Too early for domestic dairy brands to celebrate

Source:Global Times Published: 2013-8-6 22:58:01

Three batches of whey protein from the New Zealand-based dairy giant Fonterra Group recently tested positive for the botulinum bacteria. Fonterra announced Monday the recall of over 30 tons of potentially contaminated milk powder within 48 hours. Although the company actively reported the problem and made an open apology to the Chinese public, this dealt a devastating blow to its image and could further decrease Chinese consumers' trust in foreign dairy brands.

It remains unknown if the case is an accident or a problem that they were previously unaware of. Fonterra discovered the botulinum bacteria contamination in March, but withheld the information for more than four months. This will affect Chinese consumers' attitudes to the company.

Foreign milk formula companies have overwhelming superiority over their Chinese counterparts in brand recognition in the Chinese market partly due to their high quality and brand cultures.

However, their brand advantages could be dampened by incidents like this. The efforts made by Fonterra, which include voluntarily admitting problems and promising to recall contaminated products, will help alleviate, but cannot totally offset, Chinese consumers' anger.

Chinese domestic milk powder brands whose reputations are in the dust perhaps think that their chance has come.

However, if they continue to stick to vicious competition and don't improve the environment for brand construction, they are unlikely to catch up when competing with foreign brands in the future.

Chinese consumers have no obligation to give preference to domestic milk powder brands. The public will eventually realize that snubbing domestic brands while blindly chasing foreign brands will cause an imbalance in the dairy market and eventually damage their own interests. But competition between foreign and domestic brands in essence is a competition of quality, and domestic companies shouldn't expect consumers to come to them out of a sense of patriotism.

Nowadays, there are not many differences between domestic goods and imported foreign goods, but milk formula as a daily necessity has seen the biggest gap in brand recognition. This is an abnormal situation. Chinese society has abundant resources to close this gap. What it needs now is the sincerity of Chinese companies.

The construction of the Chinese dairy market calls for rational and practical consumption attitudes as well as a balance in the quality and prices of foreign and domestic brands.

We believe only by achieving this can the benefits for consumers be maximized. Fonterra won't easily fall in the Chinese market. The recovery of its image and reputation and future competition with its Chinese counterparts are welcomed by Chinese consumers. This is the same situation facing Chinese brands that have also suffered a scandal.

Posted in: Observer

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