Tuesday, 30 September 2008


The NZ Herald has followed Stuff and been sucked in by Fonterras competitors. The San Lu milk scandal is as bad as it gets but this story which appeared in Stuff yesterday , raised the ire of Roarprawn. Two clicks to the Sinlogie website showed that they do a hell of a lot of work for a very big dairy exporter in USA. ( Probably Dairy America)

This is why PR gets a bad name - this is a classic example of the dark arts, and at a time when New Zealand and Fonterra need informed media coverage we get this pap. Here's what the Herald had this morning.

More than half of Chinese consumers have less trust in New Zealand dairy produce because of the poisonous-milk powder crisis engulfing Fonterra, says a survey by Sinogie Consulting.

This is the worrying bit.

Fonterra's 43 per cent-owned Chinese dairy company San Lu is one of 22 firms caught up in the scandal over the industrial chemical melamine being added to watered-down milk to boost apparent protein levels. The contamination has made tens of thousands of infants ill and killed at least four.

Sinogie, a Hong Kong company, commissioned a survey of 300 shoppers in Beijing, Shanghai and Guangzhou between September 22 and 25 and found 51.2 per cent had less trust in New Zealand dairy produce.

Wow that's a big survey.!

Sinogie chief executive Bruce McLaughlin was surprised the figure was not higher.

"What it suggests to me is that people are still seeing this as a San Lu problem."

Suggests???! A hint perhaps - and a nice time for a another brand to infuse the market.

There was not much damage to Fonterra at present but that could change in the long term.

"I would say that Fonterra has to keep its head very low in China at the moment. I think if they start shouting too loudly about the Chinese authorities being to blame, then the Chinese authorities will react and it won't be pretty."

More than half the respondents (56.2 per cent) said they had been buying more foreign-branded dairy produce since the scandal broke, while 79.8 per cent were worried that all brands of infant formula, domestic and foreign, could be contaminated.

New Zealand came second behind the European Union when people were asked to rank food from markets for trustworthiness.

"I think New Zealand itself enjoys such a strong brand that while Fonterra is obviously probably your biggest food company, I think people will still have a lot of faith in other New Zealand brands."

Mr McLaughlin said he had seen many companies run into difficulty in China.

"I think that people are blinded by this idea of mysterious China still. Because of that they don't think that they should go in with the same level of caution [as if] investing in Australia or America or somewhere like that."

A Fonterra spokesman said the company approached its investment in San Lu very cautiously.

"Fonterra has been doing business in China for over 20 years so the company was well aware of not just the business but also the wider political and cultural complexities of operating as a foreign company in China."

Fonterra undertook very deliberate and careful due diligence before making the decision to invest, he said.

Its strategy was to progressively upgrade operations and it had also begun a plan to introduce better-quality milk to the supply chain by investing in its first farm in China.

"However, in moving to steadily improve San Lu's quality-control systems, it was impractical to be in a position to protect 100 per cent against all risks to San Lu's supply chain such as a deliberate criminal contamination

Journalists need to be very careful of running stories like this - this has been picked up everywhere as people want to know more about this issue. But instead they are being given at worse a false picture nicely planted by a competitor of New Zealand dairy interests .

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