Hong Kong Is Now Jailing China's Baby Formula Smugglers

If you’re an immigrant, or the child of one, you’ve probably had to fill your share of suitcases with American goods to lug back to the motherland. For me, this meant M&Ms and Kit-Kats and Nike gear through the ‘80s, Costco-sized boxes of Ferrero Rocher through the ‘90s, and in the early 2000s, electric toothbrushes, Glide dental floss, and whatever other miscellany might be either unavailable or too expensive in Taiwan.

In China, the must-have item travelers are schlepping through customs these days is … baby formula. The New York Times confirmed this in a recent article about barren formula shelves in Australia, attributed to Chinese visitors, eager for the good stuff. On a recent trip to Flushing, a Chinese neighborhood in Queens, I noticed floor-to-ceiling stacks of baby formula filling the front windows of department stores, where sales have been bustling.

In Hong Kong, where imported baby formula is not taxed the way it is on the mainland, the stuff is in such demand by visiting mainlanders that the local government has struggled to control exports and even proposed rationing systems. That's raised fresh tensions between Hong Kongers and mainland Chinese, and raised the ire of local authorities. The problem is so dire that new rules have been imposed--as of last Friday, anyone traveling from Hong Kong to mainland China are only allowed to carry two cans, or 1.8 kg, of milk powder. Violators risk a $64,480 fine and two years of jail time.

But the stuff is still being smuggled over the border. Last Monday, a 23-year-old man was detained in Hong Kong for attempting to transport $3,200 worth of baby formula (usually called “milk powder” in Chinese media and translations) into mainland China. And on Saturday, two people were detained for having 38 undeclared cans of the stuff in their car. All in all, the Hong Kong government announced they had detained about 45 traders--26 Hong Kong residents and 19 people from the mainland--allegedly smuggling infant formula out of the city into China.

To many Chinese parents, getting ahold of the white stuff is a matter of life and death. Breastfeeding rates are low in China-- less than 30 percent--due in part, some argue, to aggressive advertising from, and hospital deal-cutting with, baby formula companies, which lead parents to believe that formula is healthier than breast milk. (Though, this breastfeedingflash mob and recent laws increasing maternal leave to 98 from 90 days may help change that.)

Everyone needs baby formula, then, but the problem is that nobody trusts the local baby formula companies. On the last day of 2008, the chairwoman of a Chinese dairy company called Sanlu was sentenced to life in prison and two other executives were condemned to death for their role in covering up melamine contamination in their baby formula, which killed six babies and sickened an estimated 300,000. It should be noted that Sanlu was 43 percent owned by a New Zealand company called Fonterra, and nobody from Fonterra has been punished for their slowness to do something about the cover-up.

But these cover-ups were carried out in accordance with a government directive put out around the time of the August 2008 Olympics ordering the media not to report any negative news, including food safety issues, that would tarnish Beijing's image during its big coming out party. Combine that with the ongoing food safety scandals that keep getting uncovered among other Chinese dairy companies, and across China’s food and drug industry in general, and it’s no surprise that Chinese parents are still wary of domestically produced baby formula. (The government attempted to again quell concerns at a press conference yesterday in Beijing, reports the Shanghai Daily; one official said that "99 percent of formula produced on the mainland" was safe.)

The solution, if you have enough coin, are imported, foreign-made brands. But, these can cost 3 to 4 times what they cost in their home markets.  As a result, there’s a pretty penny to be made from sneaking in undeclared, foreign-made baby formula and selling it at a markup of up to $6 more per can. Australia is just one of many countries to see baby formula in tight supply. On Friday, a map began circulating on Twitter that purported to show where China's baby formula appetite had affected supplies--which it attributed to "Chinese Raids to seize Powdered Milk."

The government is already touting its efforts to solve the baby formula crisis. But just this past January, it was reported that one of the government officials removed from office in 2008 for his role in the Sanlu scandal was appointed to a new position in the provincial government. And last September, we learned that another official originally punished for his role in the scandal was promoted to deputy president of China’s State Food and Drug Administration. (Side note: a previous head of the FDA was executed in 2007 in the wake of another round of deathly safety scandals, this time involving, among other things, pet food, toothpaste, and antibiotics.)

Since my childhood days of dragging suitcases full of Air Jordans through Taipei International Airport, Taiwan has leapt up the socioeconomic ladder to squarely, comfortably, middle class, and I’ve observed this change through the increasing lightness of my suitcase. We still ask my relatives if they want anything ahead of our visits, and these days, the answer is always no.

What’s more, I recently received my first request in the reverse direction–an American friend wanted to buy a … cat exercise wheel of all things, and said the best ones are Taiwanese. I told her I wasn’t going back anytime soon, and in the end, she had to settle for an inferior, American-made one. When visitors to China start getting these kinds of requests, we'll know that the country has truly arrived. In the meantime, executions of bigwigs and clumsy attempts to stifle a desperate black market are proof that it hasn't.