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Sanlu Group Company and the Tainted Milk Crisis Essay

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Updated: Aug 26th, 2020

Executive Summary

The tainted milk scandal took place in 2008 in China. This scandal managed to expose the issues that were inherent in Chinese economic miracle. It was found that Chinese manufacturers were no strangers to institutionalized scams and scarce supervision during the periods of rapid and substantial development of the country. Several babies were found dead. Hundreds and thousands of other babies were found injured due to the act of pollution of milk and dairy with melamine. The latter is an industrial organic compound exploited in nourishments and plastics. Melamine can be utilized in production to conceal milk that has been diluted. Protein levels in milk can also be hidden with the use of melamine because it is rich in nitrogen. This organic compound may trigger the appearance of kidney stones in adults and fatal consequences in children.

Introduction

This issue raised major questions concerning the ethics of business in China. Chinese manufacturers’ image was critically undermined, and there is little chance that it will be restored anytime soon. What is even more shocking, this was not the first time when Chinese manufacturers encountered this kind of issue. Even though China managed to get back on the track and restore its business connections, there were widespread statements claiming that senior Chinese representatives were aware of the contamination but they chose not to close it down in order to discontinue the production of hazardous milk. Summer Olympics may be one of the reasons why this eventually happened. For the most part, Chinese officials were worried about bad PR when China was in the international limelight, but this does not absolve them from responsibility for their actions.

Responses to challenges

In this case, the issue is rather complex. We should pay attention to the fact that China cannot boast of a good business image, so it is going to be hard to get rid of this slur. One of the possible responses could be the convening of an international delegation. This should be done in order to supervise the quality of Chinese production (including dairy and any other suspicious areas). Another way to fight the issues in the sector would be fighting corruption. This is a very extensive task that needs to be broken down into sub-tasks. These sub-tasks include checking people in leadership positions in Sanlu Group (including such aspects as their background and connections). Lastly, the efforts should be concentrated on the transformation of the corporate vision and culture. It is important to understand the premises of the situation in order to adequately address the issue and propose a reasonable solution.

Implementation of solutions

The delegation should consist of international representatives in order to minimize the risk of fraud or bribery. The author supposes that the implementation of a plan developed by the delegation and recurrent check-ups would positively impact the production process in the corporation. Nevertheless, Sanlu Group should realize that this plan requires major expenditures and is rather resource-intensive. Sufficient salaries should be paid to the delegates, sufficient resources should be allocated for business trips, and all delegates should be experts in the field with extensive experience. The latter is important due to the fact that inexperienced specialists might be not knowledgeable enough to identify the extents of the problem and miss out significant details.

The approach intended to fight corruption in the company can also be considered a rather costly process. In addition, it is going to be hard to recognize corruption in a large corporation because their departments have already provided escape routes for the executives. Corruption necessitates several requests to be made to higher authorities in order to conduct a detailed investigation. Anyone involved in illegal activity within the corporation should be fired immediately. The benefit of this strategy consists in the fact that this slight intimidation might have a positive outcome in terms of corporate culture and eradicate (or lessen at best) misconduct and disobedience.

The third approach is a logical extension of the second method. The executives should pay attention to the corporate culture because this aspect is what makes a good company. Sanlu Group’s image depends on its managers and employees. First, explanatory talks should follow the involuntary dismissals. The author proposes to revise the company’s vision and motivate all of the corporate layers to behave professionally and strengthen their customers’ confidence in the company and the Chinese products in general. This objective should not be underestimated because Chinese economy has great potential which can be killed by the inability (or even strong unwillingness) to follow the rules for the sake of income.

Conclusion

The author believes that it is important not only to address the current issues but also investigate the reasons for the existence of these issues. In the modern era of globalization, Sanlu Group should be able to realize the main factors why they failed and revise their production standards. On a bigger scale, the government should be on the constant lookout for probable ways of fighting the corruption present in China.

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IvyPanda. 2020. "Sanlu Group Company and the Tainted Milk Crisis." August 26, 2020. https://ivypanda.com/essays/sanlu-group-company-and-the-tainted-milk-crisis/.

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IvyPanda. (2020) 'Sanlu Group Company and the Tainted Milk Crisis'. 26 August.

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