen ($1 billion) in
November. Annual frozen-food revenue at Katokichi,
which in 2006 sold 196 billion yen of noodles,
dumplings and other products, were expected to
rise to about 260 billion yen when combined with
the units from Japan Tobacco and Osaka-based
Nissin.
The cigarette maker will keep its
frozen food business, Japan Tobacco president
Hiroshi Kimura said at a briefing, adding he has
no plans to resign. He also warned that the
dumpling affair will have an even wider impact.
"It's highly negative event for Japan
Tobacco as their corporate governance and risk
management will be called into question,'' said
Junko Miyakawa, a senior analyst at Shinsei
Securities Co, told Bloomberg. "The revenue of
food companies will fall. The fallout will not end
within two or three months.''
(Asia Pulse,
with additional reporting by Asia Times
Online.)
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