EU Businesses beware Chinese storms–Aon

Recent figures from Europa's ‘Rapid Alert System for Food and Feed’ [RASFF] 2009 Annual Report show that the number of alerts of Chinese origin stood at 345 last year. Although this figure is down from 500 in 2008 it again makes China the number one offender. Aon acknowledges that China has made fast progress in ensuring food safety is a priority, and has recently introduced a food safety act similar to regulations seen in the EU. But traditionally, quality management systems, food standards and hygiene levels have not been comparable to levels of EU manufacturers, the broker added. “Many EU firms see the advantages of importing from China, and indeed there are many, however the physical and regulatory distance between the EU and China make the risk of doing so higher than buying from a firm within the EU,” said Christof Bentele, Global Managing Director of Aon’s product recall team.hideForgetting the reputational and financial impact of a recall for a minute, the potential human cost of contaminated food or beverages should be enough to make any firm realise that pre-incident crisis planning and the enhancement of quality management procedures should be an absolute top priority. For everyone involved in food production, distribution and sales, prevention really is better than cure,” he added. For companies doing business with Chinese food suppliers it is vital to take precautionary steps, said Aon. They advise companies to undergo a strict quality management process and to have firms not only agree to food safety standards but also monitor their implementation. They should also have suppliers agree to, and monitor, food safety standards such as HACCP procedures, the internationally recognised food safety system. And those reliant on Chinese suppliers should establish a recall plan in case a recall does have to be instituted, consider taking out an insurance programme for the risk of product contamination, develop a system to trace back ingredients of the supplied foods and create a crisis management plan in order to minimise the financial and reputational damage a recall can inflict on a company. “Businesses cannot put blind faith in firms operating under a different social and regulatory framework ensuring they have the same emphasis on safety as they do. It is extremely prudent, for both Chinese firms and businesses in the EU importing Chinese goods, to take out an insurance programme for the risk of product contamination. The insurance market in this area is growing and premium rates are getting more reasonable, however insurers will always look at the level of quality management and plans and procedures in place,” said Mr Bentele. “Many businesses believe that because they have liability insurance they are covered from a financial perspective, however it is important to note that contaminated products insurance is very different to liability insurance. Liability insurance only covers firms for third party liability, whereas contaminated products insurance covers for the first party loss including the costs of undertaking a recall,” he noted. The RASFF was put in place to provide food and feed control authorities with an effective tool to exchange information about measures taken in responding to serious risks detected in relation to food or feed. It is a tool that enables a quick and effective exchange of information between member states and the commission when risks to human health are detected in the food and feed chain. According to the RASFF 2009 Annual Report, after China, the second worst offender in 2009 was Turkey with 278 alerts, down from 300 in 2008, followed by the US on 237, up from 153 in the previous year. In 2009 the number of notifications in the RASFF reached a total of nearly 8000, a 12% increase compared to 2008 and an all-time high number. The record number was established because RASFF members sent more follow-up notifications, also for less urgent problems.There were 557 alert notifications reporting on serious risks found in products on the market, a small increase compared to 2008. EU Commissioner for Health and Consumer Policy, John Dalli, said: "We cannot rest on our laurels when it comes to food safety, even if 2009 is the first year since long without any significant incidents being reported in the RASFF. The high number of RASFF notifications shows that member states are very willing to cooperate beyond their national borders to safeguard our high level of food safety in the EU. The figures also indicate that member states are sending more follow-up notifications, thereby giving other countries, including third countries, the information they need to act quickly and protect their consumers."

EU Businesses beware Chinese storms–Aon

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