To some people in the outside world, “Made in China” means low quality.  Most Chinese people recognize that, and some even have their own blacklist of domestic products such as certain brands of milk and cooking oil.  Now they have one more category of products to add to their list: Chinese liquor, or bai jiu.

On November 19, 2012, Jiu Gui, a well-known Chinese liquor brand, was found to contain 1.04 mg of dibutyl phthalate (a toxic plasticizer) per kg, which is 260% higher than the statutory maximum of 0.3 mg per kg.  Within days after this news broke, Jiu Gui’s value fell by more than RMB 5.3 billion (approximately, USD 840 million).  The Chinese public also started asking about other famous liquor brands, severely impacting China’s liquor industry overall.  According to the latest news reports, Kweichow Moutai and Wuliangye, recognized as the 2 most promising Chinese luxury liquor brands, have seen their shares plunge over 10 and 3.3%, respectively, since this scandal broke out.

 

(This is an image of Jiu Gui packaging. A bottle of 500 ml costs from RMB 400 – 1,600, or approximately, USD 63 – 254.)

From the 2008 Chinese powdered milk scandal to this plasticizer scandal, consumers’ sensitive nerves have been challenged again.  Before, the main worry was that cheap products meant low quality, but now it is clear that expensive products can’t always live up to their price either.  After this scandal, chances are that Chinese consumers will be more cautious when choosing products that are made in China.

Due to the lack of sound quality monitoring system, it is generally difficult for Chinese consumers to choose safe food or beverage products.  So most of them turn to name brands to make a purchase.  If the domestic name brands are losing their reputation for safety, it might create good opportunities for foreign-branded products.  Needless to say, in the long run, only high-quality brands will succeed in the Chinese market.