Planet Money
2:13 pm
Fri April 26, 2013

Nervous Parents In One Country Clear Supermarket Shelves In Another

Originally published on Fri April 26, 2013 4:47 pm

Liyan Chen, a grad student in New York, was chatting online recently with her cousin in China.

"He said, 'I want Abbott milk powder,' " Chen told me. " 'I want you to buy it and ship it back.' "

Her cousin wanted her to buy three boxes of Abbott baby formula, sold under the brand name Similac, and ship it to him in China. She did some research and found out the shipping alone could cost $80. "They're not from a very well-off family, and that really surprised me," she said — especially because they can buy Abbott baby formula in stores in China.

People in China's growing middle class are buying more and more foreign goods, which are widely available in stores in China. But baby formula is a special case.

In 2008, formula in Chinese stores was contaminated with a thickener called melamine. Six babies reportedly died, and hundreds of thousands got sick.

"If China cannot even handle baby food, what can we trust?" Shane Li told me. Li, who lives in southern China, takes a 90-minute boat ride to Hong Kong every few weeks to buy formula, mashed baby food and bottles. Most of the products Li buys in Hong Kong are sold in stores near his house — same brands, same ingredients.

Abbott and other Western baby formula companies say they hold their factories in China to the same standards as everywhere else. Many people in China take them at their word — lots of people still buy formula in China. But there are enough people, like Shane Li, who distrust anything even packaged inside China to cause a disturbance in other parts of the world.

In the U.K., stores are rationing formula this month because of a shortage reportedly driven by people buying up formula and sending it to China. The Hong Kong government instituted limits and is now arresting people caught exiting with more than two containers of formula. In New York's Chinese neighborhoods, small shipping companies told me they have customers who send U.S. baby formula home to China every week.

When people in China buy formula from Hong Kong or the U.S., they're paying for regulations and standards they trust. And the growing class of Chinese people with a little extra money in their pockets will keep buying baby formula from overseas until the Chinese government convinces them to trust it, too.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

In China, these days, the rapidly growing middle class is boosting demand for foreign goods and retailers are responding. More and more foreign products are showing up in shopping centers. But when it comes to one foreign product, the Chinese are reluctant to buy it off the shelves of their own stores. We're talking about powdered baby formula. Here's Marianne McCune of Planet Money and our member station WNYC with the story.

MARIANNE MCCUNE, BYLINE: A few months ago, Liyan Chen got a message from her cousin in China.

LIYAN CHEN: (Foreign language spoken) Are you in the USA or in Europe? I said, (Foreign language spoken) I'm in New York.

MCCUNE: She's a graduate student here, and she and her cousin were chatting on QQ, an instant messaging program popular in China.

CHEN: He said (Foreign language spoken) I want Abbott milk powder. I want you to buy it and then ship it back.

MCCUNE: Baby formula for his brand-new son. He wanted her to purchase three boxes in New York and send them to China.

CHEN: I was like, really?

MCCUNE: She did some research and found out the shipping alone would cost up to $80.

CHEN: They're not from a very well-off family, and that's really what surprised me, because for a family that's not even middle-class, they would be willing to spend so much money in order to get milk powder from abroad.

MCCUNE: The reason goes back to 2008. Baby formula in Chinese stores was contaminated with a chemical thickener called melamine. Six babies reportedly died and several hundred thousand got sick.

SHANE LI: If China cannot even handle baby food, what can we trust?

MCCUNE: What can we trust in this country? That's Shane Li, just home from his job at a PR company in southern China. Now that his wife has stopped breastfeeding, they're giving their five-month-old only foreign-made baby formula. And what about food for yourselves? Are you worried about that?

SHANE LI: No. I've been here for 30 years. So I'm immune to the pollution.

MCCUNE: You're already contaminated.

SHANE LI: Yeah, who cares?

MCCUNE: But for his baby he says, he'll do anything. And that means every few weeks taking an hour-and-a-half boat ride to Hong Kong to buy formula, mashed baby food, bottles and more. And here's the wild thing. He can buy most of the exact same products in a store nearby, products made by the same companies with the same ingredients. But if he wants Similac, made by the American company Abbott and readily available in stores across China, he won't buy it there.

What if the company that makes your formula were to tell you, listen, we're making the exact same formula here in China, up to the same standards, as we are in any other place in the world?

SHANE LI: Well, I would say no thanks.

MCCUNE: For the record, Western baby formula companies do say they hold their factories in China to the same standards as everywhere else. And many take them at their word. They sell a lot of product in China. But there are enough people like Shane Li who distrust anything even packaged inside China to cause unexpected problems in other parts of the world.

UNIDENTIFIED WOMAN: It's hard to recall the last time an essential food item like baby milk powder was rationed.

MCCUNE: As far away as the UK, mothers have told the BBC they had to search multiple stores to find the formula they need. The Hong Kong government instituted limits and is now arresting people caught exiting with more than two containers of formula.

(SOUNDBITE OF CROWD NOISE)

MCCUNE: Here in New York's Chinese neighborhoods, there doesn't seem to be a supply problem yet. But at one of the many hole-in-the-wall shipping companies...

They send baby formula milk powder?

JEUN LI: Yeah, baby. Yeah.

MCCUNE: Like every day?

JEUN LI: Like three days a week, different people.

MCCUNE: Jeun Li says a small but steady stream of customers come to his father's business to ship baby formula home. Because of Chinese import restrictions, they, too, can only send two containers.

JEUN LI: Some people, it's like coming every week, like to same address, one box, one box.

MCCUNE: The baby formula market is officially weird. What people are buying when they turn to Hong Kong or the U.S. for a container of baby food? They're buying a set of regulations and standards they trust. And this growing class of Chinese with a little extra money in their pockets, they're not likely to stop until the Chinese government convinces them to trust it, too. Marianne McCune, NPR News, New York. Transcript provided by NPR, Copyright NPR.